Analyst Insight:  As more logistics operations realize that pen and paper methods or outdated legacy systems can't keep up with increasingly complex business models, the market for robust and affordable warehouse management software (WMS) will continue to grow. In order to convince businesses that a new WMS system is a smart expenditure, vendors are looking for new ways to offer a lower total cost of ownership than their competitors.

-Stephen Jannise, ERP market analyst at Software Advice

In order to guarantee logistics professionals a positive return on investment, WMS software vendors are using the latest technologies to make these systems more cost-efficient and are also providing more functionality than ever before. Here are just a few examples:

• Integrated labor and yard management. Once thought of as optional add-ons sold separately from a basic WMS system, labor and yard management are now being integrated into standard packages along with other options that were previously considered "extended features." By integrating labor and yard management into their WMS system, vendors can make the implementation and maintenance of these vital tools easier and more cost-effective for warehouse managers. Additionally, the inclusion of these features will help managers maximize their operation's productivity over the long run. For example, if yard activities like cross-docking are integrated with the rest of the system's functions, managers will be better equipped to reduce costly and unnecessary inventory moves into the warehouse.

• Robust performance management. Surprisingly enough, WMS systems frequently fall short of providing the necessary performance reports to help managers continually improve their business processes. If logistics professionals can't acquire and analyze in-depth information about their operational procedures, their chances of seeing a significant ROI may be impaired. For this reason, many vendors are strengthening their system's performance management functionality. Users will have greater control over the selection and creation of key performance indicators (KPI) that are used to measure performance. Once the system begins to gather and store data based on these KPIs, users will find it easier to analyze the information by sorting through KPI filters. Naturally, vendors will look to deliver this information in a graphical, easy-to-learn user interface.

• Radio-frequency identification. If you make a habit of visiting websites and blogs that focus on supply chain management news, you know that radio-frequency identification (RFID) is a hot topic these days. Everyone has their eyes on RFID as they try to guess how big an impact the technology will have on the future of the industry. Although many operations will continue to rely on traditional bar code scanning methods to track inventory, those with the necessary budget and the willingness to implement new technologies will begin making the move to RFID. In order to keep up with this trend, several vendors have already begun to make RFID functionality a standard provision in their WMS systems.

The Outlook

In the next year, the aforementioned concepts will just be the tip of the iceberg in terms of providing logistics professionals with the lowest total cost of ownership possible. Software-as-a-Service will continue to grow as vendors offer users on-demand options at low, subscription-based prices, allowing the software to grow along with the business. With WMS systems becoming more affordable for smaller business, 2011 may finally the year for your operation to make the software plunge.