In a previous blog post on WMS differentiation, we discussed how the best organizations deploy, manage, augment, and extend their WMS and surrounding applications to create material differentiation and competitive advantage. To quickly summarize, the best organizations have cross-departmental alignment on the goals of templatization, standardization, and have executive buy-in and support. Secondly, they view the WMS as a foundational piece of technology in their distribution network. Technology that provides access to a host of purpose-built point solutions that can extend the value of their WMS investment and supply chain visibility across their enterprise.

Within this blog, we will explore our perspective on the future of the WMS landscape. Specifically, where we expect WMS vendor focus from a functionality and new offering perspective, as well as what we view as the coming convergence between the WMS and Warehouse Control System (WCS) and Warehouse execution System (WES) worlds.

WMS Vendor Focus

As we discussed in the Evolution of WMS Implementations blog post, traditional gaps within the WMS functionality landscape have closed considerably in the past five years. To the point where a typical RFP cannot and should not be conducted based upon raw functional capabilities. With limited exception, the difference between the vendors and fit for a specific enterprise does not reside in functionality. It exists in deployment style, application flexibility, dependence on the vendor, upgradeability, and the vendor’s future plans.

Given this general functional parity, we expect to see a continued focus, or new focus depending on vendor, on extending and opening the application to promote interoperability and connectivity to the overall ecosystem. Most WMS vendors have shifted their messaging to describe their offering and framework either as an open API, a collection of microservice modules, or in some cases both. This allows them to tailor the sale to exactly what functions a client needs, while offering them new and existing ways to extend the functions of the WMS with a client’s own systems, solutions, and in-house development.

This reinforces our viewpoint that the WMS is a foundational bedrock in distribution made for and in support of iterative improvement. Deploying a WMS is not a destination. Additionally, most vendors are pursuing, if it not already there, the idea of a partner-based ecosystem and app store. Case in point, we have offerings available within the Blue Yonder partner portal/app store that range from our own standalone SaaS offerings, to in-house developed extensions to the WMS for both transload and co-pack environments. When successful, a thriving partner ecosystem allows the WMS vendor’s community to grow, improve, and extend the value to every customer organically at a rate the vendor themselves could not match.

The second area of continued and expected focus is the injection of artificial intelligence (AI) and machine learning (ML) into the application. While legitimate use cases are few, the race to broaden and increase the use cases in ways that drive material value to customers is afoot. We don’t predict disruption due to this technology in the next 12 months, but it is on the horizon and vendors will continue to drive exploration. In our view, the first firm that finds a meaningful way to leverage the WMS and surrounding applications as a big data hub from which to drive AI/ML actions will have a window where they have the WMS market cornered. Don’t purchase a WMS based on present AI/ML capabilities, but know that the hype train will become tangible and real. Thus, there is value in aligning with a vendor that has a homogenous view and goal with the technology.

WMS and WCS/WES Convergence

An area of interest and discussion at MacGregor Partners has and continues to be how to successfully implement and integrate automation with the execution systems within a distribution center and how the options to do so continue to evolve. This discussion has become more interesting as automation and robotics demand has been a growing trend within the distribution space for several years, with spending forecasts exceeding $112bn in 2021. The novel coronavirus and corresponding risk to a facility’s workforce has only intensified this shift and focus. In this section, we will explore how WMS and WCS/WES vendors have traditionally solved this problem, how they differentiated themselves from each other, and how that differentiation has eroded. We will close with what the savvy vendors in both camps are doing and will do to capitalize on the market’s demand for automation.

Historically, firms looking to deploy automation had few options. They could retain a firm like Dematic or Swisslog to act as both the intermediary with the steel and automation providers and as the system integrator. Their solutions, called warehouse control systems (WCS), owned the low-level automation logic and integrated back to a WMS for guidance and information on how to process their decision trees. Originally, they were little more than a system that took orders from a WMS, through which it guides the automation. The scope of WCS solutions has grown considerably the past 5+ years. So much so, that a new term, warehouse execution system (WES) emerged around that same time.

The main premise behind the advent of WES was the idea that efficiency and throughput was lost in the typical ‘push’ model. A push model describes the concept of a WMS pushing work to a WCS for execution within the automation zones at a facility. While a push model is not a fundamentally flawed approach, it does force the WCS to react to whatever work the WMS provides post allocation. Work, timing, and volumes that the WCS cannot control. Smart WCS vendors posited that they alone held the key to maximize efficiency with their knowledge of throughput limits within each automation area or zone. This idea and line of thinking birthed WES. A solution intentionally meant to expand the scope of WCS and erode the scope of WMS by bringing the allocation and work release decisions as close to the throughput parameters of the automation as possible. They believed only WES housed the ability to prevent the common problem of flooding a single automation zone while starving others, ultimately robbing a facility of throughput. Thus, in our mind, WES is synonymous with a ‘pull’ model where a WES intentionally pulls specific tasks from a queue of available work, based on demand and automation availability within each zone. Learn more about the origins of WES in this article from 2014 here.

Beyond strictly those solutions dubbed WES, WCS vendors have continued to add functionality to their offerings. They are now able to deploy their solutions in less complex distribution centers that would have previously required both a WCS and a WMS to successfully operate, or even distribution centers without any automation. While a significant step forward for the market in simplifying the technology landscape where automation is concerned, there is still work to be done on the WCS/WES side. The dirty little secret in the WCS/WES world, if such a thing exists, is that the solutions are still very bespoke. The idea of a highly configurable solution with a seamless upgrade path does not exist the way it does in the WMS arena. We do expect savvy and clever WCS/WES vendors to focus heavily on their flexibility and configurability and exploit the opportunity to push WMS vendors out of deals involving automation and take control of a larger portion of the technology spend pie.

On the WMS front, we believe most were late to the robotics and automation party. They were content to let the WCS vendors own the majority of the operational and systemic knowledge from an automation perspective. Most recognized the demand shift in 2019 and announced a significant focus on building either a robotics hub, or integration hooks to allow for interoperability with a variety of robotics and automation vendors. 2020 has seen an even stronger focus from the major WMS vendors to double down on the need to provide automation and robotics hooks, as more and more deals involve automation. As this reactive response to meet the demands of their customers intensifies, we expect to see lines of demarcation between the role of a WCS/WES versus a WMS blur.

Who Emerges Victorious?

The real question, is what does this space look like in the next five years? Who will win this arms race to corner the needs of tomorrow’s distribution centers? Were the WMS providers too late to the party? Are the WCS and WES vendors too far from a standardized and configurable solution?

Our prediction is that the solution sets will continue to converge, and the market is large enough for all offerings to survive. That said, the smartest vendors will find ways to capture larger market share with adroit marketing and rapid solution improvement.

Reach out to our team to learn more about this rapidly evolving space, assistance building your technology roadmap, system selection, or automation implementation.

Written By Jason R. Ziegler, President / CEO

Jason is an entrepreneurial executive with experience spanning sales, software development, supply chain consulting, and emerging technology implementation. He brings a unique and valuable business perspective to any engagement, having sold, implemented, and consulted for numerous Fortune 1000 company’s most transformational supply chain, distribution, and technology projects.