For years, cost and technical issues have kept many smaller companies out of the warehouse management systems market. But the emergence of hosted warehouse systems could change all that.
Like many small warehouse operators, Mike Durand was eager to automate his operation. But technical issues stood in the way: The move would have required him to install a warehouse management system (WMS) and take on responsibility for maintaining and upgrading it.
Then earlier this year, Durand, who is warehouse manager for digital photo finishing lab White House Custom Colour, ran across a company called SmartTurn during an Internet search. The pitch was compelling: For a modest monthly fee, he could use its Web-based warehouse management system to run his operation. The vendor would host and maintain the application, then deliver it as a service. There would be no hardware to buy, no software to install, and no IT staff to maintain.
Though he was initially hesitant about relying on the Internet to serve up the software, that all changed once White House Custom Colour deployed the SmartTurn application in its 14,000-square-foot warehouse. "It worried me a little bit in the beginning," admits Durand, "but after a while, it went to the back of my mind."
White House Custom Colour is just one of a growing number of small and medium-sized businesses (SMBs) that are abandoning paper and spreadsheets and using Web-based software to take their warehouse operations into the digital age. Up until recently, they didn't have that option. WMS applications were not available via the "on demand," or "software-as-a-service," model. If you wanted a warehouse management trickle-down technology system, you had to buy one or write your own. Many small outfits with limited budgets essentially found themselves cut out of the game.
But that's beginning to change. In the past 18 months, software developers like SmartTurn (which is a division of Navis), Click Commerce, and 7Hills have introduced hosted systems designed to help customers take control of their warehouse operations. SmartTurn was the first to market, introducing its ondemand offering in May 2006. 7Hills and Click Commerce quickly followed suit—7Hills with its eBizNETT-WMS software; Click Commerce with its WMX On Demand offering.
Big potential
The concept of hosted software is not new. Software developers have been delivering applications via some type of subscription-based model since the late 1990s. On demand has proved to be a particularly popular delivery model for applications like sales support, transportation management, and even enterprise resource planning. But up until recently, the conventional wisdom held that there was very little demand for WMS delivered over the Internet.
SmartTurn, 7Hills, and Click Commerce think differently. They look at the 600,000 warehouses in the United States and see a huge potential market. The vast majority of those warehouses are small or medium-sized operations, they say. And they're betting that the advantages of the on-demand model—low overhead, low risk, speedy implementation, and access to sophisticated technology—will prove impossible for these small- and mid-sized players to resist.
At least one analyst agrees that it's a viable business model. "There is absolutely a place for low-cost WMS in an on-demand setting," says Steve Banker, director, supply chain management, for ARC Advisory Group.
A study conducted this summer by research firm Aberdeen Group bears that out. Aberdeen's report on the study, Supply Chain On Demand: Enable Flexible Business Processes, showed that while just 7 percent of companies surveyed are currently using an on-demand WMS, 24 percent are planning implementation. That compares to 28 percent who are planning to deploy a traditional warehouse management solution.
Automation with no upfront costs
It's not hard to see the on-demand model's attractions. The first, of course, is cost. With on demand, there are no upfront payments or licensing fees apart from local hardware, such as handheld radio-frequency (RF) terminals and WiFi network infrastructure. Monthly costs are low enough that most operations managers can fund them out of their operating budgets. SmartTurn, for example, charges $500 per site per month.
Another is the promise of quick and easy deployment. SmartTurn says its solutions are typically implemented in two days and require little training. Durand reports that White House Custom Colour was able to configure the solution to fit its needs and deploy RF-enabled handhelds using phone support alone.
Customers are also likely to be pleasantly surprised by the service and support they receive, says Bob Kennedy, vice president of business development at 7Hills. Since an unhappy customer can simply pull up stakes and switch to a rival, the hosting company has a strong incentive to be responsive to that customer's requests. That kind of leverage was rarely available to SMBs in the past, says Kennedy.
The early word has been positive, says Nari Viswanthan, Aberdeen's research director, supply chain and logistics, and author of the report on hosted supply chain software. "Companies using on-demand WMS are saying it exceeded expectations in the cost of software, implementation time, and the cost of ownership," he says.
If White House Custom Colour is any indication, they're pleased with the results as well. Durand says the WMS has streamlined the warehouse's operations, easing the administrative load, reducing the need for physical inventory counts, improving stock visibility, cutting down on stock-outs, and boosting accuracy.
"We've had huge savings in the warehouse," reports Durand. "We're saving a great deal of time just doing everything online as opposed to paper forms."
Making it work
It's important to point out that the technology is not just taking hold at small operations. It's also starting to show up in larger DCs. Although 7Hills' largest customer to date is a 50,000-square-foot DC, the company has a 100,000-square-foot facility coming online soon. And SmartTurn reports that it's in the process of signing a customer that will use its Web-based software to manage a 300,000-square-foot DC. These applications are designed to be highly scaleable, explains Jim Burleigh, general manager for SmartTurn. "The size, volume, or number of users does not matter," he adds.
Still, hosted warehousing software isn't for everyone. On-demand WMS applications are best suited to simple to moderately complex operations. They're not designed for companies with complex processes or highly customized needs, or for highspeed automation environments—while the slight latency in delivering over the Web is a non-issue for human users, remote communication can't keep pace with super-fast conveyors.
While companies with revenues of under $250 million are the sweet spot, vendors are casting their nets wider than that. They also see potential demand from enterprises that need lower-cost solutions to support the largely unnoticed warehouses that many operate, such as stock rooms, satellite facilities, and supply depots in everything from hospitals to utilities to resorts. "That market is 10 times larger than the traditional warehouse market," says Burleigh.
To adapt their systems for use by a varied base of clients, designers must create a simple user interface and enough configuration options to address everybody's needs. Setup entails turning on and off desired functions, such as one- or twostep putaway, according to Burleigh. Configuration requires knowledge of the company's business processes.
When it comes to configuration, Ian Hobkirk of Aberdeen Group cautions prospective customers to beware of vendors that seem inclined to take shortcuts. "There is a tendency in WMS especially for SMB companies, when the vendor is selling, not to want to spend a lot of time discovering business processes," says Hobkirk, who is a senior analyst in Aberdeen's logistics practice. "They tend to oversimplify. But you've got to do your homework and do a thorough business process review." Hobkirk recommends bringing in some type of adviser or consultant to help oversee this process.
Some vendors provide that assistance themselves. Five Star Transport, a Honolulu distributor and third-party logistics service provider, reports that after it signed on to use 7Hills' hosted WMS, the company dispatched a rep to help with the configuration process. "They sent us somebody … for a week who got a good look at our operations, met with people, and talked about what we do and how," says Michael Hruby, president of Five Star. (Five Star is subscribing to a suite of on-demand supply chain execution applications in a bid to attract and retain customers.) The representative helped Five Star work through the challenges of ensuring data format compliance with a large customer, although Hruby admits the process was not entirely smooth.
Watchful waiting
To Aberdeen's Hobkirk, bumpy installations are a potential red flag. He says that on-demand developers need their early installs to be flawless while they build market awareness—and the cash reserves to tide themselves over until demand takes off. Even then, there's no guarantee of smooth sailing ahead. Once demand reaches a certain point, competition is bound to heat up. "Three to four companies have WMS products ready to roll out once the market hits the tipping point for multi-tenant WMS," he says. "Two to three vendors a week ask me [when] I think" that will happen.
Some of the competitors could be formidable. Though the big tier one WMS vendors have concentrated on custom installs to date, Hobkirk thinks they would have little difficulty creating simpler, more generic multi-user versions of their systems. "If a tier one [developer] makes a commitment, they could bring out a product fairly quickly," says Hobkirk.
In fact, most—if not all—of the big players are already offering some of their products via a subscription-based model, which means it wouldn't be much of a leap to add WMS to the roster. "We're already doing on demand for retail, workforce, and transportation management applications," says Jim LeTart, director of marketing for RedPrairie. "We have the capability to do it [for WMS], but we haven't put it in place because there is not demand for it yet."
What are the implications for SmartTurn, 7Hills, and Click Commerce if the giants invade their turf? "When the model is no longer a competitive advantage, they'll have to compete on features and functions," says Hobkirk. "I advise these three players to get as many sales as they can, and they've got to put money back into R&D."
Few doubt that the on-demand model will take hold for WMS. What remains to be seen is the impact on the larger WMS marketplace. "We'll never get to a RedPrairie or Manhattan, but we'll be pretty close," says SmartTurn's Burleigh. "Will the market be willing to pay a lot for a small delta of functionality? That will be an interesting question."
Here's our monthly roundup of some of the charitable works and donations by companies in the material handling and logistics space.
For the sixth consecutive year, dedicated contract carriage and freight management services provider Transervice Logistics Inc. collected books, CDs, DVDs, and magazines for Book Fairies, a nonprofit book donation organization in the New York Tri-State area. Transervice employees broke their own in-house record last year by donating 13 boxes of print and video assets to children in under-resourced communities on Long Island and the five boroughs of New York City.
Logistics real estate investment and development firm Dermody Properties has recognized eight community organizations in markets where it operates with its 2024 Annual Thanksgiving Capstone awards. The organizations, which included food banks and disaster relief agencies, received a combined $85,000 in awards ranging from $5,000 to $25,000.
Prime Inc. truck driver Dee Sova has donated $5,000 to Harmony House, an organization that provides shelter and support services to domestic violence survivors in Springfield, Missouri. The donation follows Sova's selection as the 2024 recipient of the Trucking Cares Foundation's John Lex Premier Achievement Award, which was accompanied by a $5,000 check to be given in her name to a charity of her choice.
Employees of dedicated contract carrier Lily Transportation donated dog food and supplies to a local animal shelter at a holiday event held at the company's Fort Worth, Texas, location. The event, which benefited City of Saginaw (Texas) Animal Services, was coordinated by "Lily Paws," a dedicated committee within Lily Transportation that focuses on improving the lives of shelter dogs nationwide.
Freight transportation conglomerate Averitt has continued its support of military service members by participating in the "10,000 for the Troops" card collection program organized by radio station New Country 96.3 KSCS in Dallas/Fort Worth. In 2024, Averitt associates collected and shipped more than 18,000 holiday cards to troops overseas. Contributions included cards from 17 different Averitt facilities, primarily in Texas, along with 4,000 cards from the company's corporate office in Cookeville, Tennessee.
Electric vehicle (EV) sales have seen slow and steady growth, as the vehicles continue to gain converts among consumers and delivery fleet operators alike. But a consistent frustration for drivers has been pulling up to a charging station only to find that the charger has been intentionally broken or disabled.
To address that threat, the EV charging solution provider ChargePoint has launched two products to combat charger vandalism.
The first is a cut-resistant charging cable that's designed to deter theft. The cable, which incorporates what the manufacturer calls "novel cut-resistant materials," is substantially more difficult for would-be vandals to cut but is still flexible enough for drivers to maneuver comfortably, the California firm said. ChargePoint intends to make its cut-resistant cables available for all of its commercial and fleet charging stations, and, starting in the middle of the year, will license the cable design to other charging station manufacturers as part of an industrywide effort to combat cable theft and vandalism.
The second product, ChargePoint Protect, is an alarm system that detects charging cable tampering in real time and literally sounds the alarm using the charger's existing speakers, screens, and lighting system. It also sends SMS or email messages to ChargePoint customers notifying them that the system's alarm has been triggered.
ChargePoint says it expects these two new solutions, when combined, will benefit charging station owners by reducing station repair costs associated with vandalism and EV drivers by ensuring they can trust charging stations to work when and where they need them.
New Jersey is home to the most congested freight bottleneck in the country for the seventh straight year, according to research from the American Transportation Research Institute (ATRI), released today.
ATRI’s annual list of the Top 100 Truck Bottlenecks aims to highlight the nation’s most congested highways and help local, state, and federal governments target funding to areas most in need of relief. The data show ways to reduce chokepoints, lower emissions, and drive economic growth, according to the researchers.
The 2025 Top Truck Bottleneck List measures the level of truck-involved congestion at more than 325 locations on the national highway system. The analysis is based on an extensive database of freight truck GPS data and uses several customized software applications and analysis methods, along with terabytes of data from trucking operations, to produce a congestion impact ranking for each location. The bottleneck locations detailed in the latest ATRI list represent the top 100 congested locations, although ATRI continuously monitors more than 325 freight-critical locations, the group said.
For the seventh straight year, the intersection of I-95 and State Route 4 near the George Washington Bridge in Fort Lee, New Jersey, is the top freight bottleneck in the country. The remaining top 10 bottlenecks include: Chicago, I-294 at I-290/I-88; Houston, I-45 at I-69/US 59; Atlanta, I-285 at I-85 (North); Nashville: I-24/I-40 at I-440 (East); Atlanta: I-75 at I-285 (North); Los Angeles, SR 60 at SR 57; Cincinnati, I-71 at I-75; Houston, I-10 at I-45; and Atlanta, I-20 at I-285 (West).
ATRI’s analysis, which utilized data from 2024, found that traffic conditions continue to deteriorate from recent years, partly due to work zones resulting from increased infrastructure investment. Average rush hour truck speeds were 34.2 miles per hour (MPH), down 3% from the previous year. Among the top 10 locations, average rush hour truck speeds were 29.7 MPH.
In addition to squandering time and money, these delays also waste fuel—with trucks burning an estimated 6.4 billion gallons of diesel fuel and producing more than 65 million metric tons of additional carbon emissions while stuck in traffic jams, according to ATRI.
On a positive note, ATRI said its analysis helps quantify the value of infrastructure investment, pointing to improvements at Chicago’s Jane Byrne Interchange as an example. Once the number one truck bottleneck in the country for three years in a row, the recently constructed interchange saw rush hour truck speeds improve by nearly 25% after construction was completed, according to the report.
“Delays inflicted on truckers by congestion are the equivalent of 436,000 drivers sitting idle for an entire year,” ATRI President and COO Rebecca Brewster said in a statement announcing the findings. “These metrics are getting worse, but the good news is that states do not need to accept the status quo. Illinois was once home to the top bottleneck in the country, but following a sustained effort to expand capacity, the Jane Byrne Interchange in Chicago no longer ranks in the top 10. This data gives policymakers a road map to reduce chokepoints, lower emissions, and drive economic growth.”
"Shrink" is the retail industry term for the loss of inventory before it can be sold, whether through theft, damage, fraud, or simple book-keeping errors. In the ongoing effort to reduce those losses, Switzerland-based retail tech company Sensormatic Solutions has expanded the scope of its Shrink Analyzer application to shine a light into previously unmonitored parts of brick-and-mortar stores where goods tend to go missing.
The newly enhanced, cloud-based application can now integrate radio-frequency identification (RFID) and electronic product code (EPC) data from overlooked parts of the building, like employee entrances, receiving doors, "buy online, pick up in store" (BOPIS) doors, or other high-risk areas selected by a store. It then integrates that data into Sensormatic's analytics engine to provide insights into when, where, and how shrink occurs to help users strengthen their loss-prevention strategies, the company says.
Those expanded capabilities allow the platform to provide enhanced "shrink insight" at locations beyond the store's main exit, Sensormatic says. For example, strategically placed RFID scanners at employee exits can reduce internal theft while providing item-level evidence for theft investigation efforts. Likewise, monitoring online-order pickup doors can help retailers both improve in-store e-commerce fulfillment accuracy and identify employee theft events, according to Sensormatic.
A few days before Christmas as I was busy preparing for the holiday, I received a text message from my bank asking if I had attempted to purchase a $244 Amtrak ticket in Orange County, California. Considering that I had the card in my possession and that I lived thousands of miles away from the attempted purchase location, I promptly replied "No." Almost immediately, a second message informed me that my card was locked and to contact my bank.
I'd like to say this was an isolated incident, but in 2024, I had to replace the same card four times. Luckily, it just took a quick trip to my local bank to replace the compromised card, but it was still an unwanted hassle.
Fraud is a never-ending issue facing not just consumers but businesses as well—no one is immune, it seems. In its latest industry report, "Occupational Fraud 2024: A Report to the Nations," the Association of Certified Fraud Examiners (ACFE) estimated that businesses lose 5% of their revenues to fraud each year. This report focused specifically on three basic types of occupational fraud: asset misappropriation, corruption, and financial misstatement. But what about other types of fraud?
The media often report on big organized theft rings stealing goods from trailers, trains, or containerships, or on bands of thieves breaking into warehouses or retail stores—but there are so many other ways in which fraudsters wreak havoc.
For instance, another area where fraud is rampant is consumer returns in the retail industry. Software company Appriss Retail, in collaboration with business management consultancy Deloitte, recently published its "2024 Consumer Returns in the Retail Industry" report. It states that "total returns for the retail industry amounted to $685 billion in merchandise in 2024." That might seem like a drop in the bucket compared to the $5 trillion in sales U.S. retailers racked up last year, but as the report's authors note in the executive summary, "the amount of fraud and abuse remains a significant issue that should be addressed. Fraudsters and abusers are often becoming adept at circumventing retailers' controls across all channels."
So what can businesses do? According to the ACFE study, internal controls (i.e., surprise audits, management reviews, hotlines or other reporting mechanisms, fraud training, and formal fraud risk assessments) are the best defense against occupational fraud.
When it comes to consumer returns fraud, Appriss Retail's report concludes that while retailers continue to adapt and refine their fraud prevention strategies, it's a delicate balancing act. The trick is for "retailers to implement solutions that have [a] minimal impact on the consumer experience," the report noted. "Brand loyalty can be fragile and competition continues to grow, so holding onto consumers is often a key to long-term success."
Then there's security and asset protection. Last October, I attended a session at the Council of Supply Chain Management Professionals' EDGE 2024 conference that focused on security and safety. In that session, Lee Ambrose, vice president of business development for Remote Security Solutions (RSS), discussed advanced strategies and technologies for violence prevention. But he also touched on asset/transit protection and specific solutions that can help companies discourage theft.
As an example, Ambrose cited his company's transit surveillance unit (TSU)—a portable monitoring device that can be installed on trailers to protect in-transit freight. According to the company's website, the TSU uses AI (artificial intelligence) detection, security cameras, and two-way communication to deter criminal activity, providing real-time detection and notification when unauthorized persons attempt to enter the trailer. It claims the device has a deterrence rate of 98%.
In the end, sometimes there is only so much a company can do to mitigate fraud/theft. But we are fortunate to have resources we can turn to if we need help. It's an uphill battle, but one that we will keep on fighting.