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When deciding to implement a new warehouse management system (WMS), there will come a point where the ROI of the new solution is questioned. While there are many systems on the market, WMS solutions are a significant expense. The right one can save you thousands per month in other expenses.
Many companies view a WMS as a cost. However, it should be viewed as an investment—an investment that:

1. Protects your inventory
2. Manages labor costs, and
3. Streamlines warehouse operations

The total cost of ownership (TCO) must be weighed when evaluating new systems, technology, or any other major business purchase. TCO is a well-established practice from accounting that looks beyond just the actual cost of the hardware and software and helps explore other non-monetary costs as well. By measuring TCO, businesses can get a holistic view of all the costs associated with a new investment.

WMS Costs to Evaluate

Tangible Costs

Tangible costs are straightforward and can be easily measured. Tangible costs refer to any costs for physical goods or things you can see, feel, or touch. Nearly anything that can be viewed on a report or that generates data is a tangible cost. Here are some of the main tangible costs impacted by a WMS.

Labor

Labor costs are the costs for your employees and how many man-hours will go into the system. However, most WMS don’t monitor people. But the time your packers and pickers spend preparing and sending out orders is another major cost to measure. A good WMS software monitors both people and inventory.

Inventory

How much inventory you have on hand and need to keep track of is another tangible cost. WMS costs can be greater if your total number of SKUs tracked is high and no other rules apply to minimize your stock.

Productivity

Measure current operational costs and then compare them to what they would be after implementing a WMS. This helps give an estimate of how much time and money a WMS can save you by helping you optimize your operations, increase productivity, and shorten tasks.

Existing Technology

Look at your existing technology stack. Is your company using any other logistics software or warehouse management software? What about ERPs?

You need to make sure that the WMS you choose will be able to integrate with your existing solutions. If not, you may need to consider investing in additional software so everything can communicate with each other, which adds to the cost of implementation.

Equipment and Automation

Will you need additional Material Handling Equipment (MHE), like conveyor belts, light picking systems, or robotics? To stay competitive and realize even greater savings in the long run, you may want to consider investing in additional MHE tools that help your team work more quickly.

Intangible Costs

Unlike tangible costs, intangible costs are a bit more difficult to measure. That’s because intangible costs aren’t necessarily tied to a piece of equipment or software. They are important costs to keep in mind for any WMS implementations though. Here are the main intangible costs to consider.

Support Requirements

Once your new WMS is implemented, are there ongoing support requirements? Is it a cloud-based solution or something that needs to be physically installed on other company devices? Is the system easy to learn, or will it require training and ongoing customer support? These are all important questions to have ready when evaluating a new WMS.

Employee Satisfaction

A major intangible cost that should be strongly considered is how will the new WMS impact employee satisfaction. Businesses should avoid software that makes workers’ jobs harder or causes daily frustration. Adding additional friction to your warehouse operations causes inefficiencies, increases turnover, and lowers morale.

WMS ROI Analysis

With a better understanding of the costs associated with implementing a new WMS, you can begin to work on an ROI analysis to help sell the system internally. The best WMS providers show a return in about a year or less because a WMS eventually saves a company much more money than it costs.

Here’s how you can begin your WMS ROI analysis to see if the system in question is right for you.

Step 1: Evaluate Current Operations

Do a detailed analysis of your existing operations. If you don’t have the expertise to do this internally, it can be beneficial to work with a consultant or ask the vendors you are exploring to help guide you.

Specifically, you want to find bottlenecks in your warehouse operations. You should also track how inventory moves through the warehouse to discover the most optimal paths. Document what happens at each stage of your fulfillment process and see what areas need the most attention or improvement.

While it may be tempting, do not rush through this first step. Plan to spend quite a bit of time here so you can be as thorough as possible.

Step 2: Needs Assessment

After finding out the strengths and weaknesses of your current warehouse operations, you can determine which needs are most important. Not all WMS solutions are the same. You’ll want to find one that can help you improve the areas you need help with while not creating any additional burdens. At the same time, you should prioritize looking for a system that can scale with your company as it grows.

Determine what technological requirements are needed to support a new WMS. Will it work with your existing systems, or will additional upgrades need to be made?

Even though “warehouse” is in the name, a WMS touches many other areas of your business. Each department involved should make a wishlist of the features they would like to see in the new WMS. You may not be able to get all of them, but it will be a helpful exercise that can improve the adoption rate of the new software internally.

Step 3: Crunch the Numbers

Review the tangible and intangible costs of implementing a new WMS. There are many ROI calculators online from various vendors. However, they all use a slightly different method to determine the WMS breakeven points. It is best to work with each vendor individually on the ROI of their system.

To make sure you are comparing apples to apples, ask the vendors if you can see the calculations they are using to determine if there are any key differences in how the ROI is calculated.

Is a WMS Worth the Investment?

To determine if a WMS is worth the investment, it needs to show a positive return. If the monthly costs for the WMS bring enough savings, then yes, it is worth the investment.

Still, this will not always be the case. Not every WMS will be suitable for every business. Finding and partnering with a trustworthy WMS provider that has a proven track record of success is a great way to ensure you get the results you need.

Logistics Vision Suite (LVS) WMS

Regardless of where you are in your search for a new WMS, check out our Logistics Vision Suite. It is used by more than 700 companies across the globe because it is advanced, adapts to your needs, integrates well with existing technologies, and delivers results.

Contact our team today to learn more about what LVS can do for you.

The e-commerce industry boomed as a result of the pandemic. Online shopping became even more popular than it already was, creating a major demand for more goods to be available for purchase online. Some businesses already possessed a strong online presence with consistent sales happening through their website. However, many businesses were not prepared to go online at the start of 2020.

As more companies began investing in e-commerce, the services offered by third-party logistics (3PL) companies also saw an increase in demand. Many companies do not want the burden that comes with handling the challenging demands of logistics and warehouse operations. Factors like shipping costs, express delivery options, and accurate order fulfillment also fueled the demand for 3PL partnerships over the last several years.

Since 3PLs are responsible for a key part of a business, they need to have a strong warehouse management system (WMS). Without the right WMS in place, 3PL companies can miss deliveries, send the wrong orders, or misplace inventory.

What is a WMS?

In simple terms, a warehouse management system (WMS) is a type of software with different modules or functionalities. The software is designed to keep track of inventory from the time it enters a warehouse until the goods are ordered and shipped out to the end customers. The purpose of a WMS is to find the most efficient and cost-effective way to stock and move goods through a warehouse. Most WMS software can handle a variety of tasks, including receiving, inventory management, tracking, replenishing, counting, picking and packing, and shipping.

What is the main benefit of a WMS for 3PL?

Today, many companies prefer to outsource their supply chain management and logistics to a 3PL. Logistics Service Providers are responsible for managing an effective supply chain and logistics operation for multiple clients at a time. Order fulfillment is a challenging and time-consuming function within the supply chain, so warehouses need a strong “brain” to help manage and keep track of all 3PL inventory coming in and out of the warehouse. That’s where a WMS comes in. It helps provide 3PL inventory management, information, insight, and tracking for the various stages of the supply chain. Warehouse management systems also help 3PLs ensure stock levels are maintained with adequate safety stock in case there are delays in replenishment.

What Criteria Matter the Most When Looking for WMS Partners?

In 3PL warehousing, a strong WMS is critical in order to effectively compete and keep customers happy. Not all warehouse management systems are the same. As with any software, there are differences and strengths that each solution can provide. The best solutions can offer the most important features and functionality for your business while also offering effective inventory management. Here are the six most important criteria for a WMS provider.

1. Speed of Implementation

Whether you’re getting a WMS for the first time or replacing an existing one, the time it takes to get up and running is critical. Many WMS solutions claim to have short implementations—but be wary. A “short” implementation could be 16 months for one vendor, or 6 months for another depending on their averages. Ideally, you should look for solutions that get your new WMS fully implemented in about 12-24 weeks. Obviously, the faster your system is online, the sooner you can get back to focusing on your clients.

Speaking of your clients, your WMS should also enable you to get new clients onboarded fast. This is a major area to consider. Faster client onboarding minimizes downtime, enabling your company to start filling orders as quickly as possible. You want to reduce as much friction as possible when starting with a new client. Not all WMS solutions are able to do this efficiently, so make sure you search for vendors that work with other 3PLs already.

2. Business Intelligence

Another important area to consider when replacing a WMS is the ability to gain deep insights from the new system. Customizable and detailed warehouse intelligence reports are very important since they will help provide plenty of visibility to the most important information for your business. Before implementing a new WMS, be sure to ask detailed questions about the system’s reporting and business intelligence capabilities.

3. Billing and Cost management

A major factor of any WMS for 3PL is the ability to control costs. Investments in a system with dozens of automations are obviously a major investment, but those investments need to do more than just save money on overhead. With a system like LVS, 3PLs can measure nearly every aspect of their operations. This enables users find and track costs associated with every area of their business.

4. Client Facing Portals

3PL companies are very busy. You don’t always have time to interact with every client at a moment’s notice. Instead, you should use a WMS that gives your clients access to the dashboards and information they need to stay informed, all without taking up your precious time to keep them in the loop. Mantis offers a proprietary customer portal called Client eWorkspace for 3PLs to use with their customers.

5. Adaptability and Scalability

There’s a high chance your business is very different today than it was a year ago. Businesses change and grow over time, which introduces new challenges and needs. Your WMS should be adaptable enough to meet you where you are today, but also be scalable so that it will last as long as you need. Some WMS systems are limited in their offerings. Make sure you look for a WMS that can support your business as it grows for years into the future.

6. Expert 3PL Customer Support

No matter how good a WMS is, there will be times when something goes wrong, or your team won’t understand how to properly operate a specific function or feature. It’s at these times when good customer service can make a world of difference for your business. Seek out WMS companies that offer ongoing maintenance, technical support, and training.

7. Advanced Slotting Capabilities

Knowing how to move inventory is only part of the challenge for 3PLs. They also need to be able to sort, store, and organize it effectively. Advanced slotting helps find the most optimal methods to maximize space utilization, labor productivity, transportation efficiencies, and compare DC operations with global industry benchmarks to see where you can improve. Some companies have used CAD tools to figure this out manually. However, there are advanced slotting solutions that can help find greater reductions in handling and travel distance while optimizing storage space.

8. Increased Productivity Through Automation

Today’s technology enables the work done in a warehouse to be augmented to make human workers more efficient and less prone to mistakes. As the name suggests, automation helps reduce costs and improve tedious manual tasks so that the warehouse can run more efficiently.

Light Warehouse automations come in a variety of technologies, including Voice Picking, Pick-to-Light, Put-Walls/Sort-to-Light, Smart Pick Carts, Smart Glasses, RFID. There are also many Automated Material Handling Solutions such as Goods-to-Person Shuttles, Carousels, Mini-Loads, Mobile Shelves & AGV – like robotics, AMRs, Conveyors, Sorters, Packing line systems, RFID-Gates and more.

There are many areas of warehouse operations that can be automated. The more a WMS can help you streamline your processes, the greater the benefits and cost savings. Many automations come with a high price tag. Mantis offers very reasonable pricing on Light warehouse automation solutions that can be implemented quickly and are flexible enough to grow with your team. Mantis also offers its own advanced solution (WCS) to integrate with Automated Material Handling Systems (AMHS).

9. Total Cost of Ownership

With any business purchase, you need to consider the total cost of ownership. This is especially true for your WMS. A system with limited functionality or poor performance can have major costs associated with it, even if the upfront cost was low. Do your homework and question the sales reps and other WMS provider personnel to ensure they won’t end up costing you more in the long run. The best WMS solutions function as a part of your business with minimal disruptions that help you see a strong ROI quickly.

Mantis Logistics Vision Suite

Of course, there are dozens of other areas to consider when selecting a new WMS for your 3PL warehouse. The Logistics Vision Suite (LVS) by Mantis checks all these boxes and more. If you’re in the market for a new WMS, explore LVS and see why more than 700 companies trust Mantis to manage their warehouses.

Premier LogiTech Success Story

Premier Logitech needed a WMS provider that could provide better functionality, stability, productivity and scalability. The company selected Mantis for its adaptability, advanced functions, and accessibility.

Background

The third-party logistics (3PL) industry has seen substantial growth over the past fifteen years. Premier LogiTech was founded in 2007 in response to an unmet need in this space. Existing 3PL solution providers did not offer comprehensive technology solutions. This resulted in wasted time and resources, inconsistent quality, and other challenges for shipping and logistics companies.

Today, Premier offers a complete technology solution and propels its clients toward greater success. The company boasts a 380,000 square foot operational facility and helps ship over 1.5 million units of inventory per month. In addition, Premier is growing rapidly, both organically and through strategic partnerships and acquisitions.

Client Challenge

By 2018, Premier was experiencing substantial growth. At the time, it was using a cloud-based warehouse management system (WMS) that was not meeting their needs. This particular cloud-based WMS also had many stability issues which inhibited productivity.

Premier’s existing system was also too limited in functionality and Premier was unable to make needed improvements. In addition, any requests for changes from the vendor were costly and time-consuming to complete. These challenges led the company to seek out a better WMS solution.

Since Premier works with many different types of companies, it required a more adaptable, advanced, and accessible WMS that could support its growth. The company attempted to create a custom in-house solution to help mitigate these challenges and issues, but it became too time-consuming and difficult. Premier realized they needed a stronger, more flexible partner and system that would be able to support its needs.

After searching and reviewing different WMS vendors, Premier narrowed it down to Mantis and one other WMS provider. The Logistics Vision Suite (LVS) from Mantis, a Tier 1 WMS provider, was ultimately selected due to the number of features it provides, its scalability, and its transparent and attractive pricing.

Implementation

Mantis is capable of implementing its LVS platform in a few days to 6 months, depending on the warehouse’s complexity or the integration with MHE. With Premier, it was determined that a WMS solution adapted to their warehouse operations would be most beneficial in meeting their needs. At the same time, Premier encountered internal IT staffing challenges, which could have stalled the implementation process further. Dedication from the very experienced Premier and Mantis teams enabled the implementation to be completed on time and on scope. Mantis did the bulk of the heavy lifting and only required internal support from a handful of resources at Premier.

Results

Once LVS from Mantis was fully implemented, Premier was able to onboard new clients with very different business needs (from industries such as health care and electronics) in a very short timeframe.

Apart from the core LVS solution, Premier Logitech also deployed several other modules, including:

• Warehouse Vision
• Traceability
• Warehouse Value
• Warehouse Control
• Warehouse Intelligence
• Logistics Billing
• Adaptability
• Parcel Management

These modules provided additional benefits and value-added services, such as billing and cost management, labeling, packing and checking, kitting, light manufacturing, upstream and downstream traceability, operational alerts, and more.

With LVS, Premier now has much greater inventory accuracy (over 90%) and faster turnaround time with fewer resources required. Mantis has also assisted in several demos to Premier’s prospects, which played a significant role in Premier gaining more clients.

Anthony Gelat, Business Relationship Manager at Premier LogiTech stated, “The nature of our business and the services we offer require a powerful WMS solution. There are a lot of moving parts, literally, to our day-to-day operations. Mantis and its LVS solution have been a game-changer for us and have played a pivotal role in improving our productivity and helping us achieve greater growth.”