Due to the buyers’ underestimation of data mapping, the wireless network’s lack of support, and the need for extensive change management in addition to their common issue of delayed implementation of SaaS warehouse solutions into the second year of deployment, it is critical that before selecting any warehouse management platform, the buyer avoids evaluating potential vendors until they have mapped their actual order volumes, SKU velocities, and number of bins in their physical warehouse to the vendor's technical architecture.
Through a thorough analysis of the execution features, pricing bands, and hidden integration liabilities of the market’s most viable SaaS warehouse management software platforms, a buyer can determine an appropriate purchasing strategy.
The True Cost of SaaS Warehouse Management Software
A vendor's marketing claims should not be the basis for a software selection. The logistics industry typically obscures the true cost of warehouse management solutions through the employment of per-user licensing and the employment of unknown module add-ons.
The basic tier of cloud subscription rates for mid-market SaaS warehouse management software are available from $100 up to $3,000/month, while enterprise class systems fall into a totally different category with regards to cost. For a single physical site, an enterprise-level warehouse management system (WMS) will cost between $15,000 and $50,000/month.
This monthly software licensing fee represents only a small portion of the organization's initial capital outlay; the implementation services dictate what the actual total cost will be in the first 12 months post-deployment. For entry-level cloud warehouse management system implementations, costs range from $3,000 to $12,000.
Mid-market implementations will generally run between $15,000 and $60,000. True enterprise-level implementations can be expected to take a minimum of 6 to 12 months to implement and require between $200,000 and over $1,000,000 in professional services.
The rationale for spending a high monthly fee on a SaaS solution is predicated on the ability of the solution to provide a clear quantifiable reduction in labor hours. If a SaaS solution costs $2,000/month but provides a reduction in picking times such that it eliminates two manual shifts, it can be argued that it will be paid for in full after a single year.
Conversely, if a warehouse manages fewer than 100 orders per day and pays for an automated solution, it is financially irresponsible to do so. Hardware also adds to the total cost of ownership; therefore, buyers should keep this factor in mind when reviewing any potential SaaS offering.
In order to properly support your warehouse operations from the ground up, you will need to furnish your warehouse floor with industrial tablets, mobile printers, and RF scanners to run your SaaS warehouse management software.
The individual cost of a heavy-duty RF scanner is typically greater than $1,500. Therefore, it would be wise to calculate the associated hardware and associated user licenses, module fees, and hours required for consulting based on a three-year period prior to signing any contract.
How Warehouse Management Systems Create Profit
Workflow execution through the WMS (warehouse management system) is directed through logic which makes the WMS profitable.
Directed Picking and Route Calculation
Directed picking and route calculation are ways to optimize warehouse picking efficiency. Pickers who manually collect items waste significant labor hours walking to and from storage locations to collect their items. Walking typically accounts for more than 50% of a warehouse's total labor cost.
SaaS platforms enable the ability to map the layout of a physical warehouse down to the precise bin location of each item throughout each row and aisle of the warehouse. The SaaS system will receive orders from ecommerce on the front end, aggregate the orders into logical batches, and determine the most efficient walk path to take to retrieve each item from the floor.
The picker simply views the order, walks down the directed path, and scans the items as they pick them up, following the correct sequence. In addition, the system actively blocks a worker from walking past an item that will be needed for another order in three minutes.
This mechanical routing reduces the time that a floor worker will spend traveling physically for their job. Therefore, if a direct-to-consumer brand were to process an average of 2,000 orders per day, by reducing the pick time by 15 seconds per order, it would save such a company thousands of hours per year.
Automated Putaway by Selling Speed
Automated putaway logic by SKU velocity reduces the likelihood of creating backlog at the receiving dock by the receipt of freight. If a company receives product with receiving dock delays, workers have no guidance as to where to place the inbound freight.
Putaway logic will systematically direct and/or determine the location of incoming product stock. As such, the putaway logic will always ensure that fast-moving products will be stored near the packing stations, while ensuring empty locations are not occupied by slower-moving products.
The software places very slow moving items on the far back of the warehouse, on tall racks that are up high. It also tracks the selling speed or velocity of each individual product and then automatically determines the best location for storage based on this selling velocity.
A worker scans a pallet as it is being unloaded from a truck at a dock location. The scan immediately tells the worker which exact storage zone, aisle, and bin to place the pallet in, based upon that product's characteristics. The inventory software will also prevent the worker from placing a refrigerated product in a non-refrigerated zone if the item sells at a high velocity.
Cycle Counting and Inventory Control
The annual complete count will involve shutting down warehouse operations for days. The complete count is a very costly and outdated way of managing inventory.
Modern day WMS platforms are designed to run a continuous cycle counting system based on product velocity classes. High volume products are counted on a weekly basis, dead products are counted once a year. The inventory software includes the process of cycle counting within the workers' daily pick path.
For example, while the worker is picking a high volume item to fulfill an order and scans it, the software will notify the worker to perform a cycle count on the remaining inventory that is located in that bin prior to leaving that bin with the picked item. Therefore, the worker can maintain an almost perfect level of inventory accuracy, without connecting the outbound shipping of product or pausing for a cycle count.
Third-Party Logistics and Multi-Client Architecture
Third-party logistics (3PL) providers are typically required to operate under a completely different set of rules compared to traditional warehousing companies. Therefore, utilizing a standard inventory system is a recipe for failure in a 3PL environment.
In a multi-client WMS, the product is split up between client A and client B and the inventory management rules, picking rules, packing rules, and billing rules are set up differently for each client, but the software and WMS technology can still run in the same physical building.
The only substantial difference between clients in the 3PL environment is the billing component. Advanced WMS technology captures every single physical touch point. Each time a worker handles a pallet, puts away a bin, or prints a shipping label, the system logs the activity, and immediately applies the respective rate card for that client so there will never be a revenue loss. All physical activities will generate revenue.
Comparing Top SaaS Warehouse Management Software Providers
The range between Tier-1 through Tier-3 software capabilities is enormous. If you purchase too much software, your business will be paralyzed by being unable to operate effectively. If you purchase too little software, in a year from now, you will most likely have to migrate entire systems, which is going to be a major expense and hinder future growth.
1. Manhattan Active Warehouse Management
This Tier-1 software provides the necessary tools to manage large, multi-location, complex distribution networks. It incorporates all elements of inventory control, labor management, yard operations, and equipment automation into one centralized platform.
Pricing for this software is exorbitantly high and completely custom. A company can expect to pay anywhere from $15,000 to more than $50,000 per month for the software at each location. Implementation projects can take up to a year and cost anywhere from $200,000 to $1 million or more.
This software has maintained the position of being a Gartner Leader 18 times in a row and has a huge presence in the marketplace with approximately $2.35 billion in remaining obligations recently. Do not consider implementing this software unless your revenue exceeds $50 million. The sheer amount of complexity involved will cripple a standard ecommerce team. For very high volume enterprise operations, this software will provide complete control.
2. Blue Yonder Warehouse Management
This software functions as a direct competitor to Manhattan. Blue Yonder focuses primarily on providing AI-based solutions to execute supply chains, manufacturing, and logistics, and incorporates many different strategic capabilities from an integrated view of how supply chains operate and manage through the use of physical control towers.
Pricing structure for Blue Yonder is in a modular format. Each module will run approximately $100,000 for one year. When you look at Blue Yonder modules over the course of three years, expect to spend millions of dollars on them.
The process of the 20 billion daily AI predictions is a claimed process for optimizing floor activity. Buyers have the same advantage in this tier of enterprise solutions using Manhattan versus Blue Yonder during the procurement process, typically resulting in discounts of about 8 to 12 points at contract renewals.
3. SAP Extended Warehouse Management (EWM)
The SAP Extended Warehouse Management (EWM) solution provides companies with a high degree of physical execution control who already utilize other SAP solutions. While the solution is part of the larger SAP ecosystem, it operates as a unique workstream and subscription from SAP's base ERP product.
Implementing the solution requires extensive professional services expenditures, and project budgets typically exceed the few hundred thousand to few million dollar ranges in North America and Europe. In India, use of this solution can range from 50 lakh rupees up to several crore rupees.
Assuring that the solution is configured correctly and connected to third-party parcel platforms will help ensure that users can expect reductions in total processing times of approximately 20% to 25%. Implementing the EWM tool without a highly automated business structure or dedicated internal IT resources is likely to result in a major strategic mistake for any organization.
4. Oracle WMS Cloud
Oracle has built its enterprise execution capabilities on top of its broad supply chain and ERP product line, allowing for integration of both physical and informational workflows across the entire supply chain.
Oracle maintains a custom pricing model for all of its solutions; implementation projects frequently exceed the $100,000 to $1 million milestone. Oracle has consistently ranked among the top tier solutions for enterprise implementations, so only companies with existing Oracle database infrastructure should evaluate and invest in the Oracle WMS Cloud.
5. NetSuite WMS
NetSuite is a natively built module of a larger business management platform (ERP). The NetSuite WMS solution enables users to maintain complete bin tracking, perform wave planning, and operate wireless bar code scanning equipment within the NetSuite environment without the need to create external interfaces or connections between systems.
NetSuite is a costly solution. The base monthly fee for a user is approximately $999. For additional users, expect to pay an extra $99 to $199 per user.
The warehouse management system (WMS) adds $1,000 to $3,000 monthly on to $25,000 to $150,000 in total implementation. Thus, it really is not a journey small 3PLs or growing brands should take on because of the heavy set-up cost; rather, it will serve solely a growing distributor in the mid-market dedicated to using NetSuite without third-party software connections.
6. ShipHero
ShipHero caters primarily to the DTC ecommerce market, processing 200 to 2,000 orders daily using a hybrid business model to offer both SaaS software and 3PL services.
ShipHero's standard monthly subscription is approximately $1,995 for its core service and $2,145 for the dedicated 3PL service, and additional users can be added for approximately $150 each. ShipHero includes best-in-class directed picking, pack verification, and quick carrier rate shopping.
For mid-market companies outgrowing the basic inventory limits provided through Shopify, ShipHero provides a great option for cost-effective solutions, as it enables a high level of labor efficiency that is more than enough to cover the monthly subscription cost.
7. Extensiv
Extensiv has designed its platform to target 3PLs and companies with multiple fulfillment locations to allow for flexible billing solutions, enabling businesses to meet diverse client needs.
Extensiv offers both an introductory price of approximately $599 per month and also has high-volume growth tiers that are available on a custom quote basis. It has implemented an AI tool called Knowledge Mode and delivers highly effective batch picking capabilities. If you run a 3PL and struggle with manual invoicing and lost revenue, the Extensiv solution will yield tremendous results immediately.
8. Logiwa
Logiwa's focus is on creating advanced orchestration capabilities across multiple warehouses. Logiwa is also competing heavily against 3PL contracts, as well as offering advanced solutions for complex DTC fulfillment operations.
Basic packages usually cost approximately $500 per monthly subscription, but there are also more advanced packages available which can cost upwards of $2,500 monthly for more robust enterprise services. They provide DTC businesses the ability to manage high volume distribution of multiple locations efficiently, with strong concentrations on managing surges of direct-to-consumer orders.
9. SKUVault
SKUVault offers high-volume distribution services to DTC brands and third-party logistics services that need to optimize picking and packing processes. The emphasis of the service is on deep-level accuracy of inventory across all sales channels.
The cost of using the service is around $1,000 each month and increases based on the number of warehouse space locations as well as overall order levels. The platform provides a large amount of control over the complete process while not committing to a large enterprise software solution.
10. Fishbowl Advanced Warehouse
This software solution solves the gap for existing manufacturers and distributors located in the United States with QuickBooks as their main source of bookkeeping. Fishbowl Advanced Warehouse also extends to those who require in-depth manufacturing capabilities like bill of materials and complex work orders.
The minimum subscription price for the Advanced Warehouse tier is around $595 monthly, while a small team has several options ranging from $229 to $729. Implementation consulting will cost an additional $2,000 and up to $10,000.
You cannot complete implementation services without working with a professional implementation consultant, and this solution is perfect for any company with a product that needs to continue using QuickBooks accounting software.
11. Zoho Inventory
Zoho provides a low-priced software application for online retail and is delivered through an internet connection. The initial setup and configuration are extremely simple and can be completed with little to no tools, and there are many integrations available between Zoho Inventory and other popular retail applications.
A free version of Zoho Inventory is available for microsellers with fewer than 50 orders each month. The Standard plan is $29 each month for 1,500 orders. The Premium plan costs $129 each month and allows for a maximum of 15,000 orders, adding serial and batch tracking functionality.
There is an enterprise-level plan available for approximately $249 each month. The software has been determined to not support the full capabilities of a warehouse management system, as it does not incorporate picking logic or advanced putaway rules.
Other Notable Mid-Market and Small Business Solutions
1. HighJump and Infor Cloud WMS
Both HighJump and Infor have offerings for mid-market to enterprise-level companies. HighJump is frequently rated among the best in terms of deep feature and overall value propositions for mid-sized warehouses.
The Infor Cloud WMS offers specific workflows for different industries and interfaces directly into their complete suite of supply chain solutions.
2. PackemWMS
PackemWMS positions itself as a replacement WMS in direct competition with NetSuite WMS for the 3PLs that want to reduce the high cost and complexity of implementing an ERP.
The monthly fees for software are fixed, meaning that anyone who needs it can pay one set price regardless of the number of users or the features they need. Unlike ERP systems, the PackemWMS is free to implement for users, and 3PLs can get set up in a very short period of time without having to spend thousands of dollars in implementation consulting fees, therefore reducing costs and enabling faster adaptability.
3. ShipStation and Ordoro
If your order volume is under 100 to 200 per day, do not purchase a complex WMS.
ShipStation costs $25 to $160 per month. Ordoro offers free basic shipping starting at $59 per month, with options for inventory features. Both solutions provide batch label printing and printing basic picking lists. There is waste in paying thousands of dollars for shipment route optimization if your volume is low.
Common Problems When Setting Up New Warehouse Software
Software is not useful to businesses until the building that they are working out of provides the necessary physical ability to do what the software does. In many cases, the downtime caused by operational friction points has stopped more software implementations from going live than software bugs have.
The Importance of Clean Data and Accurate SKU Sizes
In essence, if a business uses bad physical data, software cannot fix that problem. The first day of operation with your new warehouse management system (WMS) will likely be successful if the dimensions, weights, and barcodes for your current items on file are accurate. However, if they are not, you will not be able to utilize the WMS properly and things will come to an abrupt halt on day one.
The time needed to complete the clean-up process on your master data is consistently underestimated by the teams that are implementing the new WMS. When preparing for the implementation of WMS, teams should measure the dimensions and weight of every SKU (stock keeping unit) and box to ensure accurate input into the new WMS.
The success of the new WMS depends on the accuracy of the clean data migration process. If an SKU is entered into the new WMS with an incorrect dimension listing, when the putaway logic tells workers where to put items, they may not be able to fit large box sizes into the small bin locations, which will stop the receiving portion of the process entirely.
Wireless Network Infrastructure Requirements
In addition to needing to have the current data prepared to start using WMS, you will also have a strong need for an adequate physical wireless network infrastructure to support the operation of your new WMS.
Because the cloud-based software will be used as the basis for operating your new SaaS warehouse management software, the building must be wired and connected to the main server for operation of the WMS.
In order for your warehouse to operate properly with the new WMS, you must have a working and fully functional wireless network system. Any area of your warehouse that is not covered by a wireless signal (e.g., a dead zone) will not allow team members to scan an item, therefore breaking up the batch pick in real time for that SKU and delaying the receiving process in its entirety.
A full site survey of your warehouse is required as part of the capital expense process prior to signing agreements for new WMS software. As part of the clean data process, you will also be required to label every bin, shelf, and rack with an exact readable bar code, which is extremely time-intensive and will cause major delays to the rollout timelines for the new WMS software.
Managing Software Connection Costs
In addition to preparing your master data as clean and accurate before starting to use a new WMS, you will incur significant financial costs as a result of the connection of a new WMS to your existing ERP (enterprise resource planning) module.
The process of connecting a new WMS to your existing ERP will create an exceptionally high degree of risk within the organization as it relates to the use of electronic data interchange (EDI) data connections from your existing systems. EDI data connections are frequently being interrupted or broken due to the technical architecture of older systems. In contrast, modern WMS systems utilize RESTful APIs which provide a secure way to exchange all of your inventory data and allocate your inventory to your stock in an almost instant manner.
Companies such as SAP and Microsoft Dynamics 365 offer their warehouse solutions in addition to the base supply chain management (SCM, an acronym with the words "supply chain" preceding "management") subscription. The theory is that you get the basic ERP system and pay for another subscription to obtain use of the warehouse execution module.
The compounded costs of these two products can be extremely damaging to your IT budget unless you create a rigid three-year plan to budget for these expenses. When assessing which software would best serve your specific requirements, demand technical proof during the demonstration phase of how the software will communicate with your particular accounting application.
How to Choose Software Based on Your Daily Orders
You must align your specific square footage to the tier of software you are purchasing. If you purchase outside of this specific volume range, you are virtually guaranteed failure.
Under 200 Orders Per Day
A business processing fewer than 200 orders on a daily basis should rely on basic shipping software.
You should utilize basic shipping software such as ShipStation, Zoho Inventory, or Ordoro. Concentrate on order batch printing and simple stock synchronization. Do not attempt to implement directional picking or purchase RF scanners at this time because of the lack of volume to justify those capital costs.
300 to 2,000 Orders Per Day
A mid-market distributor that processes 300 to 2,000 orders per day operating out of a warehouse that occupies 25,000 to 100,000 square feet has the option to purchase an ERP module or a mid-market SaaS warehouse management software solution.
For example, the total project budget for a mid-market distributor will likely fall between $75,000 and $200,000. The mid-market distributor should be prepared to implement a directional picking system, as well as establish exact bin locations and fast carrier rate shopping capabilities.
The mid-market distributor as such should not attempt to move toward Tier-1 enterprise software due to the potential for staff to not be able to utilize the additional features.
High Volume and Multiple Locations
If your company operates from multiple locations, relies on significant conveyor belt automation, and requires detailed labor forecasting capabilities, you must consider purchasing a larger system.
The only options to consider would be Manhattan, Blue Yonder, SAP EWM, and Oracle. There are many factors that dictate the budgets associated with these systems. First and foremost, budgets can start at approximately $600,000 and easily reach upwards of $2,000,000.
In addition, you will most likely require the use of internal IT personnel to manage the vendor and implement change management over a 12-month period.
Stop Delaying Your Software Decision
Finally, the operational cost of indecision within your organization will negatively impact profit margins faster than any other customer software investment.
If you do not force your teams to map exact daily order volume against the above-listed technical architectures, you will allow fulfillment errors to progressively erode your organization's operational capital.
