Regional Market Outlook on Warehouse Management 

The versatile business nature of the e-commerce industry is a key market driver of WMS, which is forecasted to be $1.5 billion by 2017, with a CAGR of 13.9 percent between 2015 and 2029.

Current Market Size

  • The North American WMS industry is estimated to be $1.5 billion in 2017 and is expected to grow at a CAGR of 13.9 percent between 2015 and 2019
  • Rebound in trade activities, requiring to manage highly efficient warehouse operations, increasing logistics outsourcing to 3PLs, and B2C e-commerce are the factors influencing WMS market
  • Automobile, e-commerce, healthcare, and food industries are the major market drivers, where service level and lead time influence the growth of each market
  • Tier-1 WMS providers with core functionalities and other peripherals are highly preferred by leading apparel retailers, such as Adidas, Nike in the US and Europe

analysis-warehouse-management.jpg

Growth Drivers and Constraints

Drivers

Growth of E-commerce Industry

  • The e-commerce market is the key driver for the increase in WMS adoption
  • In North America, e-commerce is growing at 8.3 percent CAGR (2017–2021), with a user penetration of 76.5 percent in 2017
  • Fashion products contribute to 20 percent of the overall e-commerce market
  • Omnichannel retailing by e-commerce industries has increased the need for WMS to provide high operational efficiency

Change in Warehouse Operations

  • Increased adoption of automated material handling equipment needs updated WMS to have seamless integration
  • Adoption of cloud-based technologies reduces capital cost and enables WMS to work smarter
  • Multiple channel distribution and just-in time inventory requirement have necessitated WMS to be faster and smarter with additional features and functions, such as slotting, RF tracking, etc.

Customized Analytics Reports

  • Data captured and past data analysis to develop a future plan to be competitive in business
  • Data-driven warehouses help in identifying process bottlenecks
  • Higher adoption rate of 3PL practice in North America initiates the necessity of defined performance metrics, customized to each organization

Market Constraints

Upgradation and Maintenance

  • WMS needs repetitive maintenance and constant upgrade of software, due to the changing nature of the warehousing industry
  • WMS is prone to system bugs, which are to be considered while negotiating maintenance terms

Installation and Integration

  • Changes in current warehouse process are to be captured carefully to customize WMS to suit requirements
  • Training with respect to new functions and features will need labor skill from inter department

Change Management

  • The reluctance to change from the current legacy system to new WMS is an existing threat
  • Shift from on-premise system to cloud-based technology will need high technical expertise for successful implementation

Market Dynamics and Trends

Supply chain professionals have begun to consider warehouse as a growth center rather than a cost center. So, robust WMS solutions with peripheral features are highly recommended for the retail industry to increase service levels with their automated warehouse systems.

Legacy WMS

  • This is the basic WMS, which focusses only on key warehouse operations, which facilitate operators with necessary data
  • The limitations include accuracy of data, single warehouse operation, and high customization cost
  • The software had off-the-shelf functions, in which, only 60 percent was utilized

Advanced WMS

  • This is highly customized with the best-in-class options, which caters to the need of each industry and buyer
  • The advancements in automation and multi-region warehousing operation, due to evolving e-commerce industry, had provoked the development of advanced WMS
  • The advanced WMS processes high level of information and provides bespoke reports, reducing the administrative work
  • Advanced WMS supports new functions, such as slotting, RF tracking, and enables connectivity with mobile devices