In a recent conversation with a client, the discussion centered around why their WMS implementation had failed. The client was trying to better understand what had gone wrong and what they could have done differently. In this case, the client had signed the WMS vendor's contract prematurely, only to discover two weeks later that the bid was incomplete.
There weren’t any estimates for modifications, integrations, conversion and training costs. As a result, the client had been pushed by the vendor to “get into the implementation queue and work out the details later.” Now that the implementation is planned, the company discovered its costs will be 50% higher than originally thought.
Here are the 9 major mistakes we see companies make in selecting these WMS systems:
1) Choosing the wrong team to select and implement a new Warehouse Management System.
It is critical to make sure you have a team that can work together with representatives from each functional area, and a strong project manager. The WMS project team must be able to make timely decisions and keep the executive sponsors up to date with the progress of the project.
2) Failure to develop detailed business requirements with current and future business needs.
Developing a request for proposal (RFP) is necessary for comparing multiple vendor applications, modifications and services, and in developing a gap analysis based on RFP responses. Warehouse management systems are not always comparable with one another, and understanding which is the highest fit with your business is paramount.
3) Limiting the search to a few vendors too early in the selection process.
Keep your options open and work towards documenting the business requirements. Once the vendors have your RFP and have responded, you can then base your decisions on how well various applications address your functional requirements.
4) Not conducting a competitive bid process.
By not comparing multiple WMS solutions, each vendors product product offerings, services and maintenance plans, this can lead to failure. How do you know that you are getting the best WMS solution and partner company for your investment? Are you blindly willing to sign a contract with a vendor because a salesman is enticing you with deep discounts? You are potentially leaving something on the table, and it might not be the best decision for your company.
5) Planning too many application modifications vs. adapting your business processes to the application’s functionality.
At times, modifications are necessary and critical to managing a business. Yet, more often than not, companies are quick to modify an application instead of challenging departments to change a business process to fit an application. Modifications to a WMS can create unnecessary risks and become expensive. We often see companies modify an application, only to remove those program changes a season or two later after they fully understand the vendor’s application. Companies should only plan to modify the application if all other avenues have been discussed and no alternative is suitable.
6) Relying on superficial demos to cover your most critical requirements.
Letting the WMS vendors determine what will be reviewed and discussed in a demo means you will see what they do really well. The demo will not address specific areas of concern to you or the areas in which the vendor may not be so strong, unless you control the narrative. Use your RFP responses to develop a demo agenda, as this will ensure that your business needs are covered. These demos, in conjunction with the RFP responses will help you to better perceive the gaps between the WMS solutions.
7) Expending insufficient time and effort into vendor reference checks.
This is one of the most critical steps in the process. It is where you get a feel for how other customers use the application and vendor support. Once you have narrowed things down to your finalist, the reference checks with their user base will allow you to understand how strong the vendor’s support is. Ask:
- How problematic are the WMS vendor upgrades?
- Is there an active user group?
- How is the implementation process?
- Did they stay on budget?
Try to reach out and talk with as many of the finalist’s customers as possible.
8) Signing vendor contracts before the total investment for hardware, software, maintenance and services has been identified.
Oftentimes, companies do not know the full investment necessary for the various solutions. Vendor proposals aren’t always clear and easy to understand. You need to make sure that you understand the full year-one investment from hardware to software as well as maintenance (due in year one and all future years), project management fees, implementation fees, integration costs, file conversion costs, modifications, etc.
Compare the fully loaded year-one investments and extrapolate them out to three years. Make sure you know the pricing models for licensing as you grow. A solution that has a low year-one investment may become more expensive after three years than one that has a higher year-one investment.
9) Not having an intellectual property attorney review the vendor contracts and statements of work before signing them.
Vendor contracts for the most part lean in favor of the vendor. Knowing what to look for and how to negotiate the best contract for your interest will ensure that all the homework you have done to date doesn’t go to waste. An intellectual property attorney understands software licensing and services contracts, which are vastly different from any other contract. Not all attorneys are capable of thoroughly reviewing these agreements. A good lawyer will show you how to work towards a fair and balanced contract for both you and the vendor.
