Have you ever wondered what drives distributors to invest in a new warehouse management system (WMS)? Is it the promise of improved efficiency and customer satisfaction through automation? Or perhaps the seamless integration with existing enterprise resource planning (ERP) systems? Or maybe it’s the ability to manage inventory better, improve speed and reduce errors and costs?  

Whatever the reason, it’s shocking that – depending on which study you look at – between 15-30% (or more) of distributors still don’t use a WMS to manage warehouse operations. For those holding out, change seems inevitable. The latest study from Grand View Research shows the global WMS market growing at a compound annual growth rate (CAGR) of 19.5% from 2024 through the end of the decade.

To get a clearer picture of how and why distributors choose a WMS and what they look for in a system, I spoke with nearly a dozen distributors from various sectors and across diverse geographic locations. Their real-world experiences and considerations when selecting and implementing a system offer valuable insights to help those without a WMS make more informed decisions for their warehouse management needs.  

Improved Efficiency and Productivity

One of the most important factors driving WMS adoption among distributors is the promise of improved efficiency. Not surprisingly, my conversations illustrated that distributors expect a new WMS to streamline their warehouse operations.  

One respondent noted, “It all came down to efficiency. You can’t efficiently manage a warehouse on paper. Having real-time insight into productivity, lines per full-time employee in a day or month, error rates and physical inventory variances are all critical.”  

This sentiment is echoed by others seeking to optimize their workforce and achieve higher productivity levels. They often consider performance metrics to measure the return on investment (ROI) in a WMS (more on that in a bit). 

Enhanced Speed and Accuracy

The speed and accuracy of warehouse operations greatly impact distribution efficiency. It’s essential to get products moving quickly and accurately so that distributors can meet their customers’ needs on time.  

One distributor shared, “The solution we had required so much inventory movement — and a WMS reduces that amount of movement. That allows us to move the product quicker, not only saving a bunch of time but also getting to the end result a lot quicker. This means that we can have the same number of staff conquering more, or maybe less staff achieving the same amount as we’re already doing.” 

For many distributors, speed and accuracy separate them from the competition. It’s difficult to deliver on those differentiators without a WMS. 

ERP System Integration

Seamless integration with existing ERP systems is another critical consideration for distributors when selecting a WMS as it ensures cohesive data management to improve decision-making and operational flow. One respondent pointed out, “Yes, it definitely was a factor and one of the reasons we started looking at a bolt-on WMS. When you have access to others in the same user community who speak convincingly about their WMS vendor, confidence levels grow.” 

Selecting a WMS with a strong reputation among ERP system users was also noted as being important to distributors. After all, a WMS that integrates well with an existing ERP system can enhance overall business processes to provide a unified system that improves data accuracy and operational efficiency.  

In another instance, a distribution center had concerns regarding the interface with their existing ERP system. This was mainly due to the complex nature of their eCommerce operations, which involved advanced material handling equipment like carousels, a dimensioning system, and more. Finding a WMS provider that had prior experience with their legacy ERP system helped ease these concerns. 

Customer Support and Reliability

One topic that may surprise some is the WMS provider’s reputation for excellent customer support and reliability can be a decisive factor for distributors. As noted in my interviews, having a supportive and experienced team made a significant difference.  

For example, the distributors I spoke with called out the importance of timely responses and expert guidance, which highlights the reliability and effectiveness of support services. Sometimes that even means going the extra mile and meeting a customer face-to-face. One distributor said, “We are a private, family-owned company, and we value all our relationships with vendors, manufacturers, and customers. Meeting someone in person can give you better insight into their demeanor and intentions.” 

You can learn much about how a company treats its customers by asking to speak with some of their other customers. One distributor shared that “users were satisfied with the support and service they received. Also, any questions were answered in a timely manner.” Good customer support ensures that any issues arising before, during and after implementation can be resolved quickly, which can help to minimize disruptions to warehouse operations.   

Return on WMS Investment 

Of course, any conversation with distributors about why they chose a WMS must cover ROI. They assess the potential for time savings and cost reductions relative to the upfront and ongoing costs of the WMS.  

Not surprisingly, numerous success stories underscore the financial advantages of a WMS. As one distributor explained, “We figured we could calculate how much it was going to cost us upfront and monthly and how much time we anticipated that it was going to save. We decided that it was definitely a worthwhile investment.” 

Another distributor shared, “The first evaluation is how can we offset the cost. The biggest is a reduction in workforce – doing more with fewer people. Once you know where you’re at in terms of lines per employee, we can back into the math. You can either grow exponentially or reduce your force to offset some costs. At the same time, you can get a better handle on your inventory, which will help improve your working capital, too. These are all factors we looked at to justify the cost.” 

This financial evaluation includes considering the potential benefits, such as increased productivity, reduced operational costs, and better inventory management, to make an informed decision about investing in a WMS. Based on my discussions, distributors recognize that a WMS can help them manage their inventory more effectively, which reduces errors, minimizes physical inventory variances, and thus leads to cost savings. Or, as another distributor put it prior to deploying a WMS, “Even if we see half the savings presented to us, the ROI timeline on this project is around two years.” 

The insights gathered from various distributors shed light on the many factors that influence the adoption of warehouse management systems. Improved efficiency and productivity, enhanced speed and accuracy, seamless ERP integration, customer support, and financial evaluation are among the top considerations for distributors when selecting a WMS. By learning from these experiences, distributors who have yet to implement a WMS can make more informed decisions and ensure the system they choose aligns with their ongoing operational needs and strategic goals.