How to Choose a Warehouse Management System ?

When it comes to choosing the right warehouse management system (WMS) for your business, it’s important to understand your warehouse needs and the benefits of having an integrated WMS before starting the selection process. Whether your goal is to automate your warehouse operations for the first time or to upgrade to a more robust warehousing system, this article is an ideal resource for finding the right WMS—including information on how to build an effective project team, ask the right questions of your software reseller, and successfully implement the system.

5 Common Mistakes People Make When Choosing a Warehouse Management System

Mistake 1: Not doing enough homework.

Analyzing and then selecting a warehouse management system takes time and effort. Information is critical to selecting the most appropriate system for your organization. You’re already a step ahead of most people because you’re reading this blog.

Mistake 2: Misunderstanding the benefits of automation

Automating warehouse operations and related functions can save your organization considerable time and money. However, if you don’t also improve your current processes and ways of interfacing with RF-based hardware, shipping systems, and warehouse equipment, automating your system won’t deliver the full return on investment you require.

Mistake 3: Ignoring hard-to-quantify benefits

It is difficult to calculate possible future gains such as increased productivity, better warehouse efficiency, improved customer service, and other factors after a new system has been successfully implemented. Remember, these types of benefits can dramatically improve your bottom line and should not be overlooked.

Mistake 4: Passing the buck

Top management and other key personnel within the organization must be involved in the selection and the implementation process. For the project to be a success, management needs to stay involved.

Mistake 5: Underestimating the ramp-up phase of a project

Many companies assume a well-designed system will operate at peak levels shortly after they make the purchase. The best system will not perform as expected until properly trained personnel have developed complete competency with the system. Allow users to gain confidence through a gradual process of operational ramp-up, including incremental training and system usage. Wait to introduce them to new and more complex system functions until they have mastered the basics.

When is the “Right” Time to Move to a New System?

Don’t wait until your warehouse operations are no longer competitive to evaluate whether you need a new system. Here are some important tips to help you maximize your business processes:

Keep pace with industry trends

The availability of new technologies and increased market demands are driving rapid change in many industries. Watch for trends such as rising customer expectations, increased competitive pressure, or dropping margins. Introducing new or improved automation management technology to your warehouse can be a powerful tool for increasing competitiveness in a challenging market.

Ensure compliance with integration requirements

If you plan to sell to large retailers, you’ll need to comply with their terms in order to remain in good standing and keep your margins in place. Most large retailers have strict vendor compliance requirements that make a modern warehouse management system absolutely critical for success. Since many large retailers use EDI (Electronic Data Interchange), an ideal WMS solution will have EDI integration and be able to automatically transmit order information into an ERP (Enterprise Resource Planning) system.

Manage the changes required by e-commerce

If you’re one of the many businesses selling products over the Web, a WMS is essential. An online business encounters higher transaction volumes and greater customer expectations. Your material-handling needs also change when you ship directly to consumers rather than to businesses. Instead of pallet or case shipments, most online businesses fulfill many small unit shipments. As shipping times decrease, new requirements such as cross-docking may be required. Without the right system, many errors can occur. And with thin margins, shipping errors can be detrimental to your business. You want a WMS solution that supports and integrates with your e-business initiatives.

Automating your warehouse

If you’re finding that the lag time between warehouse activities and the entry into your warehouse system or accounting database is slowing down your business, you may want to consider automating those processes. A strong WMS solution integrated into your ERP system will allow you to monitor the warehouse activities in real time, minimizing entry errors, and measure the efficiency of your warehouse employees.

Make the most out of a warehouse move

If you plan to relocate to a new warehouse, this may be a good starting point to implement a new warehouse management system. By designing a plan from the ground up at your new location, you can eliminate the bottlenecks and inefficiencies of your old warehouse. The sooner you plan and implement, the sooner you can reap the benefits of your new system. Measure your current capabilities An objective way to assess your warehouse efficiency is to conduct a detailed benchmark measuring your current capabilities. The benchmarks can show you how well your warehouse is performing and the areas you may want to improve. If your assessment indicates significant changes are necessary, now is as good a time as any to implement a new system that provides the required functions of your warehouse.

5 Important Questions to Ask Before Implementing a New System

It’s important to ask questions, especially if you’re finding that your warehouse is not as productive as it can be. Discuss order fulfillment, shipping/receiving, inventory control, labor, and equipment challenges. Here are some questions to address:

1. How are inaccuracies negatively impacting your organization?

2. What do you need to accurately pick, pack, and ship your orders?

3. How can your current system integrate with your e-business initiatives?

4. What information do you need to make strategic decisions?

5. How fast do you need warehouse data to be available across the enterprise?

Getting Started

Today, more than ever, warehouse efficiency is a critical success factor to effectively manage your supply chain and achieve peak performance. Implementation of the latest technologies can significantly improve warehouse operations, employee productivity, and customer satisfaction. By installing the right system and realigning how your warehouse interacts with your employees, customers, and vendors, you can streamline your warehouse operations while achieving a high return on investment.

Build the case for a new system

The greatest challenge to implementing a WMS may not be finding the right system; it might be convincing your management team of the need for it. While most executives agree an accounting system is a must-have, the sentiment does not always apply to WMS. You probably have to sell the idea of a new system to the rest of your senior management team. They may be skeptical about whether the investment is really necessary. You’ll need quantifiable metrics, such as predictive error rate, RMA (Return Materials Authorization) costs, etc. That’s why it is important to determine all the ways your company will benefit from the system, both directly and indirectly, and be prepared to explain these benefits to senior management.

Form a project team

Assemble the team of people who will decide what your company needs from the new system and what functions it must include. Depending on the size of your company, team members may include the warehouse manager, a senior finance representative, and the director of IT. Define each person’s role and their level of involvement and decision-making during this process. Clearly define each team member’s responsibilities so they know up front how much time and effort will be required of them. You may need to restructure work priorities during the selection and implementation phases to make sure your project team has the resources to get the job done.

Evaluate your current system

To get the most out of your new WMS, you need to do more than simply add technology to your current processes. The more you know about the problems you expect the new system to solve, the more successful your final choice will be. Discuss what modifications need to be made to current system procedures. What works? What doesn’t? Consider not only how technology can automate current processes, but also examine other ways they can be improved. Encourage your team members to be candid about what they find frustrating, redundant, or ineffective. Examine how your warehouse interacts with customers, suppliers, and your organization’s departments; look for weaknesses and ways to improve these communications.

Share your expectations

Once you’ve agreed on the process and the timeline, have each member of your team share their expectations for the new system. Conduct a session to brainstorm ways the existing system can be improved, including new functions and processes that aren’t currently in place.

Agree on your needs

Have each team member create a list of key functions they feel the new system needs to provide for the company. Then have them prioritize these items as Essential, Greatly Desired, or Would Be Nice. Encourage team members to differentiate between functions they want and functions they definitely need. Achieve a general consensus within the team, defining the rank of each function and then combine those items into a prioritized list.

Create your list of required functions

Once you have consensus, refine your mandatory requirements into a formal Required Functions List. Your Required Functions List should be a short, one- to two page prioritized list that includes all of your must-have functions. This list of mandatory features will help you quickly eliminate systems that don’t meet your needs.

Consider the benefits of back-office integration

Selecting WMS software that integrates with your ERP system ensures complete control and flow of information between your back-office and warehouse floor. An integrated WMS system will keep your warehouse activities in synchronization with your accounting data, eliminating manual intervention and transcription errors while providing accurate and up-to-date inventory control. Look for a smooth-running warehouse system that can easily and reliably interface with your financial data—supplying in-depth information across the enterprise. Just as important, an integrated WMS will support your Web order and EDI needs, and send back Advance Ship Notices (ASNs) to notify customers of incoming shipments.

Don’t forget about hard-to-quantify benefits

The right warehouse management system maximizes the productivity of your warehouse staff. It frees them from tedious, time-consuming tasks and allows them to focus energy on picking the right items the first time, every time. It allows your company to benefit from increased inventoryhandling accuracy and reduced carrying costs associated with obsolete and slow-moving stock.

Avoid RFPs

Contrary to what your colleagues may tell you, the next step is not to create and send out a Request for Proposal (RFP) to resellers you are considering. Creating an RFP, sending it out, waiting for proposals, and reviewing them can take months. You can achieve the same results in days by asking potential resellers if their system provides the key functions you require. Obviously, if your company requires you to use an RFP, this step is necessary.

Finding a Reseller

The ideal reseller has knowledge of end to-end operations, including warehouse management, accounting, order management, customer relationship management, and integration with EDI and wireless data collection systems. Another critical aspect is their experience with implementing software for businesses in your industry. When evaluating a reseller, ask yourself these questions:

Can the reseller provide my company with a complete service package?

Critical elements of any software implementation are product training, technical support, future maintenance, and upgrades. Look for a reseller who wants to assist you not only with the immediate sale and installation, but also with long-term training and service.

Does the reseller listen effectively?

This question separates the true solution provider from a product peddler. To make the best recommendations for your organization, a reseller must first learn about your organization—including your systems’ current capabilities and those missing (but required) items or functions. Has the reseller attempted to learn as much as possible about your organization? Has the reseller spoken to more than one person within your company?

Does the reseller communicate clearly?

Be wary of resellers who spend all their time discussing features of a program. Your focus during discussions with a reseller should include the system training and services the reseller can offer in addition to features and benefits of the WMS software itself.

Can I work with the reseller?

Remember, you’ll be working closely with the reseller over a period of weeks, maybe even months. It’s important to find a reseller you enjoy working with, who is a good fit with your company’s philosophy, and who you feel will provide the necessary expertise and consultation in a professional manner.

Find the Best Fit

Just ten years ago, you could easily evaluate every warehouse solution available on the market. Today, with so many solutions to choose from, you can spend months looking at demos and still not see them all. Every warehouse is unique—with different processes, tracking systems, and problems. This is why it’s critical to choose a system tailored to your specific needs.

Generally, look for a system capable enough to significantly improve inventory control and staff productivity. This is first accomplished by integrating your warehouse staff with the tools and equipment at their disposal: radio frequency (RF)-based communications equipment, shipping systems, lift trucks, forklifts, etc. Secondly, all the information gathered by utilizing this equipment should be made available to your entire enterprise—including the accounting and inventory management data.

The vendor you choose should be dedicated to serving the changing needs of the warehousing and logistics industry, and consequently committed to upgrading and improving the product. Consider the following factors when evaluating available WMS solutions:

Know the benefits of working with a reseller

Before you begin narrowing your list of WMS contenders, it is important to understand the benefits of working with a reseller. Typically, resellers have been through the process many times before and can save you time and effort. They can help you select the right software for your warehouse, install new networks or hardware, and make sure the system is running by your target date.

A good reseller will:

  • Evaluate and suggest the best WMS software for your organization.
  • Save your company time and money during system installation and subsequent training.
  • Help you get the most out of your WMS implementation based on your organization’s requirements.

Screen potential solutions

E-mail a copy of your Required Functions List to the resellers you are considering so they have time to prepare and can quickly answer your questions. Conduct a phone interview with each reseller to determine how well their solution matches your required functionality. Note whether each feature comes standard with the system, is available as an add-on module for an additional fee, or is not available at all. A good reseller will also need to ask you many questions to determine which system is the best fit for your company.

Consider implementation time

Look for a complete solution that can be up and running smoothly and rapidly. The less upfront customization your system requires, the more quickly the implementation process can be completed. Ask your reseller how long the implementation will take and what factors may increase or decrease the amount of time needed.

6 Questions to Ask Resellers About a New System

Pick the best three systems and ask each reseller to provide the following information:

1. Estimated license costs for your implementation.

2. Estimated build-out costs to adapt the system to your requirements.

3. If automated wireless data collection and bar-coding equipment are a good fit for your company, what are the estimated costs?

4. Timeframe and cost for implementation.

5. Annual support and maintenance costs.

6. Training methodology and training costs.

Choosing the Right System

As you narrow the field of software contenders, begin examining the companies more closely to see how well they meet your needs. Consider the following factors to weed out vendors that won’t fit with your long term strategy for distribution excellence:

Interview resellers before the demo

Familiarize yourself with the various WMS solutions available on the market so you can be confident about your top picks when you shortlist the best options for your company. By interviewing as many software resellers as possible in advance, you can avoid time wasted by lengthy, irrelevant demonstrations.

Get to know the software manufacturer

Are you familiar with the company that makes the software? Are they a respected name in the software industry? How long have they been in business? What is their vision for the future—for their products and for the company? These are just some of the questions about the manufacturer you want to address when evaluating WMS solutions. Clearly, you don’t want a “here today, gone tomorrow” organization.

Insist on a user-friendly system

Even with all the functions your system promises to deliver, if your WMS is not user-friendly, your staff won’t be able to maximize the full benefits. Make sure you select a solution that’s logical and easy to use. Ask these questions during the interview process:

  • Does the system enable users to easily sort and view information, allowing warehouse employees to know exactly which activities need to be done at all times?
  • Does the software use the familiar navigational model of a standard hand-held browser?
  • Can the software provide a real-time window into your warehouse operation and access to critical data with only a few clicks?

Look for a solution that integrates with your accounting data

Make sure the WMS software has solid integration with your accounting data so multiple departments and your warehouse staff can more effectively track inventory and order fulfillment. Real-time integration of inventory and shipping information to your back-office data can reduce transcription errors, lower the staffing requirements for data entry, and improve access to information throughout your organization. The best way to ensure this real-time integration is to have the WMS functions as a module within your ERP system.

Ask about the capability to automate the warehouse management processes

Look for WMS software that supports wireless RF-based technologies. The warehouse management data is updated as soon as information is captured on an RF-based hand-held device. Also, if a system promises real-time delivery, make sure vital business information (for example, inventory count) with orders requiring same-day shipping—which can result in high compliance fines.

Understand how the wireless system collects data

Consider how well the system monitors your critical operational activities. When you’re running at full capacity, can you monitor which items have been received? If so, what communication standard is used to capture and transfer data? Most RF-based technologies collect data using the 802.11 communication standard. Make sure the system you choose supports this widely accepted standard, and isn’t limited to a proprietary communication standard.

Find out costs for extra users and modules

In addition to maintenance, upgrade, and support costs, it is important to consider how much you’ll have to pay for additional users. Solutions that include all modules generally cost less than those that don’t, but will often charge a higher cost per number of users. You may also encounter vendors who are relatively inexpensive when it comes to adding seats, but charge significantly more for additional modules. Be sure to ask the reseller what the cost structures are for adding users and modules.

Ensure options for growth

Before you make a purchase, find out if your software vendor has a maintenance program in place that gives you access to frequent updates. A good vendor invests heavily in engineering and develops new product features and enhancements regularly. They stay abreast of new technologies and make sure their customers do too, particularly those customers with fast-growing businesses. The opportunity to move to a similar, but more powerful, solution provides you greater flexibility as your company grows. Often, software upgrades cost far less than the retail price of the full program. Some vendors even provide upgrades within their support programs. Imagine purchasing a new car a year ago, and then seeing this year’s model and wanting some of the new features. You can’t have those new features unless you purchase the new model! In contrast, a good software manufacturer will provide product upgrades at reasonable prices or as part of a yearly service agreement.

Inquire about the system’s capacity

What is the maximum number of users allowed to work with a particular application at a given time? What happens if your business needs to add another warehouse or configure multiple work zones in your existing warehouse? It’s important to consider what your warehouse will need in the future to avoid having to purchase another new system within a short period of time. There are always opportunities for further efficiency gains by maximizing warehouse automation equipment and perhaps reworking some of your existing inventory-handling processes. When selecting a system, ensure the software has the capacity to grow with you.

Look for e-business strength

Online retail fulfillment is very different from traditional fulfillment—requiring different picking strategies and special material handling operations. Fulfillment operations for a Web store will have thousands of orders, but usually with only one or two lines. In contrast, traditional fulfillment typically has fewer orders, but many lines per order. If your company is considering electronic commerce, look for a flexible system that can manage a multitude of operational strategies. You’ll also want a scalable solution to ensure that seasonal peak volumes can be handled accurately and efficiently.

Get powerful reporting

Look for a system with the ability to extract relevant information easily. Your warehouse manager should be able to track labor productivity and provide order fulfillment, and inventory movement information. A good system can provide virtually unlimited reporting capabilities. Ask for samples of reports when evaluating the different systems.

Evaluate system security

The degree to which sensitive functions and reports can be protected will affect how the system rates in security. Ideally, you should be able to specify which operations certain users can perform at specific times. A good system can be set up so your warehouse technicians only see information relevant to their job function.

Conduct product demonstrations

Before each product demonstration, have your team meet to discuss the perceived strengths and weaknesses of each software solution and areas they think require particular attention. Inform resellers ahead of time the order in which you want the functions demonstrated. It will make the demonstrations easier to assess if they are all presented in the same order. Keep the demonstration focused on the functions your company needs and not on the ones that look most impressive on-screen. Have your team fill out comment sheets during each interview for use during the final decision process.

The software demonstration is an excellent time for your team to understand the features and capabilities of a particular solution. Take full advantage of this opportunity by following these guidelines:

  • Inform software resellers about your specific needs in advance. A software demo is a reseller’s opportunity to profile their products and services. By informing them ahead of time about your specific needs, you direct the demonstrator’s attention to your interests, not theirs.
  • Make sure your core team is able to attend the demos. Make it a priority to keep your core team up to date about their appointments. Since each team member has a different area of expertise, it’s important for everyone on the team to be at the demonstrations in order to get the most out of each demo. Encourage team members to remain in the room through the entire demo; shared concerns can be flagged more effectively if everyone is present to hear questions raised by others on the team.
  • Plan your questions. Have the core team come up with questions for each product demonstrator. You may also want to plan the sequence in which the questions will be asked, to ensure that everyone stays on topic during each demonstration.
  • Establish a system for scoring each issue addressed by the demonstrator. Keeping tally for individual issues makes the entire scoring process efficient. It prevents situations in which someone from your team forgets how a particular demonstrator addressed an issue. The scores will also come in handy when it’s time to decide which of the shortlisted solutions is best suited for your organization.
  • Ask the reseller to follow up on issues not fully addressed. The reseller may need to consult with colleagues or the software manufacturer before providing answers to more in-depth questions. Be sure someone on your team follows up on any unanswered questions after the demo.

Ask questions during the demo

If someone on the team has a question, such as whether the RF-based technology being demonstrated can update inventory in real time, make sure they ask during the demo. It will be easier to get a clear answer if you ask questions when they occur to you, and while the functionality in question is on the screen.

Understand the difference between standard functions and “extras”

Some software vendors provide basic functions but then make you purchase “extras” that come standard in competing solutions. Confirm which functions are included in the core pricing and which must be purchased separately.

Ask about technical support

Your reseller will be a good resource regarding technical questions or other issues that arise. However, you may still need to rely on the software vendor’s technical support team as well. Find out the cost for technical support as well as the policies for maintenance, upgrades, and support. Ask your reseller what you can expect in response times to support questions and if there are support packages available for purchase.

Implementing Your System

You’re almost there. You’ve done your homework, chosen a reseller, and a solution—now it’s time to put your system in place. To ensure a smooth and successful implementation, consider the following guidelines.

Start with a plan

Begin the implementation process by laying out the goals of the project. This helps keep every team member focused. An installation usually takes between one to three months with an off-the-shelf package that requires minimal customization. If you have numerous goals to achieve, plan on a longer implementation with more consulting resources.

Revisit your timeline

Make sure your implementation timeline is realistic. Your reseller will propose a timeline with deadlines they feel confident they can either meet or beat. Find out what you need to do and which individuals need to be available to help with the process.

Remember: Time is money

Your reseller will probably give you a range of hours each task will take. The general rule is the more resources you allocate for implementation, the less it will cost you in both time and money. The reverse is also true. If you aren’t able to give your reseller the time and resources requested, the process is going to take longer and cost more.

Provide ongoing training

If you want your warehouse operations to reach their full potential, maintain constant vigilance over your system. Ideally, WMS training never ends. Promotions, new hires, and the start of every quarter introduce new opportunities for training. Develop a training agenda focused on continuous learning, along with supporting materials, such as written tests and training guides. These tools will enable you to reinforce existing methods and procedures, teach new hires, and ensure that you’re optimizing the efficiency of the people in your warehouse.

Postpone modifications

Don’t request any major modifications to the software before you’ve actually installed it and started using it. Instead of trying to make the software work the old way, wait until you and your staff are familiar with the new system before attempting to change or customize it.

Schedule a good rollout time

Find an appropriate time to roll out your new system. It’s difficult to schedule a “right time” to do this, but at the very least, plan to install the new software during your organization’s slowest time of year, to minimize business interruptions.

Measure against the old system

The success of your warehouse management system in part depends on the goals you have established for your operation. Once your system is up and running, be sure to benchmark it carefully and compare the results to your pre-system benchmarks. You’ll collect vital information to help calculate the return on your investment. The benchmark also sets a standard for your team to beat. With ongoing benchmarks, you can put measurable employee incentives in place, compare your results to industry averages, and set targets for coming years.

Sample Warehouse Management Software Checklist

General Features 

Excellent 

Adequate 

Deficient 

Paperless check-in

     

Bar-code verification and labeling

     

One-step put away to bins

     

Stock immediately available for picking 

     

Cross-referencing of supplier part numbers 

     

Incorrect shipment identification 

     

Express and normal receiving options

     

RMA (Return Materials Authorization) processing 

     

Random storage 

     

Efficient handling of special and non-stock items

     

Discrepancy reports 

     

Inbound freight management 

     

Low stock alert 

     

Picking and Packing Features

     

Direct picking to shipping carton(s) 

     

Variety of picking styles: wave, batch, order, and product picking

     

Simultaneous and sequential zone picking 

     

Forward picking from fast-flow locations 

     

Product substitutions 

     

Carton picking from dedicated or random locations 

     

Kitting function 

     

Order verification and price ticketing in multiple formats

     

Tracking of serial numbers or lot codes 

     

Inventory Control Features

     

FIFO stock rotation 

     

Cycle count by date/product/bin location 

     

Inventory tracking of product through the warehouse 

     

Tracking of both picking and overstock 

     

Replenishment requests based on actual orders (vs. min/max)

     

Stock adjustments 

     

Shipping Features

     

Integrated multi-carrier shipping system 

     

Packing slips on demand 

     

Tracking of vital shipping information 

     

Compliance labeling and ASNs 

     

Generates ASN, Automatic Customs, Dangerous Goods documents 

     

Rate shopping 

     

Prints correct freight labels 

     

Automatic manifesting 

     

Invoicing Features

     

Invoice printed based upon actual fill 

     

Backorder processing 

     

Shipping and handling 

     

Purchasing Features

     

Create purchase orders on demand 

     

Virtual distributed warehouse 

     
       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source : Sage – how to choose a WMS system

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About Kurt Hatlevik

Greetings. I appreciate that you’ve helped create this worldwide blog community—as a consultant working from Norway, the blog lets me share more than 16 years of experience with Microsoft Dynamics AX. Along the way, I developed the DCS, BTI, SYNC, KIT and the WM&D solution. My blog focuses on my deepest interests and expertise: along with a 360 degree view of warehouse management topics, I welcome opportunities to dive into retail and intercompany supply chain automation, logistics, and production—everything that is moving around in a truly connected enterprise. As executive consultant for Dynamics AX, I specialize in strategic development and planning for corporate vertical solutions and works to build international networks that increase knowledge and understanding for Dynamics AX. As an advocate for both providers and customers, I'm committed to ensure that customers meets constantly changing needs, and I see community as key for increasing expertise.
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3 Responses to How to Choose a Warehouse Management System ?

  1. John Camus says:

    This is a very good article. I do have an issue with first time implementations of basic systems: people think their processes are good ans insist on making the WMS work their way, as opposed to following the best practices laid out by such systems. Yes, many systems are different, but fundamentally, any WMS is WAY better than no WMS. Before requiring major changes from the WMS supplier, ask the supplier questions as to why they believe their built in processes are world class. Maybe they are right, and God forbid, maybe YOU are wrong.

    Not much to go on, but anybody who has gotten a WMS project go ahead only to see it bomb because of unrealistic expectations or narrow mindedness should get this. Even a less than perfect WMS (or part of it), is usually substantially better than the best manual processes.

  2. topwms says:

    Great article, this strengthens the quality and repertoire of WMS, Warehouse Management Systems allowing Warehouse owners to understand the importance. I found that these people were great in terms of a supplied to this solution, Systems Logic. They provided great customers service unlike other software providers, they ensure to maintain the quality of your warehouse and improve all processes.

  3. Adam C Young says:

    So many companies over-complicate and overshare when describing the WMS selection process and considerations. Kurt, you did a great job summarizing & simplifying while still hitting the most important considerations. Thanks!

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