Warehouses are extremely complex environments, requiring a plethora of different hardware and software systems to orchestrate various workflows and activities. Historically, almost all warehouses used paper-based methods of assigning orders and tracking inventory. However, toward the end of the 20th century, we saw the introduction of warehouse management systems, or WMS, a computational approach to tracking inventory and managing orders.
More recently, we’ve seen the introduction of hardware such as automation and robotics that have further streamlined warehouse operations. These systems require additional software, on top of the WMS, to coordinate the movements of the mechatronics and robotics.
Subordinate control software is used to control fine movements of the hardware. Meanwhile, warehouse control systems (WCS) and fleet management systems (FMS) provide the movement logic that enables pallets, cases, totes, and other handling units to get from Point A to Point B through an automated system.
Execution software, on the other hand, is used to orchestrate order release and task allocation to optimize a given output, such as to maximize throughput or minimize cost.
Our “Warehouse Software – 2024” report is the first study to look at both WMS and automation-related software through the same lens. Given the relative maturity of the WMS market, we’re seeing revenue generated from automation-related software growing at a faster rate than warehouse management software.
Furthermore, the growth of automation is leading to the blurring of traditional industry boundaries, which is going to lead to significant disruption in the industry over the coming years.
There is strong growth in warehouse software, particularly for automation-related software, according to Interact Analysis.
The market for warehouse software reached $7.2 billion in 2023 and is forecast to increase to $16.6 billion by 2030, experiencing a compound annual growth rate (CAGR) of 13%. As the complexity of warehouses continues to increase, and the need to fine-tune logistical processes grows, we’re expecting significant growth in the deployment of warehouse systems.
Breaking the market up into WMS and automation-related software, we find that the market size for WMS reached $5 billion in 2023 and is expected to reach $8.9 billion by 2030, growing at a CAGR of 8.6%. Automation software, on the other hand, reached $2.2 billion in 2023, with the market anticipated to expand to $7.7 billion by 2030, growing at a much higher rate of 19.5%.
Warehouse software types analyzed by different software layers. Source: Interact Analysis
The reason for the differential in growth between WMS-related and automation-related software solutions is that most warehouses have a WMS and growth potential is therefore largely limited to renewals and greenfield warehouse developments. On the other hand, the penetration of automation within warehouses is much lower, resulting in a greater opportunity to automate existing brownfield sites.
Industry boundaries blur
The development of warehouse automation is also blurring the lines between what were previously well-defined product categories. Traditionally, warehouse management software was typically provided by enterprise resource planning (ERP) or supply chain vendors.
However, with the development of warehouse automation, some providers have begun offering warehouse management software, such as Knapp’s Kisoft, Swisslog’s SynQ, and SSI Schaefer’s WAMAS.
Similarly, traditional WMS providers, like Manhattan Associates and Blue Yonder, are getting more involved in the orchestration of automation through the development of execution layers that are embedded into their platforms. Some software providers like SAP and Mantis are going as far as providing a WCS where the WMS is then able to connect directly to the PLCs.
In other words, automation vendors are looking to move up the value chain by providing more execution and management products, while traditional software providers are looking to move down into the orchestration space through the development of execution layers that are embedded into their WMS systems.
Warehouse software strategies vary
With the growth of the automation market, we’re seeing traditional software providers looking to capture a slice of the pie. However, we’re also seeing that warehouse software providers are developing different strategies to capitalize on the growth of automation.
Some are relying on third-party interoperability layers to help connect and integrate with automation, such as SVT Robotics. Others are developing an in-house library of APIs that are used to connect directly to robotic solutions.
Manhattan Associates, on the other hand, isn’t looking to connect directly to automation, but to orchestrate and execute automation through the warehouse execution system (WES) module in its Active platform.
Our research is looking to track and analyze these different strategies, while benchmarking the relative performance of each approach. Given the changes the industry is facing, it’s more important than ever to stay ahead of the curve and develop a successful automation strategy.
About the authors
Irene Zhang joined Interact Analysis in 2022 as a senior analyst in the warehouse automation research area. She has nine years of experience in global market research.
Before joining Interact Analysis, Zhang worked for an international private equity firm, focusing on semiconductor industry investments and mergers & acquisitions. She holds a master’s degree in applied economics and is based in Interact Analysis’ U.K. office.
Rueben Scriven, a research manager at Interact Analysis, is a warehouse automation industry analyst and is a regular speaker at leading industry events. He has moderated several panel discussions on the topic of commercial vehicle electrification and has appeared on CNBC, providing insights on the global electric bus market.