An efficient warehouse management system (WMS) is an invaluable part of a company’s distribution strategy. As omnichannel fulfillment becomes increasingly more popular and complex, WMS systems are too. Companies need to be able to plan and optimize orders quickly and accurately.
However, most companies will struggle with the decision of using their own WMS or using that of their logistics provider.
In an ideal world, the company would manage all of its information within a single WMS platform to increase efficiency and visibility. This could happen with their own WMS or the 3PL’s.
Companies may choose to stay with their own system for the sake of integration and cost controls. Jim Stephens, chief information officer at Port Logistics Group, says “[companies] may not want to invest the time and IT resources to integrate with a new WMS, or fear that they will lose control of how the system is updated and upgraded over time.”
A good 3PL will recognize the importance of this decision. It’ll work with clients no matter which WMS they choose to use. Of course, there are pros and cons to both avenues.
When a customer decides to retain its own WMS, the 3PL must provide a trained staff with the expertise to accurately execute operations. The team should be skilled enough to act as if they were an extension of the customer’s supply chain network.
Although utilizing the customer’s own system optimizes their visibility and increases consistency within the supply chain, it has its drawbacks for the 3PL when the customer experiences dramatic spikes in volume, as it makes it more difficult for the 3PL to quickly move staff to and from accounts to deal with the abrupt change.
Companies also choose to use their own WMS to ensure data and operations uniformity when working with multiple warehouses and logistics services partners. Some supply chain professionals attest that there is a loss of control when they utilize the 3PL’s system.
A logistics provider increases its ability to move labor around on the customers’ behalf when it uses its own WMS across all customers and facilities.
Change is a constant in many industry verticals, and keeping up with the changes entails system modifications that can be costly. When the 3PL uses its own WMS, it eats that cost. The customer would have to foot the bill if they chose to stick with their own system.
Every customer is different, so 3PL’s must be, and have become, skilled in integrating data from all of their customers into one system – their own.
When it’s all said and done, there are three major advantages to relying on the system of the logistics provider. They include faster implementations, relief from the burden of updating the WMS. Also, it means more flexibility in changing locations in the future.
But, these advantages are contingent upon the skill of the provider’s IT staff. Without an IT department that possesses the competence to integrate quickly and adequately, these benefits are immediately negated.
The decision of which WMS to use is not one that should be taken lightly. The pros and cons of both avenues are undeniable. However, the most important issues need to be identified and addressed upon the initial contemplation of a business relationship. Only then will the relationship be beneficial to both the logistics provider and the customer.