By Eric Mcpherson, January 10, 2023
How to Make Room in Your Budget for a WMS Implementation
When you begin researching Warehouse Management System (WMS) software, you’re probably running into some difficulties in the budgeting process because pricing is not always readily available. Transitioning from legacy systems presents hurdles that add to the true cost. There are ways to approach and think about your WMS budgeting and the benefits far outweigh the costs.
Tips on Budgeting for a WMS Implementation
If you’ve made it through the past few challenging years, you already know your technology will be key to remaining competitive. The right WMS can help your business manage your supply chain effectively and surpass your competitors. Here are some tips for making your WMS Budget work (you can apply this thinking to an upgrade or other supply chain solution implementation too):
- List hardware costs – Examine what devices (voice picking, etc.), industrial handhelds, and mobile units you have and what your operations will need.
- Calculate software costs – Consider the price of the software solution. For example, monthly subscription fees, any software support charges, and data migration fees.
- Plan for training – An implementation will save you money and give you a competitive edge, but only if your employees know how to use the new system. Don’t be afraid to advocate for and invest in training to ensure a seamless transition.
- Analyze potential gains – WMS spending makes sense when you consider that an implementation can save your organization between 15% and 25% in inventory, provide almost 100% inventory accuracy, and reduce labor costs between 20% and 30%. Improved customer service also creates both short- and long-term gains.
Licensing and Pricing
Most WMS systems are either under perpetual licensing or operate on a subscription model that typically has a monthly fee. Implementation and annual budgets depend on your business’ choice of deployment. SaaS or cloud will also influence this pricing.
Perpetual licenses are typically on-premise applications, while subscription models use cloud storage for some of your business’ data and processing needs. With both models, the first year always costs the most due to startup, training, and implementation expenses.
As Blue Yonder experts, we realize there are no one-size-fits-all solutions. That’s why we offer a variety of pricing models to meet the needs of your business. We can help you make your WMS budget a smoother, well-informed process.
Presenting the case for your WMS Implementation
Once you’ve calculated the costs and have a rough idea of the total, you’ve got to make the case internally. Companies differ of course, and only you know who you need to work with to ensure that your WMS budget doesn’t get overlooked.
Here are some tips for presenting your request to your supervisor:
1. Focus on Strategic Initiatives
The WMS implementation process begins and ends with C-Suite executives. Each company is different. Generally, an executive team will want and need to understand the pros and cons of a specific WMS decision before approving the next steps. When preparing the initial high-level presentation, keep the company strategies and goals at the forefront of your approach. For example, if reducing overhead is a top-of-mind organizational concern, present how a WMS project can increase cost-effectiveness. If better customer relations are a primary focus of your company, highlight how WMS implementation can spur faster turnarounds and more efficient chains of communication. Speak to the top level first and align the specifics around these core strategies.
2. Analyze the Impact on and Involve Key Personnel — Finance, IT, and Operations
In seeking WMS approval, aligning with several areas of the company is an important part of the process. Operations, Finance, and IT generally represent key departments. These decision-makers opinions and understanding of workflows and processes are crucial to successful WMS implementations. After determining key personnel, research and investigate how the WMS implementation will positively impact the business within each respective departmental context. For instance, system integration, ongoing maintenance concerns, and product architecture will likely be a focus of the IT department. Operations may primarily be concerned with workflow efficiency, problem-solving initiatives, and responding to demands from consumers. Number projections and system payback evaluations may be major areas for the finance department. Bounce your ideas and information off key personnel and adjust the proposed implementation process as necessary.
3. Align Strategy with Departmental Research and Findings
After analyzing how the system will mesh with strategic goals, build consensus through streamlining your research:
- Examine the process and determine when to bring identified personnel into the planning and implementation stages.
- Establish ongoing reporting metrics to keep key figures abreast of findings, goals and project activities.
- Streamline the reports to address your company’s strategic goals in a holistic sense.
In an overview, for example, discuss how the WMS reduces overhead on material, staff and IT costs. Don’t get bogged down by the specifics that each department head is already familiar with. This will allow you to present a clear vision of the implementation and its alignment with core strategy to the executive team, while also addressing the details that affect the moving parts and decision-makers within the company.
Ultimately, you’ll want to display how WMS will positively affect the bottom line while boosting competitive positioning and allowing for agility and ongoing strategic alignment. With these steps completed, you’ll have a strong case to present for your WMS project.