Before you move to the cloud ...

When it comes to their software, a lot of warehouse and DC managers have their heads in the clouds these days. Rather than buying a traditional warehouse management system (WMS) and installing it on their corporate servers, they're opting for cloud-based applications that are hosted by the vendor or a third-party on an off-site server, often far away, and delivered via the Internet.

Much of the appeal of cloud-based solutions is their low cost. Companies can avoid a hefty upfront capital outlay for software licenses as well as ongoing expenses for upgrades and maintenance. At present, most cloud-based WMS users are small warehouses that use basic equipment like forklift trucks, bar-code scanners, and radio-frequency devices in their operations.

But what if a user wanted to trade in its forklifts and RF devices for, say, sorters, carousels, pick-to-light systems, or automated storage and retrieval systems? Would it have to rethink its choice of software? Or is it possible to use a cloud-based WMS to run a facility with sophisticated automated material handling equipment?

Not for the faint of heart
Industry experts say that while they haven't seen much activity in this area yet, it is possible to use a cloud-based WMS to manage an automated facility. "Our market is still green with respect to integrating material handling equipment in the cloud, but it can be done," says Frank Camean, president of the 4Sight Supply Chain Group, a supply chain consulting and systems integration firm.

Nonetheless, they caution that this type of project isn't for the faint of heart. Along with the usual challenges of getting an automated system up and running, a company would also have to address some issues raised by remote operation. "Fragility, security, and response time are all issues with cloud-based computing," says Steve Martyn, chief executive officer for systems integrator Glen Road Systems Inc.

In the case of a fast-paced, high-throughput warehouse operation, for example, one of the top concerns would likely be the potential for delays in communications. With a cloud-based setup, information has to travel back and forth across the Internet, making some time lag inevitable. But even a lag of a fraction of a second could be too long for tasks that require split-second timing—like the transmission of instructions from the WMS to a high-speed sortation system. "I have a certain time window to read a bar code and get that information back to the sorter," says Paul Faber, director of software and systems integration at the consulting firm Tompkins Associates.

To prevent these kinds of delays, a robust warehouse control system (WCS) is essential, the experts interviewed for this story agreed. A WCS, which would be installed at the warehouse, essentially serves as a local agent for the remote WMS, downloading information on what items need to be put away or retrieved from inventory and then converting the information into instructions for the sorters, carousels, conveyors, and so forth that carry out the tasks. Because the WCS processes the data on site, it reduces the risk of delays caused by a disruption in communications.

But one software executive cautions that a WCS alone may not be enough. Chad Collins, vice president of marketing and strategy at HighJump Software, says pilots of his company's cloud-based WMS indicated that in some cases, a special "controller unit" might be needed in addition to the WCS. The special controller would sit between the WMS and the WCS, relaying real-time information from the WMS on, say, items needed for a shipment to the on-site warehouse control system.

A matter of volume
Another consideration for a company considering a move to the cloud is transaction volume. No matter how robust a facility's WCS may be, if its transaction volume exceeds a certain level, a cloud-based WMS might not be viable because of the risk of slow response time.

"If you're in a high-volume environment, I'd be hard pressed to see someone doing this," says Camean. "Bandwidth and firewall can become a challenge."

Still, Camean says he wouldn't rule out the possibility altogether. If a company could devise a way to batch communications from the cloud-based WMS to the WCS, he says, this type of setup would work. The WMS would collect instructions regarding which products need to be picked for a shipment; the WCS would then coordinate the activities of the material handling equipment to carry out the task. "Let the WCS do everything that needs to be done and then send word back to the WMS that the actions have been [completed]," he says.

Safe and secure
Another issue that inevitably comes up with cloud computing is data security. It's not uncommon for companies to have trepidations about allowing their critical inventory information and financial records to be stored on a computer many miles away, outside the company's IT domain.

"It becomes a major concern for the customer where the data exists and how they access it," notes Jerry Koch, director of corporate marketing and product management at Intelligrated, a manufacturer of automated material handling equipment. "There needs to be a security scheme in place to provide for [protecting] the information going back and forth [between the WMS and WCS]."

That's why it's so critical to pick the right hosting vendor for the job. Camean advises companies to ask the vendor detailed questions about its data protection procedures, including its processes for data backup and recovery in the case of disaster. He adds that companies should be aware that some hosting services charge extra for data recovery.

It's all about money
Because of their complexity, these types of projects will require extensive testing and debugging before going live, the experts say. In fact, when it comes time for the pilot, they recommend bringing in all of the vendors involved—the suppliers of the WMS, the WCS, and the material handling equipment as well as the software hosting company—in addition to the warehouse's operations and IT personnel.

"Many folks need to be involved ...," says Camean. "It's not as simple as connecting the WMS to the WCS."

Given all the complexities, it seems fair to ask why any company would consider using a cloud-based WMS to manage a highly automated facility. According to the experts, the decision to go with a cloud solution would likely be based on IT-related factors, not by warehousing or distribution considerations. In other words, companies would take this route to avoid having to invest in hardware and software, and more importantly perhaps, to avoid having to maintain an in-house IT support staff.

"The software provider is managing the technology on your behalf so you don't have to develop this IT expertise," says Collins of Highjump. "Limited IT resources would be the driver [for adopting a cloud WMS]," adds Camean. "You could save a ton on labor and maintenance."