System overload

Following years of growth in the Middle East, will demand for warehouse management systems (WMS) be impacted from the global recession?

During its latest chapter of growth, the Middle East has created a unique precedent with the fast-track construction of a modern, world-class logistics industry. Rising from the desert with a compelling ferocity, the region has embraced the mass development of warehouse facilities and transportation infrastructure to establish itself as a new-age metropolis for supply chain operations.

Experiencing the benefits of this epic transformation, suppliers of material handling equipment and technology solutions have been left rubbing their hands in glee, with demand swelling to overwhelming proportions. This situation is particularly true for vendors of warehouse management systems (WMS), with record profits being reported in the Middle East by global heavyweights such as RedPrairie, Infor and Manhattan Associates.

More recently, however, the onset of a global recession has presented a troublesome dilemma that threatens to burst the WMS bubble - should clients freeze their technology spend as a result of budget-cutting measures or has the importance of boosting efficiency and reducing operating costs through a WMS solution never been greater? The answer, according to Abu Dhabi-based trade expert Christophe Pinot from Greenline Logistics Consulting, will vary depending on the specific requirements of each customer.

"The global recession has definitely had an impact on the market for warehouse management systems in the Middle East, especially since purchasing decisions are largely influenced by financial factors," he states. "For customers that have started to seriously evaluate the market, it's a question of whether the return on investment is still worthwhile, considering the operational benefits that can be obtained.

Picking the right solution could result in a leaner supply chain and lower operating costs within a reasonable amount of time, which is very attractive at the moment. On the other hand, companies that have considered WMS technology on a primary level, their priorities might have been diverted to areas that produce more immediate results."

Opportunities are still present in the market, states Pinot, although vendors will need to weather the storm by overcoming a series of challenges. "Demand will be pushed by the influx of warehouse facilities being developed or have been developed in the Middle East, with the best outlook coming from countries such as Saudi Arabia, where manufacturing is now taking off," he says.

"However, this is a relatively non-mature market and customers must be educated on the functions, features and benefits of warehouse management systems. Once the knowledge is there, the hesitation to invest will be significantly reduced. Many vendors are heading in the right direction though, in recent months the likes of Infor, ATMS and Ehrhardt + Partner have organised free workshops in this region for customers to experience the system and discuss their requirements."

Customers generally favour the opportunity to attend such workshops and assess the different variety of WMS on offer, especially since the number of solutions available in the Middle East has continued to increase. "Most customers will understand the importance of researching the market before making a purchasing decision. Although the number of systems that are being marketed in the region has grown, there is a limited number of companies that provide a complete solution, which includes technical consultancy, training procedures, vertical knowledge and most importantly, customer support on a local basis," says Pinot.

"This has traditionally been the domain of regional players. However, although the likes of Infor, Manhattan Associates, Ehrhardt + Partner and RedPrairie are international companies, they have opened branches or partnerships in the Middle East to reinforce their commitment to the region and provide a better service to customers."

A long-term commitment to the Middle East is normally considered pivotal for customers, with good reason too. Warehouse management systems are, after all, a long-term purchase and clients are looking for partners that have the ability to look after their interests for years, rather than months. "Its a relationship that normally lasts five to 10 years," concludes Pinot. "As your company grows and your needs evolve, you had better get insurance and guarantees from your supplier that the warehouse management system will continue to develop at the same pace."

ATMS, Steve Cross, managing director

What are the highlights of your WMS?

Since the warehouse management system has been produced by ourselves, customers can benefit from a strong price advantage and greater flexibility. It has been designed for fast implementation, requires no maintenance and can be operated 24 hours a day, seven days a week and 365 days a year.

Which companies use the system?

Our customers include Al Naboodah Cargo, Triburg Supply Chain Management (TSCM), AyezanLogistics, IAL Logistics and Gulf Warehousing Company.

How competitive is the regional market?

The Middle East is a vast market and each WMS supplier has continued to grow. However, we're expecting the competition to become more intense in the future.

Have you faced any challenges in the Middle East?

We're determined to reach a stage when companies are educated about the benefits of warehouse management systems. To make this happen, we organise a series of workshops in the Middle East, which are free of charge and help to encourage a greater awareness in the market.

What are your future expansion plans?

We will soon have a local development centre in our Jebel Ali office, which will provide implementation and support, thereby developing a fully self-sufficient team to serve the Middle East market.

Business Systems Group (BSG), Raheel Khan, regional director

What are the highlights of your WMS?

Exactus offers a range of tightly integrated and easy-to-use supply chain solutions called "Aware", which is exclusively handled by BSG in the Middle East. The core foundation is the WMS product and built around it are modular solutions to address finance management, transportation management, freight management and performance management.

Which companies use the system?

Our clientele includes Transworld Logistics, Al Madina Logistics, Sun and Sand Sports, Nikai and Aptec Distribution.

How competitive is the regional market?

There are a handful of reputable vendors, but we sometimes hear about less established players trying to make inroads in the market. Also, there are some "no-win" competitive situations, such as decisions being driven by price alone, with little regard for functionality.

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