Gartner is a research and advocacy company that publishes annual reviews in the form of a ‘Magic Quadrant’ (MQ) for a variety of software categories. In this blog, we will take a look at Gartner’s Magic Quadrant for the leading Warehouse Management Software (WMS) solutions.
Gartner’s Magic Quadrant
Gartner performs their research on a multitude of companies that offer a software solution in question but only charts the top companies. The MQ chart itself is broken into four quadrants: niche players, visionaries, challengers, and leaders. In theory, after entering as a niche player, the software solution will skew towards becoming a visionary if they enhance their deployment and solution for customers across different product industries. Others may skew towards becoming challengers when their base software meets the needs of a specific product industry or vertical. If a company does both, then they are considered a leader in the industry.
Ranking and Classification
In the early days of Warehouse Management Systems in the 1980s, few software solutions existed with numerous customers, which caused many new contenders to enter the market. As time went by, a portion of these companies were either absorbed by another WMS company, a software suite looking to expand its profile, or went bankrupt from underperformance. Now, Gartner has identified five different levels of WMS and are as follows:
- Level 1: Storeroom
- Level 2: Putaway and Picking
- Level 3: Barcode Scanning with RF
- Level 4: Drives Resource Optimization Decisions
- Level 5: Integrated with Material Handling Equipment
Level 1 is the storeroom where other functions drive the need for the system besides typical warehousing. The storeroom only uses one location for all the product and is typically used by a sales or support services team. As storage areas grow bigger, Level 2 is used so the user could be assisted to pick up or put down product in one or multiple locations from the entire facility given by the system. More time is saved with Level 3 WMS as they use barcodes for RF guns that scan in real time instead of the user keying in long numbers into a terminal. A Level 4 WMS takes all the data collected in a Level 3 equivalent WMS and uses it to drive decisions for resource optimization especially for inhouse manufacturing. Finally, Level 5 WMS uses a Level 3 or 4 as its base while using machines to perform most of the physical labor.
It is important to point out that to enter the MQ, a solution company must have impressive, continuous sales on a global presence or an incredibly cutting-edge solution. Once a company passes this threshold, Garter will rank them using their own system. Their special tool quantifies 10 complexities of a warehouse that the WMS can handle: warehouse size, warehouse layout/locations, volume of work, cycle time throughput, types of work, adaptability, warehouse constraints, product characteristics, variability, and material handling equipment (MHE) automation. Each of the 10 complexities is valued on a scale from 1-5. If a software company is able to meet their standards of an average offering in each complexity, they will have a ranking of 3. However, the WMS may have a Level 5 classification since it can perform MHE automation. By the same logic, ranking and level can be tied together by first looking at MHE automation. If a WMS solution does not have the MHE automation capability, it will receive a 0 for the section and the highest possible score of a 4.5 and an inability to reach both the ranking and level of 5. With this logic, if a system cannot address variability or portions of the warehouse constraints and product characteristics for manufacturing needs, the system cannot reach a ranking or level of 4.
We can see larger industry trends by looking over years of MQs. For example, visionary companies have a tough time moving forward to the leaders quadrant on their own. They either remain in the quadrant (as seen with Tecsys and Softeon) or are acquired when reaching the middle of the graph (Accellos and Logfire). On the opposite end (with the exception of SAP) all companies who join the leaders quadrant originated from the challenger quadrant.
2020’s MQ, with the exception of Softeon, looks almost like an identity function (y=x) where the company’s vison and strength of its software is equally proportional to its ability to execute a deployment. Although this would be tempting to call stagnation, it is better categorized as honed market positioning. The strength of these positions can be shored by the same characteristics that each company inside the MQ holds. The most evident characteristics are Cloud capability and Level flexibility.
With the exception of Mantis on the current MQ, all companies offer a cloud solution. This matter is important considering 8% of current warehousing companies use the cloud and this number is expected to hit 40%, or a 400% increase. Therefore, these companies are equipped to fulfill a minimum need that is more difficult for smaller companies who outsource to Google Cloud, Azure, and Amazon Web Services.
There has been a trend where there is a bifurcation in the customer market. This split is occurring along the Level 3 and 4 line which has the largest cost/benefit ratio, especially when an established customer operation’s team has a well proven and solidified practice causing larger than normal resistance to change. Therefore, it would be expected that any given companies’ growth pattern would follow the trends of one group, or another depending on the WMS level it offers. However, all of the WMS systems in the MQ have the ability to fluctuate its level, some all the way between Level 1 and 5. The way the WMS software companies achieve this is by having multiple solutions that are on different levels that attract different customers, or they have a solution that is flexible enough to unlock features that would increase the system’s complexity. Therefore, the companies are still able to individually grow and transfer between the two customer groups.
When looking to the future, the question is, what innovations will cause the players in the MQ to shift right (and up depending on execution) that will break the graph’s linear look? First, Manhattan is soon to release a versionless cloud WMS solution meaning customers will have an easier upgrade path for future enhancements and feature sets. In addition, the Korber group is using the other companies it has acquired to work with its WMS software to create new software and hardware features including autonomous pickers. Lastly, Blue Yonder is making strides to provide the most complete solution for customers with large network presences. Like the other companies in the quadrant, Blue Yonder has connected all its systems together, so information can be communicated between them. Blue Yonder goes a step further by creating a piece of software called the “Control Tower”. Not only does the control tower track the company’s goods as it traverses through the system, but it also makes intelligent suggestions on how and when to create more goods and move them to their optimal destination.
As SMEs in the warehousing field, it is our job at Bricz to understand the WMS landscape and recommend the best system to fit a client’s needs. In addition, we take pride in educating ourselves on the newest features from longstanding leaders so that a client can make the most of a system when the feature is released.
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Contributor: Matthew Segars, Supply Chain Consultant at Bricz