October 6, 2021

Warehouse Management System Total Cost of Ownership – Part 3

Understanding a warehouse management system’s total cost of ownership is an important part of the success of your project. The license itself is just the tip of the iceberg. There’s more you may or may not be aware of that sometimes gets hidden, depending on how an estimate is written. The first part in this series covered license, support, and maintenance costs, and the second covered replacements and consumables, enterprise infrastructure, facility infrastructure, and education costs. Our final part covers the costs of the implementation and integration.

Implementation and Integration Costs

One of the more obvious (yet still critical) costs of a warehouse management system is the cost to implement and integrate the WMS itself. There are many moving parts in a warehouse management system implementation and it’s important that you have enough staff with the right skills and experience to keep things on track and be successful. Warehouse management system implementation costs to consider and include in your budget will cover both the internal people dedicated to the project and external consulting help if that’s how you decide to run the implementation.

Your internal people of course have a regular day job to do during the implementation and you may need to factor in the cost of backfilling their positions/responsibilities (partially or even fully) until the implementation is complete. If you use external help, implementation costs will be affected generally in the form of labor and travel expenses.

The people on the implementation team will be one of the most important variables to your implementation success, so this is not the right place to cut costs.

It’s important to understand the difference between a fixed fee approach vs. a time and materials approach if you are using external help. Not every consulting firm quotes labor in the same way. A good way to approach the labor variable is to understand what the assumptions are in the implementation plan and if those are mutually agreed upon by you and the external firm. An example of an assumption is, “Are you required to provide the training services, or are training services included?” Sometimes a “train the trainer” type of assistance is offered – this means personnel are trained and then they turn around and train the rest of your team.

Integration comes into play when you have other systems that need to exchange or merely pass information to the warehouse management system, such as an ERP, order management system, material handling equipment, and even time clocks. Integration costs are usually one-time costs at the enterprise level unless each site has its own system and its own integration (this is possible and we’ve seen it happen). Keep in mind that even a WMS from the same provider as your ERP might not truly plug and play. Even if it is plug and play, you will still need to validate that the integration works with your configuration. Be careful to fully understand this critical variable and plan accordingly.

We hope that our three-part series has given you a good foundation for understanding the total cost of ownership for your warehouse management system.

In case you missed our earlier Total Cost of Ownership posts:

Part 1 covers licenses, support, and maintenance costs.

Part 2 covers replacements and consumables, enterprise infrastructure, facility infrastructure, and education costs.