September 1, 2009
Column | techwatch

Use what you've bought

If you own the licenses and are paying for maintenance, it makes sense to use all the modules in your logistics management software. So why are so many modules gathering dust?

By James A. Cooke

If you've bought and paid for something, it only makes sense to use it—particularly in recessionary times when money's tight.

That might sound obvious, yet many companies that own logistics management software—especially warehouse management systems (WMS)—have yet to use these applications to their full potential. "Most people buy a WMS and only put in three of the 12 modules," observes systems integrator John Sidell, a senior vice president at the engineering firm TranSystems Corp. based in Kansas City, Mo. "They have all these other modules on the shelf. They own the licenses and have been paying maintenance but haven't been getting the full benefit."

The modules that end up on the shelf are often "extras" thrown in by software vendors during the negotiating process to sweeten the deal. "The software vendors often give additional modules for free," says Philip Obal, president of the software research firm IDII in Tulsa, Okla. "It's a trivial cost to give you another module or two."

When companies go to install the new software, they rarely implement all of the modules at once, preferring to tackle the job in stages. "A lot of folks do a phased-in approach because it's what the company can handle," says Obal. "The vendor is willing and able to activate everything initially. It comes down to what the company can manage without wearing people out or scaring people."

In the case of a WMS, companies typically start by installing the core module, which manages distribution operations and keeps tabs on inventory. But many discover that setting up that core module is more work than they bargained for. That's particularly true in cases where systems integration work is required to get the WMS to exchange data with the company's existing systems (for example, an enterprise resource planning application). Even in those rare cases where integration isn't required or turns out to be relatively swift and easy, things don't always go according to plan. It's not uncommon for these projects to exceed the allotted time and budget.

Discouraged by the time, cost, and amount of effort required to set up the core module, many never get around to installing the other modules. "Due to the missed expectation on budget and time frame, the other modules are dismissed as being too difficult to implement after the bone-jarring WMS project," Sidell explains. "Companies turn their focus on other matters, and three to five years go by and they never got back to the implementation of the other modules."

Trouble is, they end up missing out on applications, that although "non core," still offer enormous potential to boost productivity and performance. These include slotting, which automatically determines the optimal storage location for each item in a distribution center. Another is "task interleaving," which manages work assignments to reduce workers' travel time between tasks. Still another module that frequently ends up gathering dust is labor management, which measures work performance against standards, helping companies identify areas of inefficiency.

Although most of these "deferred module implementations" involve users of WMS packages, it happens with transportation management systems (TMS) as well. Obal says this most commonly occurs with companies that use both for-hire trucking services and their own private fleet. What happens, he says, is the company begins by installing the core carrier selection module, intending to get around to the private fleet modules later. But "later" never comes, and software that could relieve staff members of onerous tasks like fuel-tax calculation ends up sitting on a shelf.

So if you're looking for ways to stretch dollars and increase productivity, you might want to check to see if your company has implemented all of the modules in its logistics management systems. "You want to turn this stuff on because you paid for it," says Obal. "If you paid for three cars, would you not drive one of them?"

About the Author

James A. Cooke
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP’s Supply Chain Quarterly and a staff writer for DC Velocity.

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