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What’s Driving Companies to Buy Software for Warehouse Management?

Date posted: January 16, 2017

Software Advice, a warehouse management system consultancy, recently released its 2016 Supply Chain Management Buyer Report, with results particularly interesting in the warehouse management arena.

 “More businesses in our sample are looking to improve warehouse management than any other area of supply chain management, with 36 percent citing this goal as a motive for software purchases,” notes Daniel Harris, research associate for warehouse management system consultancy at the Gartner-owned Software Advice. “For comparison, supplier management came in second at 10 percent. This suggests that businesses are still struggling to escape the inefficiencies created by the use of manual methods in the warehouse (28 percent of our sample relies on pen & paper, and 18 percent relies on Excel).”

Among the key drivers of new software implementation— the desire to automate systems and improve integration, and the need to better accommodate and manage rapid business growth.

While 46 percent of businesses surveyed already are using some sort of commercial SCM software, respondents indicated a number of reasons they’re looking to replace it, including:

  • Overkill
    Having bought into an expensive ERP suite with many features they neither need nor use, many companies are looking to cut IT costs by implementing more modern, streamlined, and user-friendly software with the functionality they need (i.e., no superfluous functionality).
  • Underkill
    Companies using “light” enterprise supply chain software (e.g., basic accounting with inventory and warehouse management modules) no longer sustainable for their growing businesses are turning to new solutions.
  • Lack of support
    Unresponsive customer support can be a motivating factor in driving companies to look to new software vendors.

Growth Is Demanding Change

Nearly 20 percent of companies surveyed indicated enterprise growth at a level that was straining their current tools and processes. According to the authors, “In many cases, business growth has meant adding more warehouses or more vehicles to the fleet. While their current solutions can handle a single warehouse or a small (fewer than 10 vehicles) fleet, that growth means there are now more cogs in the machine to be mindful of… What this means is that more growing businesses are starting to tie their growth to improving their IT infrastructure—and as such, are positioning themselves for sustained growth over time.”

A Note on Survey Demographics

The survey sample was comprised primarily of manufacturers (60 percent), 3PL firms (32 percent) and other specialty distributors (8 percent). Eighty-three percent of the businesses were small (under 500 employees) or midsize (between 501 and 1,000 employees); seventeen percent were large businesses (more than 1,000 employees).

For a full copy of this B2B Software Advice study, you can go here.