F. Curtis Barry & Company Blog

As a basic principle, companies need to ensure that the operations are as efficient as possible, increasing throughput as much as possible while maximizing the capacity and utilization of the space before opting to move to a new facility.  It is critical that the operations have truly taken advantage of the existing facility, due to the high cost of relocating distribution center operations.  

Relocating a facility can, at times, be inevitable, but the disruption of business and impacts on labor mean that you must at first be sure that you have maximized the existing facility. In addition, most major markets are at record levels of warehouse occupancy rates, and lease costs are at all-time highs.  New warehouses being built on speculation are large centers that may not be suitable for small to moderate-sized businesses. 

In our experience, more than 50% of the time, major fulfillment center projects such as a new WMS installation or an automation enhancement are not implemented on time or within budget.   The solutions and new processes a WMS allows for can cause major changes to how inventory is managed, and the ways orders are fulfilled.  It can take months for workers to achieve the expected productivity gains and for companies to get back to and exceed the same level of throughput as before the new system.

True story. A client’s system selection team had arrived at the three best Warehouse Management Systems (WMS) for their e-commerce company. There were still open questions from the demos. The company did not have a total budget yet as costs for modifications and interfaces were not yet identified. No project planning had been discussed. The contractual agreements had not been reviewed by an attorney.

Unbeknownst to the team, the salesperson went around the team to the CFO and proposed a significant discount to sign with his company within the next few days. It also meant paying a non-refundable discount in excess of 25%. After briefly reviewing the potential discount with several senior managers, he signed the agreement and announced the decision.

After months of preparation, systems customizations, file conversions, training, etc., you have just implemented your new ERP, OMS, WMS or Forecasting system. The Go Live isn’t as problem free as you’d like. What next?

 Last week we sent a Request for Information (RFI) for budgetary pricing to three ERP system vendors that we felt best fit our client’s business. We laid out the schedule for how the client expected the system selection to proceed. This list of tasks included sending a Request for Proposal (RFP), analyzing the responses and on-site demonstrations of the software. For some context, the client has sales of $13 million and a budget of $500,000 to implement.

At a recent conference, I had one of the best panels I have ever had on systems strategies.  Joining me were:  Ashley Kohnen, Co-owner, COO, LEM Products, Keith Kirssin, President of BoxInBoxOut and Shao Li, Senior Operations Manager, UncommonGoods.   What made the panel so effective was they easily articulated why the three radically different approaches worked best for providing order management and warehouse management functionality to their company. 

File conversions “don’t get no respect,” as Rodney Dangerfield would say. Everyone knows they need to write programs and convert files. However, it’s not uncommon to leave off detailed discussion of which files and tables to convert, what data fields and how much data (this year’s only or how many years’ history) until the implementation.

Well, we just watched the 402^nd project where management intended to have new operational procedures and training materials developed to accompany the major upgrade of a new ERP system. The procedures were not developed and the users went live on the new ERP system for call center and fulfillment operations.

As we have written many times, 50% of large scale implementations end up over budget and well behind the original proposed implementation schedules. Typically, we have always identified investment in several areas: hardware, operating software, third-party software, professional services and applications licenses. In order to plan initial new system implementation budgets for large scale order management system and enterprise resource planning systems (ERP), it’s prudent to go well beyond these categories of expense and engage in broader based planning and due diligence.