Linking warehouse complexity to warehouse planning and control structure: An exploratory study of the use of warehouse management information systems

Warehousing is becoming more and more a critical activity in the supply chain to outperform competitors on customer service, lead times, and costs. However, if warehousing is to be a source of competitive advantage, then the implementation of a warehouse management information system (WMS) is a necessary condition to achieve efficiently the high performance of warehousing operations required in today's marketplace. A major practical question is then whether a given warehouse should implement a standard or a tailor-made WMS. A standard WMS offers many advantages; it is a proven solution, it is less costly, the implementation lead time is shorter, and the after-sales service is better. On the other hand, a standard WMS remains largely making compromises between the way a warehouse wants to work and the way the system allows the warehouse to work. In certain environments, such compromises might seriously degrade warehouse performance, in which case it then seems better to implement a tailor-made WMS. To answer the above question, we conducted an exploratory field study of warehouses with recently implemented WMSs to first understand the empirical reality and then build up a theory linking the constructs warehouse complexity and warehouse planning and control structure. Warehouse complexity refers to the number and variety of items to be handled, the degree of their interaction, and the number, nature, i.e. technologies used, and variety of processes, determined among others by the warehouse's position in the logistic chain and the nature of its market. Warehouse planning and control structure refers to the management functions that plan, direct, coordinate and control the flow of goods through the warehouse, from the time of receiving to the time of shipping. It is strongly related to the WMS in use. We found that the number of orderlines to be processed per day and the number of stock-keeping units are the two main observable aspects of warehouse complexity; that the more complex the warehouse is, the more tailor-made the planning and control structure should be; that for simple warehouses a standardized planning and control structure suffices; and that the design of a new-to-build warehouse should be carried out in close concert with the design of the warehouse planning and control structure.

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