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ANALYSING WHETHER COMPANY X SHOULD IMPLEMENT A WAREHOUSE MANAGEMENT SYSTEM

Kycyku, Kushtrim LU (2024) MTTM05 20232
Engineering Logistics
Abstract
A Warehouse Management System (WMS) is a software that tracks and
manages warehouse activities. The first WMS was introduced in 1975 and today the
WMS market is valued at over USD 3 billion. Most warehouses use one as quality
assurance becomes unlikely plausible without software support. This thesis focuses on
Company X, who are the third-largest manufacturer by revenue in their industry and are
active in more than 150 countries. Company X has existed for more than 200 years, and
since the 19th century in City X, and predate the creation of the warehouse management
system. Combined with an overall focus on the production part of the site, they have not
implemented a WMS (Warehouse Management System) for their warehouse yet.... (More)
A Warehouse Management System (WMS) is a software that tracks and
manages warehouse activities. The first WMS was introduced in 1975 and today the
WMS market is valued at over USD 3 billion. Most warehouses use one as quality
assurance becomes unlikely plausible without software support. This thesis focuses on
Company X, who are the third-largest manufacturer by revenue in their industry and are
active in more than 150 countries. Company X has existed for more than 200 years, and
since the 19th century in City X, and predate the creation of the warehouse management
system. Combined with an overall focus on the production part of the site, they have not
implemented a WMS (Warehouse Management System) for their warehouse yet.

Company X believes that it would be difficult to make
warehouse improvements without a WMS as it would be too time consuming to plan
everything manually at the scale of their warehouse. Company X currently use an ERP
from SAP and with this they have an internal policy to not use any external software. The
policy also prevents them from using external companies to make an analysis regarding
a WMS implementation. Therefore, the purpose of this thesis is to increase
understanding of how to analyse whether a company should implement a WMS or not.
The purpose is answered by researching the benefits and problems of different WMS
features, how external factors influence the warehouse performance and the WMS
features, and how a WMS implementation is translated into financial gain.

The theoretical framework consists of four
sections: warehouse operations, core WMS features, KPIs (Key Performance indicators),
and lastly a section briefly explaining ABC-classification and path-optimizations since
they were brought up a lot in the findings. The method used in this thesis was an
abductive holistic multiple-case study, with inspiration from Yin’s (2018) method of how
to do case study research. Data based on 15 KPIs related to warehouse efficiency was
gathered at Company X and then three WMS vendors were interviewed along with two
customer companies to the vendors, in order to compare and generalize the findings
rather than optimizing one specific case. The cases were analysed with cross-case
synthesis, where they were compared to each other, and analysed with the literature
using pattern matching, where the results were compared to the literature.

The case interviews showed that all 15 KPIs were likely to be
positively impacted by a WMS implementation. The impact depends on many
influencing factors. A WMS gives full visibility and control of goods in a warehouse and
the opportunity to improve the flow-speed of the warehouse. It also eliminates most
human error related problems in warehouses. There are many benefits and very few
problems with implementing a WMS. Company X can benefit from implementing a
WMS; in Company X’s case the benefits would mostly be found in picking and put-away
through optimised pathways, ABC-classification, and multi-picking. The optimised
picking and put-away can also impact their storage positively. (Less)
Popular Abstract
To WMS or Not to WMS: Company X’s ConundrumWhether or not to implement a Warehouse Management System (WMS). For many this choice is easy to make. Company X is a
manufacturing company that has existed long before the creation of the WMS. Due to
an internal policy, they are prohibited from consulting external companies other than
SAP. This is where I come into the picture! To increase their knowledge on whether to
implement a WMS or not.

What would you do if you had a hand-held device that makes you all-knowing and in
control of everything? Manage your warehouse! A WMS gives you absolute visibility and
control of all goods and operations in a warehouse, and it is often accessible from a
handheld device. With an advanced... (More)
To WMS or Not to WMS: Company X’s ConundrumWhether or not to implement a Warehouse Management System (WMS). For many this choice is easy to make. Company X is a
manufacturing company that has existed long before the creation of the WMS. Due to
an internal policy, they are prohibited from consulting external companies other than
SAP. This is where I come into the picture! To increase their knowledge on whether to
implement a WMS or not.

What would you do if you had a hand-held device that makes you all-knowing and in
control of everything? Manage your warehouse! A WMS gives you absolute visibility and
control of all goods and operations in a warehouse, and it is often accessible from a
handheld device. With an advanced system you could know already in the morning the very
minute that you would finish your last shipment

Having the visibility and knowledge of where everything is and how much of everything there is, is the foundation of a WMS that allows for much more advanced features as well. Three features that could benefit Company X the most are ABC-classification, path optimization and multi-picking.

Imagine your kitchen as a warehouse and your brain as the software. Having no warehouse
software would be like having the memory of a fish. Every drawer would be filled with random objects, kitchen utensils, glass and plates would all be placed together. The first benefit of warehouse software is knowledge of where everything is. Instead of gambling that a drawer has a knife, you know for certain whether there is one or not. A WMS is like activating your brain even further. Instead of just remembering where you’ve put your objects, ABCclassification would designate objects to drawers and prioritising their locations to optimise after your needs. For instance, glass closer to the sink and utensils closer to the stove.

With path optimization and multi picking you would also be able to choose the shortest paths between your drawers and pick up multiple objects at a time. Instead of picking only forks, then only spoons and then only plates, you could stack all utensils on the plate and bring them to the table in one go! While also doing it in the shortest distance possible.

This study is a multiple-case study where 15 KPIs (Key Performance Indicators) related to
warehouse efficiency are tested with WMS providers and customer to the providers in order
to create a generalized analysis on the benefits, problems, and influencing factors on a set of core WMS features. This solves the issue for Company X, equipping them with enough
knowledge to determine whether or not they want to implement a WMS. It can also be used
by other companies for the same reason; anyone could measure the given KPIs for their
warehouse and draw knowledge from the conclusion of the study to determine how they
would be impacted. (Less)
Please use this url to cite or link to this publication:
author
Kycyku, Kushtrim LU
supervisor
organization
course
MTTM05 20232
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Warehouse management system, WMS, Key performance indicators, KPI, warehouse efficiency, ABC classification, influencing factors.
report number
6008
language
English
id
9150424
date added to LUP
2024-04-24 16:04:56
date last changed
2024-05-13 17:41:17
@misc{9150424,
  abstract     = {{A Warehouse Management System (WMS) is a software that tracks and 
manages warehouse activities. The first WMS was introduced in 1975 and today the 
WMS market is valued at over USD 3 billion. Most warehouses use one as quality 
assurance becomes unlikely plausible without software support. This thesis focuses on 
Company X, who are the third-largest manufacturer by revenue in their industry and are 
active in more than 150 countries. Company X has existed for more than 200 years, and 
since the 19th century in City X, and predate the creation of the warehouse management 
system. Combined with an overall focus on the production part of the site, they have not 
implemented a WMS (Warehouse Management System) for their warehouse yet.

Company X believes that it would be difficult to make 
warehouse improvements without a WMS as it would be too time consuming to plan 
everything manually at the scale of their warehouse. Company X currently use an ERP 
from SAP and with this they have an internal policy to not use any external software. The 
policy also prevents them from using external companies to make an analysis regarding 
a WMS implementation. Therefore, the purpose of this thesis is to increase 
understanding of how to analyse whether a company should implement a WMS or not. 
The purpose is answered by researching the benefits and problems of different WMS 
features, how external factors influence the warehouse performance and the WMS 
features, and how a WMS implementation is translated into financial gain.

The theoretical framework consists of four 
sections: warehouse operations, core WMS features, KPIs (Key Performance indicators),
and lastly a section briefly explaining ABC-classification and path-optimizations since 
they were brought up a lot in the findings. The method used in this thesis was an 
abductive holistic multiple-case study, with inspiration from Yin’s (2018) method of how 
to do case study research. Data based on 15 KPIs related to warehouse efficiency was 
gathered at Company X and then three WMS vendors were interviewed along with two 
customer companies to the vendors, in order to compare and generalize the findings 
rather than optimizing one specific case. The cases were analysed with cross-case 
synthesis, where they were compared to each other, and analysed with the literature 
using pattern matching, where the results were compared to the literature.

The case interviews showed that all 15 KPIs were likely to be 
positively impacted by a WMS implementation. The impact depends on many 
influencing factors. A WMS gives full visibility and control of goods in a warehouse and 
the opportunity to improve the flow-speed of the warehouse. It also eliminates most 
human error related problems in warehouses. There are many benefits and very few 
problems with implementing a WMS. Company X can benefit from implementing a 
WMS; in Company X’s case the benefits would mostly be found in picking and put-away 
through optimised pathways, ABC-classification, and multi-picking. The optimised 
picking and put-away can also impact their storage positively.}},
  author       = {{Kycyku, Kushtrim}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{ANALYSING WHETHER COMPANY X SHOULD IMPLEMENT A WAREHOUSE MANAGEMENT SYSTEM}},
  year         = {{2024}},
}