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Should you use your own WMS or your 3PL’s?

Illustration of warehouse shelves with highlighted barcodes. A forklift is sitting next to the shelves.

A good Warehouse Management System (WMS) is an essential component of a brand’s distribution strategy, especially in the increasingly complex world of omnichannel fulfillment

Efficiently planning, waving, and optimizing orders to be processed in a day or shift reduces cost per order and drives higher levels of customer service. Most importantly, all but the very smallest players require such capabilities for a seamless fulfillment operation.

This means that the question of whether a brand needs its own WMS will inevitably come up at some point. While most third-party logistics (3PL) have a WMS they can make available to their customers, there are some important considerations to be made.

What is a Warehouse Management System (WMS)?

A warehouse management system (WMS) is a software automation system that helps a business or 3PL to manage critical warehouse operations. This includes inventory management, order processing, picking and packing, and shipping. The purpose of a WMS is to optimize the storage and movement of goods within a fulfillment center and to track inventory levels, pick times, and order status in real time. WMS can also be integrated with other important business systems, such as enterprise resource planning (ERP) to provide a full overview of a brand’s retail operation.

Who should manage this data?

Ideally, a brand will want to manage all of its information within a single WMS platform, so it has the same system, processes, and inventory visibility, regardless of whether it owns the WMS or relies on a 3PL. A good 3PL will recognize the importance of this decision and help prospective customers work through the different options early on in the sales process.

According to Jim Stephens, chief information officer at Ryder E-commerce by Whiplash, some companies choose to stay with their own packaged or proprietary system out of consideration for integration costs and control. “They 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.”

“These are legitimate concerns,” Stephens says, “and a 3PL should be prepared to work with clients no matter which avenue they decide to take, since the new processes and procedures may result in higher costs for a 3PL, at least for some time. Moreover, the customer retains responsibility for up-time, maintenance, and user administration.” When a customer does decide to retain its own system, a 3PL must have the trained staff and expertise to accurately and efficiently execute operations as if they were an extension of the customer’s supply chain network. 

One of Ryder E-commerce by Whiplash’s accounts, a national retailer of women’s specialty clothing lines, opted to use its PkMS warehouse management software at all of its facilities and to require each of its 3PL partners to use it as well. 

“They wanted to have complete inventory visibility in one system,” says Stephens. “They wanted a very specific quality control process built into their warehouse processing, and they decided it would be beneficial to implement their own system at all facilities. When they dropped that system into our dedicated warehouse, we brought in our trained PkMS experts and the result was a very seamless integration and a facility that looks and operates just like every other in their network.” 

But implementing a customer’s system in a 3PL warehouse does have its drawbacks. Customers across industry verticals can experience sudden spikes in order volume, and retail and e-commerce are certainly no different. Using the 3PL’s WMS ensures that the provider can rapidly move staff from account to account, creating a more flexible operation.

The challenge of implementing and integrating a WMS 

When a fulfillment provider uses a single WMS across customers and facilities, it increases flexibility to move labor around on its customers’ behalf. 

“Change is a constant in retail, and not only in volume. For example, fashions and tastes dictate new product introductions and discontinuations of older lines. System modifications have to keep in step, but changes can be costly,” says Dennis Tenorio, Ryder E-commerce by Whiplash’s director of supply chain applications. 

A customer that retains its own WMS must foot the bill, whereas the 3PL pays when its system is used. There are still fulfillment costs involved when using the partner’s system, but they are much lower when that investment is outsourced to the 3PL, as the costs are spread across multiple customers. 

“Every customer is different,” says Tenorio., “We can integrate with any customer’s ERP system. Over time, we’ve become specialists in converting customer data and moving it into our system.” 

The ease and length of implementation depend on a number of factors, not least being the complexity of each customer’s needs. Another vitally important factor is the competence of the client’s IT staff. “I like to say, I can only move as fast as my slowest-moving partner,” Tenorio says. 

A flexible 3PL can adapt to changes quickly 

Flexibility is key in every facet of a 3PL-customer relationship, says Sarah Drazetic, chief engineering and process officer at Ryder E-commerce by Whiplash. A client that gives all of its business to a provider, for instance, is advised to align itself with that 3PL’s WMS. Not only is it a low-cost solution for them from an annual maintenance standpoint, but it allows for customization designed specifically to meet the client’s needs. 

Moreover, it more easily permits system changes as those needs evolve. For example, a retailer that changes its business model to accommodate more e-commerce sales will require a different approach to picking and packing. A flexible 3PL that can accommodate those changes quickly is indispensable. 

A customer may insist on using its own system because it wants uniformity in reporting when using a multi-node fulfillment strategy and working with several fulfillment partners. “Perry Ellis International, an international sportswear and casual clothing brand, exemplified that initially,” says Drazetic. “They use warehouses on the U.S. East and West Coasts, in Toronto and in Mexico City, and wanted the same system throughout their operations. However, several years ago they decided to lower their internal cost base and integrate with Ryder E-commerce by Whiplash’s WMS.”

Every organization manages its supply chain differently, and some operators contend that there is a loss of control when they utilize the WMS of their logistics provider. “Not so,” says Joseph Roisman, executive vice president of Perry Ellis International. While his company used its own solution when it began working with 3PLs, the process became too cumbersome, he says. 

Perry Ellis continues to send flat files of incoming inventory to providers, who process orders, print labels, create bills of lading, and ship the product. Clearly, one of the advantages to such an arrangement is that the 3PL has to manage the production and priority of orders, not Perry Ellis. 

“My core competency is selling clothes, their core competency is managing production in the warehouse,” Roisman says. “You don’t set it and forget it, you send the documents, then you have to make sure they have the right process in place, what has been picked and packed and routed for shipment. It’s not like we wait to see what happens. We monitor on a daily basis.” Roisman continues, “You never get a second chance to do things right the first time. You have to do due diligence to see that the 3PL is capable of doing what they are promising and that they have a robust IT department that can deal with anything.” 

Roisman agrees with Ryder E-commerce by Whiplash’s Jim Stephens: any potential issues are identified and addressed when a partnership is first considered. Says Roisman, “You’ve got to make sure that we speak the same language, and you do that before you pull the trigger.”

Mine or yours?

To sum up, there are three major advantages to relying on the WMS of your fulfillment provider: 

  1. Faster implementation
  2. More flexibility in choosing or changing fulfillment center locations
  3. Relief from the burden of maintaining and updating a WMS 

In Tenorio’s view, Ryder E-commerce by Whiplash also brings a fourth advantage: No one implements quicker than us. Check out apparel brand Edikted’s testimonial of onboarding and implementation: 
“We are Shopify-based, so the technical integration with Whiplash was seamless and straightforward. The onboarding process was very professional, and we saw how much of management’s attention went into it. Meeting our launch date was crucial, as well as moving inventory in a way that didn’t cost sales. If we had pushed back a week it would’ve been a disaster for us, so the fact our deadline was met was amazing.”Zvika Alon, COO of Edikted.

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