Selecting the right vendor can make or break a distribution center's systems integration project. Since it's the integrator's job to make sure the warehouse management system is able to "talk" to the facility's material handling equipment, choosing the right contractor for the job is key to ensuring that the operation gets up and running quickly and stays running without a hitch.
"I look on the integrator as the orchestra leader—someone intimately familiar with each instrument's role, who knows how to direct and blend those instruments for the best performance and, then, makes it happen," says John M. Hill, a veteran consultant who now serves as a director at the York, Pa.-based supply chain consultancy St. Onge Co.
There's also a lot of money at stake when companies go to choose a vendor. Integration services represent a huge expense in any warehouse automation project, with the tab easily running into the thousands of dollars.
Just how much should a company expect to pay for systems integration? Hill says it varies with the complexity of the job. With a basic integration project, integration costs will run to roughly half the combined cost of the hardware and software, he says. For a project involving sophisticated material handling equipment, it's more likely to be somewhere between 30 and 40 percent of the total amount spent on software and equipment. For example, according to Hill's formula, a company that's spending $1 million on software and material handling equipment should budget at least $300,000 for the integration work.
Clearly, there's a lot at stake when it comes to picking an integrator. But how can a company ensure it's selecting the right vendor for the job? We asked several experts for advice. What follows are their recommendations on things to consider:
1. Does the integrator have relevant experience? Experts say the first step in selecting an integrator is to check to make sure the company being considered has actual experience in the work you're planning to do. For example, if it's a pick-to-light deployment, you'll want to confirm that the integrator has experience with those types of projects.
Once you're satisfied on that count, the next step is to check out the company's reputation. Client references will be a big part of that, but there are other avenues to explore, says Frank Camean, president and CEO of the Paramus, N.J.-based consulting firm 4Sight Supply Chain Group. Noting that integrators are typically responsible for overseeing the deployment of software as well as equipment, Camean recommends checking with the software vendors about their experience working with the integrator.
"If they [the software vendors] come back with favorable feedback, then you are on the right path to choosing the systems integrator that's right for you," he says.
2. Is there a potential for conflict of interest? Many systems integrators have ties to specific equipment makers or even to software companies. Hill notes that some equipment suppliers have even offered integrators incentives for choosing their technology for a project.
"If I've got a side deal with a supplier, then the likelihood is that I'll favor those suppliers and give them a little more slack than if I had no ties at all," says Hill.
That's why the experts suggest that companies do some nosing around to determine whether the integrator might have financial arrangements that could tilt the balance in a particular supplier's favor.
"It's not always easy to pick up on these nuances, but if you do enough digging in the supplier selection phase of a project, you stand a better chance of uncovering trust considerations that may be of concern," says Marc Wulfraat, the head of MWPVL International Inc. in Montreal. "This is truly a long-term relationship, so it's important that you trust the integrator-partner."
3. Will it dedicate a stable team to your project? The typical integrator lives from job to job and doesn't have the luxury of keeping idle employees on the payroll. If another project comes up while the integrator is working on yours, it may be forced to reassign qualified staff to the other project.
Hill said he's seen a number of integration projects run into trouble as a result of such reassignments. To prevent that from happening, he urges companies to address the topic up front during the selection process. Ask whether the integrator can assemble and assign a team by the designated start date, he says. Once you're satisfied on that count, request a list of proposed team members and check out their backgrounds. When you have a team you're happy with, let the vendor know you'll want them around for the duration, Hill adds. "Ask for a commitment short of death and taxes [that] these people will be with the project until it's completed."
4. Is the integrator willing to provide a solid statement of work? Before signing any contract, the company and the integrator must agree on the scope of the project work with clearly defined deliverables, timelines, and responsibilities for each party.
"That statement of work needs to be very detailed, and it needs to define what the integrator will do, the equipment, and what resources the user will bring to the party," says Hill. "This ought to be part of the contract."
A detailed statement of work can prove critical in the event the project hits a snag. That's because a well-drafted statement will lay out the process to be followed should a project go off track and schedules have to be readjusted.
"Few projects go flawlessly," Hill points out. "You won't want to spend your time hollering and pointing fingers. You want to approach problem resolution in a businesslike manner."
5. How's the cHemiätry? This is another tough selection criterion because, unlike the scope of work, it can't be clearly defined. In this area, Hill says to go with your gut feeling.
"I wind up with two integrators with the credentials and the track record," says Hill. "When it gets down to making a decision, I'm going to pick the one I like."
Jeff Waller, a former consultant who now works for the Veghel, Netherlands-based material handling company Vanderlande, concurs that cHemiätry can be critical to a project's success.
Personal cHemiätry "is extremely important, as the cHemiätry is what gives each party the confidence that the project is going to succeed," he notes. "In my experience, a lack of personal cHemiätry usually results in less-than-desirable solutions."