Is it the time to update your Warehouse Management System?
In 2018, one-third of warehouses didn’t have a WMS in place. Since then, the situation changed a lot, as shifts in the market have forced many companies to adopt such systems. It’s safe to say that today, most warehouse companies have embraced automation and invested in digital solutions. Warehouse Management Systems (WMS) became essential tools for all businesses that handle inventory and logistics.
Unfortunately, many first adopters still overpay for old software, unaware that legacy systems suffer from various issues. Using an outdated WMS often creates challenges that can negatively impact a company’s operational efficiency and profitability. Read further to explore the most important challenges businesses face when using an outdated WMS, their costs, and the benefits of updating their systems.
Challenges of using an outdated WMS
Simply put, if you use an archaic Warehouse Management System, some of your processes can’t be streamlined and automated because it holds you back. Consequently, your capacity to sustainably grow your business is limited. Insisting on using a legacy system creates a bottleneck for your company’s evolution. The list below describes the most common challenges resulting from failing to upgrade such vital software.
An outdated WMS may not be optimized to handle the demands of modern logistics, resulting in inefficient workflows that lead to delays in order processing, inefficient use of resources, and missed delivery deadlines. Today’s customers are used to fast processes, and every little delay harms their satisfaction.
Inaccurate inventory tracking
Accurate inventory tracking is the key to a well-functioning warehouse. Relying on a legacy WMS can sometimes lead to discrepancies between actual and reported inventory levels. Both inventory stockouts and overstocking are bad for business, as they lead to increased costs or lost sales.
Outdated Warehouse Management Systems are not always equipped to handle the volume of orders and tasks required by a modern warehouse. Some of these systems were adopted long ago, and your business probably grew over the years. When operating on larger volumes, a legacy system can seriously limit your productivity and lead to an increase in necessary manual labor.
As your business grows, sooner or later, you’ll likely decide to implement new technologies, such as robots, software systems, or other digital solutions. Yet, your time-worn Warehouse Management System may be incompatible with current technology, such as Automated Material Handling systems, Enterprise Resource Planning (ERPs), Order Management Systems, Rate Shopping solutions, your shipping service provider’s software, and eCommerce solutions (such as NetSuite, Shopify, etc.). It can prove very difficult to integrate your WMS with other, more recent systems, which in turn limits your ability to automate processes and improve efficiency.
Most legacy WMS are monolithic in nature, which makes any refactoring or enhancements an uphill task. Changes to these kinds of solutions often require bringing the whole system down, which invariably causes downtime across all areas of operation, including clients’ integrated systems.
Everybody knows that outdated systems are more prone to cyber-attacks. An older WMS probably doesn’t support the latest security features and may be more vulnerable to threats such as data breaches. Inadequate cybersecurity increases the risk of losing data, revenue, and customer trust. According to PCI Pal’s survey, “64% of consumers said they would not purchase from a brand they know has been subject to a data breach.”
Lack of support
If you rely on an outdated WMS, it becomes more and more difficult to get the tech support you are looking for. As technology advances, support for legacy systems is routinely discontinued, leaving businesses that use these systems without access to necessary upgrades and fixes. You may find that troubleshooting issues, upgrading systems, or simply getting help when you need it is easier with new vendors. Younger companies must compete with established enterprises, so they tend to understand the importance of excellent customer service.
You might be interested in our article about the challenges third-party logistics companies face in 2023.
Costs of maintaining an outdated WMS
Maintenance of legacy systems is more expensive than people realize. It’s not only the cost of hiring someone with the right skill set but also training new employees on legacy technology. However, the new generation doesn’t want to learn old systems. You can miss out on great talent who’d rather work for your competition that uses new technologies that will still be relevant in the future.
On top of that, an outdated WMS often requires more maintenance and upkeep than a newer system, which is costly and time-consuming. It can impact your bottom line and limit your ability to invest in other vital business areas. Read further for a complete list of additional costs of outdated systems.
Old Warehouse Management Systems usually require frequent maintenance to keep running smoothly, which can be time-consuming and expensive. Additionally, your team will have to continuously overcome new issues in the future, usually caused by incompatibility with your partners’ systems.
Repairs and Downtime
Legacy systems are more prone to breakdowns and failures. Practically every downtime caused by outdated WMS results in lost sales, reduced productivity, and decreased customer satisfaction.
Outdated WMS might not integrate with newer systems, causing delays and errors in data transfer and management. Consequently, every attempt at connecting your WMS to any new system will require your development team to build a new integration solution from the ground.
Generally speaking, new technologies are more efficient than the old ones. This is why using dated WMS often leads to higher labor and operations costs. Your warehouse can’t operate at its full potential without the right system in place.
Employees often become frustrated when they have to work on outdated systems and solve problems caused by out-of-date tech. Eventually, they will seek employment elsewhere, leading to higher turnover rates and costs associated with hiring and training new staff.
Top benefits of updating your WMS
Updating your Warehouse Management System already looks logical once you understand the risks associated with relying on a legacy system. But organizations notice many other benefits right after implementing a system designed to fulfill modern warehouses’ needs.
Better Customer Service
An updated WMS will help you improve customer satisfaction by providing accurate and timely information about order status and inventory availability. It will also enable your employees to respond to customer inquiries quickly and ensure on-time deliveries.
Depending on the season, you might need more or less resources to handle the workload. Newer systems use cloud capabilities to help businesses accommodate growth and expansion by providing the ability to scale up or down as needed. That way, a modern WMS can easily handle increased volumes of inventory and orders.
Modern WMS solutions are relatively easy to integrate with each other. Suppose one of your partners uses some other third-party WMS. Updating your system will allow for seamless integration between your WMS and theirs if such a need arise.
Improved operational efficiency
With an up-to-date WMS, you can automate routine tasks, optimize inventory management, and reduce manual labor, resulting in decreased costs. A current system should make receiving, putaway, picking, and shipping automation possible. And every automated process ultimately leads to faster order processing times, reduced errors, and increased productivity.
Improved inventory tracking
With the correct implementation, your updated WMS can make tracking inventory accurately easier, eliminate stockouts, and reduce overstocking. Ensuring products are available when needed decreases costs associated with excess inventory and increases customer satisfaction. A proper system in place can also significantly reduce manual data entry errors.
A current WMS improves productivity in various ways. Automating routine tasks means your employees get to focus on more complex issues. Reducing errors and freeing employees from mundane tasks also have a positive impact on employee productivity and job satisfaction, often leading to reduced churn and labor costs in the long term.
Whenever you improve efficiency and accuracy, your profits increase. Updating your WMS will help your business save on labor costs by reducing the need for manual labor and streamlining workflows. It will also help reduce errors that can lead to fines for missed orders. To such a degree, WMS updates directly influence your bottom line.
Start thinking about a WMS update to improve your P&L
Relying on a legacy Warehouse Management System seriously limits your company’s potential. Not only does it increase the risks, but it also hurts employee satisfaction and client experience. Yet, the solution is simple: updating your WMS to the requirements of today’s fast-paced global market. Modern companies need reliable software solutions that scale with them, no matter how the requirements change.
However, updating a Warehouse Management System can take some time, and it comes with its own challenges. To steer clear of possible issues, consider working with subject-matter experts. Maxima’s consultants understand the transportation and logistics industry and adjust proposed solutions to fit the unique needs of our clients. Learn how our globally distributed team enabled WMS modernization, supported cloud migration, and provided quality assurance for one of our clients in the 3PL industry, or schedule a free consultation with one of our experts today!