In the never-ending decision over build vs. buy when it comes to software applications, a growing group of pure-play ecommerce providers is opting to develop their own homegrown warehouse management system (WMS), opting for the flexibility on upgrades and functionality over the comfort of relying on a vendor.
But a consultant cautioned that merchants have to consider all the design and upgrade work that goes into ensuring that their in-house WMS keeps on delivering all the functionality and performance they require.
Joseph Gullo, director of fulfillment for motorcycle enthusiast website RevZilla.com, said he designed a system called Revzilla Integrated Distribution Environment (RIDE) about a year and a half ago. Since then, he said, he has been constantly adding tailored functionality that makes sense for his operation.
“It’s all built on the concept of critical path,” Gullo said. “If a worker starts at point A, it forces them to complete point B before moving on to point C – they can’t skip it,” Gullo said. “It guides you along as you complete different actions. It keeps the workflow straight because they do things the same way every time without deviating. That’s how we gain efficiencies.”
Gullo said at this point, with distribution centers in Philadelphia and Las Vegas totaling several thousand square feet, Revzilla hasn’t felt the need to go totally automated with its fulfillment operations. He said RIDE does do inventory management and determines carrier selection based on cost. “We were going to buy a sortation system but figured out a more cost-effective way to do it with automated label printing,” he said. “We don’t need a lot of automation at this point.”
While Revzilla has been approached by a couple of vendors about acquiring RIDE, he said the company has no interest at this point in selling it or making it into a commercially available product, focusing instead on its rapid growth.
“We thought, is the juice worth the squeeze?” Gullo said. “In the end we decided we didn’t want to take our eye off the ball. Since I came here two years ago, with double and triple-digit growth, keeping up on the fulfillment side has been challenging.”
Mike McCabe, vice president of operations for Bodybuilding.com, said his company’s homegrown WMS provides the flexibility of quick customization.
“We don’t have to go to the vendor and spend money on an upgrade – we just send an email to the development team and they jump right on it,” McCabe said. “Within two weeks we have what we’re looking for.”
Like Gullo, McCabe said “tech guys are beating on our doors” wanting to purchase Bodybuilding.com’s WMS capabilities. “It seems to me in interactions with other operations guys at other pure-play ecommerce companies, that 20% to 30% of them are using their own systems.”
Anthony Boatwright, senior manager of supply chain and logistics consultancy The Progress Group, said while there are clearly benefits of developing your own WMS, companies need to consider the resources required to keep it up to date.
“They have to ask what their IT bandwidth is in house, and what will it cost them as an organization if they don’t have enough,” Boatwright said. “We have helped clients develop their own WMS. But the challenge has been that within six months it becomes antiquated and needs to be constantly developed and scaled to meet the demands of the company.”
While it might be easier to maintain in a smaller organization, Boatwright said, even those companies might have multiple DCs and a number of demands from operations managers.
“How do you meet all those demands and continue to develop or scale the base product to meet business goals two or three years out?” he asked. “That’s where a software vendor with a packaged solution has the upper hand. Not only do you get the capacity you need, you also get the capacity your competitors have thought about. Whether you think you need (more functionality) or not, it’ll be available in the next release.”