Warehouse Management

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

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