Warehouse Management Meets ERP

The warehouse management systems market, long fragmented and somewhat neglected by senior management, is starting to heat up. Perhaps the most significant indicator was last month's quiet investment by enterprise resource planning giant SAP AG in a small Tel Aviv, Israel-based warehouse-management software firm.

SAP purchased a 51% interest in Ofek-tech Software Industries Ltd., which makes warehousing and logistics systems. SAP plans to use Ofek's expertise in this area to help create a new system that will become part of the R/3 supply-chain system. The idea, the company says, is to combine some of its own technology with the deep functionality Ofek offers.

"With Ofek-tech, we are partnering with a company that has made a name for itself through innovative technology in the warehouse control area," says Dr. Peter Zencke, SAP executive board member.

Ofek-tech developers are working with SAP to enable the R/3 Warehouse-Management application to use radio-frequency devices. Among the firms using Ofek-tech's DC-Master system are Ciba-Geigy, Colgate-Palmolive, Nestle, and Vittel.

SAP has plenty of competition in this market. Masterpack International, a maker of a family of software applications for distribution, recently began offering an upgrade, Release 7.0, which includes new functions for its WarehouseManager module. Masterpack's strategy is to fill a vacuum that has been left by ERP software vendors, whose products might not offer full functionality for managing distribution centers.

Desmond Miller, chairman of Masterpack, says the Australian software firm's own research shows that two-thirds of current warehouse systems used by large companies were created internally.

"This highlights the significant gap in the worldwide ERP market that we are poised to fill," Miller says.

New modules in Release 7.0 include Buyer's Workbench and Returns. The former is a decision support system that enables logistics and inventory managers to reduce over-investment in inventory while ensuring stocks are purchased economically and when needed. The latter tracks returned products and manages warranty issues for both customer and supplier returns, while providing management with key performance measures related to the costs and benefits of the company's returns policies.

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