5 Questions 3PL’s Need Answered Before Building an In-House WMS

Using Barcode Technology in Inventory Management

So you’re a 3PL considering building your own warehouse management system (WMS). Where do you even start to figure out whether this choice is right for you? Developing in-house depends on your business requirements rather than the inherent qualities of a specific system. A commercial WMS system isn’t always a perfect fit for your needs, but in many cases systems developed in-house also fall short.

You can make an informed decision for your company only after careful research and thought. There are a few key factors that should be considered making a WMS solution decision. Here are five questions you should ask yourself before building your own WMS:

1 – How Much Will You Scale?

Major software companies have begun to develop WMS software over the past decade. Most of these programs focus on the needs of 3PL clients rather than 3PL companies themselves.

The WMS software market is expected to grow by 20% percent over the next several years. As retailers grow and strive to keep up with the market, they also begin to support multiple distribution channels. The higher they scale, the more vital a flexible and powerful WMS software becomes. While you could build your own WMS in-house, it takes a lot of time and resources to adapt a in-house program as your company scales. A major reason to consider a commercial WMS is their research and development resources. In the case of a commercial WMS, the solution providers maintain development teams that soak up the latest technology and can constantly iterate. This is a significant advantage over the typically much smaller staffs retained by 3PL’s who decide to build their own systems. 

2 – What Are Your Core Needs?

One of the first steps you should take as a 3PL is defining your current clients’ needs. You should also define how you expect a software tool to keep track of the business processes. By doing so, you will nail down exactly how you complete transactions within your company, what your key business metrics are, and what you want to provide to your clients as you scale. These factors are huge in determining whether a 3PL has the bandwidth to create a in-house WMS that will match their needs and the needs of their customers. 

3 – Who Are Your Target Clients?

You should also define your target client profile. If you are targeting to serve food companies in the near future even if you don’t have any today, the WMS functions specific to food industry will play a key role.

For most 3PLs, things move so fast that they can sign a contract with a client in an industry that they have no experience with before. In this case, a commercial WMS would have a deeper knowledge base in how this industry works, and how to manage the warehouse efficiently. While you could build an in-house system despite limited experience in another industry, research and development would take up valuable time that could otherwise be spent elsewhere.

Additionally, commercial WMS providers typically offer multiple product types or business models (B2B, B2C, B2Store) that would be difficult to switch to with a in-house system. If your 3PL might venture into other industries, the added flexibility of commercial systems should be considered. 

4 – Can You Handle the Integrations?

As a 3PL, you will need to build integrations with your clients’ ERP software for a seamless service experience. Every WMS will need to be flexible and be able to handle multiple future integrations. Many commercial WMS solutions have already built in that infrastructure many years ago. Commercial WMS providers often have large development teams and have experienced hundreds of those integrations before.

This is especially important to consider if you are providing warehousing and order fulfillment services to online retailers. This is because you will have to connect to hundreds of sales channels such as marketplaces, shopping carts and also shipment carriers, and balance them all. Commercial WMS software companies make huge investments to build strong connections with all these parties and continuously maintain these integrations. If you want to build your own in-house WMS, however, you will have to build these from scratch. 

5 – Is It Worth Your Time?

As a 3PL, your main priority is selling the idea of “outsourcing” to your clients. Your key pitch usually sounds something like, “Let us handle your warehousing and logistics so that you can focus on your business”. Why wouldn’t you apply the same logic to your software needs? If you are not a software company and developing software is not your core business, why spend the time and money developing something that already exists? Before venturing into software development, be sure to ask yourself the questions above. After all, the key is to focus on your business and sell more — not less. 

 

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