warehouse management system

What Is a Warehouse Management System (WMS)?

Regardless of the type or size of your business, you can use online retail management software to help you offer your products to people worldwide. Your business can grow with a great e-commerce plan, but first, you must decide how to manage your supply and customer support. Warehouse management systems are helpful in this situation. These tools give you the necessary resources to manage inventories, restructure processes, and cut costs.  

What Is a Warehouse Management System (WMS)?

The manufacturing and retail sectors frequently employ software called a warehouse management system (WMS) to monitor and control warehouse operations from when goods or supplies arrive until they depart.

Overall, WMS aids in optimizing your warehouse activities. It keeps track of all the products in your warehouse and develops a procedure for staff to pick up and pack customers’ orders. With a WMS, you can follow your products as they enter the warehouse, are placed on shelves, or are packed elsewhere until they leave for order fulfillment. 

How Does a Warehouse Management System Work?

Because they house everything used and produced, from raw materials to final commodities, warehouses are essential to manufacturing and supply chain activities. The fundamental goal of the warehouse management system is to ensure the practical and economically viable transportation of materials through the warehouse.

When a customer orders, the WMS can check the product’s availability immediately because it has all the data. The WMS speeds the procedure by marking the order as set for packaging if available rather than requiring a person to manually check to see what is available.

Why Use a Warehouse Management System?

You must be able to deliver orders quickly and effectively in the current online retail market. By helping you locate every product in the warehouse, a warehouse management solution can reduce order latency, errors, and processing costs.

Using a warehouse management system (WMS) can reduce product delivery and processing times and help you keep track of what you’re selling. Knowing which things commonly leave your warehouse will help you modify your layout to simplify loading goods for staff. 

Difference Between a Warehouse Management System and an Inventory Management System

A WMS tracks the movement and storage of products in the warehouse or distribution center. It also helps ensure that items are stored in the most efficient location and that the correct items are picked and packed. Warehouse management systems also enable the management of all warehouse operations and monitor employees’ performance. 

On the other hand, an inventory management system helps track available inventory, including raw materials, work in progress, final products, and components needed to manufacture final products. It monitors stock levels and informs businesses if and when they need to produce more products or when raw materials are required to manufacture a product. 

While an inventory management system gives notice of the availability of a specific item, a warehouse management system provides information about the location of items within the warehouse, including the bin in which they are. 

The most significant difference is that a warehouse management system can help you manage employees’ work in the warehouse. In contrast, inventory management systems only deal with stock and finished goods, making warehouse management systems more complex than inventory management systems. 

Who Needs a Warehouse Management System? 

Who Needs a Warehouse Management System

If you own a warehouse or a distribution center and want to run a competitive business, you need a warehouse management system. Relying on a manual system isn’t practical, and you risk losing customers if you can’t execute your operations properly. 

Even though many industries use warehouse management systems, six sectors are the most significant WMS users. Including retail companies that need a WMS to help manage the surge in online orders so that customers can see inventory at their brick-and-mortar stores and arrange for pick-up and delivery. 

The manufacturing industry is also one of the most significant WMS users as they need help tracking several types of inventory, from raw materials to finished goods. 

Third-party logistics (3PL) manage stock for multiple companies, so they need the WMS software to help ensure that consumers’ orders are kept separately and managed independently. Wholesale distributors also use WMSes to manage their extensive inventory and streamline labor costs. 

The healthcare and food and beverage industries also require the assistance of a WMS to help accommodate the unique needs of their products that can spoil or expire and ensure that they are placed in a suitable location to be shipped on time. 

Difference Between Enterprise Resource Planning (ERP) and WMS

WMS and ERP are two different types of software designed for various purposes. WMS aims to manage and simplify day-to-day warehousing operations, improve inventory accuracy, and provide real-time visibility of warehousing activities. On the other hand, ERP is a suite of business management solutions with several modules to help manage every aspect of a business. Most ERP systems include a WMS module, but they differ in the features they offer. 

Types of Warehouse Management Systems

The type of warehouse management applications a business chooses will depend on size and activities. There are various types and installation techniques for warehouse management software. A WMS might be an execution suite for a supply chain or a stand-alone system. 

They also vary in complexity. Larger organizations utilize sophisticated warehouse management system software. However, other small enterprises may only use a basic collection of spreadsheet documents. Additionally, some companies want to have their WMS specifically tailored to the size of their firm. Other organizations, in comparison, use WMS software that can adjust to various company sizes. 

A WMS can also be created to meet the unique needs of a company and the kinds of goods it offers. 

Some examples of WMS include:

Cloud-based WMS

Applications operating on a company’s internal servers were the original form of warehouse management systems. But as time passed, this model changed, and now that businesses are aware of the advantages of hosting systems in the cloud, cloud-based warehouse management solutions are more widespread. 

In contrast to the on-premise model, a cloud service provider or WMS vendor hosts and manages the software, which is an essential feature of the cloud-based WMS—assuming responsibility for updating, setting up, and maintaining the company’s warehousing system.

Because cloud-based WMSes are more accessible and less expensive to manage, most are billed on a subscription basis, and small and medium-sized organizations choose them. However, more large businesses frequently utilize on-premises WMSes since they demand specialized systems that adhere to the needs of their particular industries and can handle the software on their own.

Pros of the cloud-based WMS

  • Fast implementation
  • Fewer upgrade 
  • Low upfront cost
  • Scalability

Cons of the cloud-based WMS

  • Long term costs
  • Cloud-based WMS cannot be customized
  • Regular software updates

Also, major WMS vendors like Microsoft and Oracle offer various deployment options, including cloud-based systems.WMS cloud-based vendors include Fishbowl, HighJump, and SnapFulfil. 

Integrated WMS

The integrated warehouse management system software is typically attached to your current enterprise resource planning (ERP) vendor. ERP systems control accounting, inventory monitoring, and billing.

The order is taken, and the integrated WMS handles the order-picking procedure, the products, and the receiving and delivery of the goods. When everything is integrated into one database, managing and keeping track of the items you might need to invest money in is simpler.

For instance, if an item with a low profit margin is selling out quickly, you can stock a product with a high profit margin instead and reduce sales. You can keep track of all these financial analytics with an integrated WMS. 

Some ERP systems offer warehouse management, but not all of them do. So be sure to look for ERP systems that provide that feature. 

Also, some ERP vendors offer WMS solutions as an additional solution, which a third-party vendor sometimes provides. In contrast, some vendors offer ERP systems with a fully integrated WMS, so you won’t need an add-on solution. Ensure that you look out for that as well.

Pros of the integrated WMS

  • It provides access to centralized information in real-time
  • Integrated WMS are cost-effective in the long-term 

Cons of the integrated WMS 

  • Integrated WMS applications can be complex and may require a learning curve to learn the system’s core features.

Standalone WMS

The standalone WMS may include reporting tools that can aid in expanding your warehouse because it is designed exclusively for warehouse management. On the other hand, a standalone WMS is software with various capabilities to assist you in managing your warehouse. As a result, the standalone WMS might only contain a few features for other parts of your company’s operations, such as accounting and inventory.

Pros of the standalone WMS

  • Affordable upstart cost
  • It offers internal integration capabilities, which means businesses can incorporate the standalone WMS into their current systems without experiencing a total system overhaul. 

Cons of the standalone WMS

  • It has a limited scope,, meaning that only so many businesses can do it.
  • It lacks real-time information and isolates warehouse and inventory management steps from the rest of the business’s operations. 

Supply chain module

This system handles all the aspects of the supply chain. It helps with vendor relationships, business processes, risk evaluation, and warehousing features. You may want to avoid overlap with the supply chain module if you already have a system. However, if you decide to go in this direction, ensure that you choose a system that integrates well with your other software. 

Features of Warehouse Management Systems

WMS software products have a lot of standard features. They include the following:

  • Inventory tracking 

With the aid of this feature, you may locate your products even if they have been relocated by using sophisticated tracking and automatic identification and data capture (AIDC) systems, including a barcode reader. 

  • Shipping

This function allows the WMS to transmit bills of lading before the shipment reaches its destination, create a packing list and invoice for shipment, and notify recipients of the impending shipment in advance.

  • Yard and dock management 

Using this WMS feature, truckers entering the warehouse may quickly locate suitable loading docks. Businesses can utilize this functionality for cross-docking and other incoming and outgoing operations for more advanced uses. 

  • Warehouse design 

Businesses may tailor their workflow using this WMS function, ensuring the warehouse is prepared for inventory allocation. The WMS establishes bin slotting to maximize storage capacity and consider periodic stock variations.  

  • Picking and packing products 

This feature includes zone selection, batch selection, and wave choosing. Warehouse personnel can also use the site zoning and project interleaving functions to set up pick and pack activities effectively.

  • Labor management

Utilizing key performance indicators (KPIs) that show whether employees deliver above or below expectations makes it easier for warehouse managers to monitor employees’ performance. 

Benefits of a Warehouse Management System 

Although operating a WMS might be costly and complicated, the benefits to organizations outweigh these drawbacks.

A WMS can assist a company in lowering labor expenses, increasing inventory accuracy, increasing flexibility and responsiveness, decreasing picking and shipping errors, and enhancing customer experience.

Modern WMSes work with real-time data, giving the company access to up-to-date data on orders, shipments, receipts, and the movement of goods. 

Disadvantages of a Warehouse Management System

Even though WMS has countless benefits, there are also some disadvantages to implementing one in your business operations. Some of them include:

  • For large-scale businesses, managing the maintenance of the WMS master data might be too difficult. 
  • The additional steps in between the picking and receipting are time-consuming
  • Maximizing the WMS benefits will require expert knowledge, and it isn’t always possible to have thorough knowledge. 
  • Using a warehouse management system is only better if standard logistics functions are insufficient for your business operations
  • While WMS provides a better automation system, it requires more attention and maintenance. 
  • Because of its complexities, it is more prone to errors. 

How to Choose the Right Warehouse Management System 

Here are some criteria to help you select the best WMS for your business:

  • Budget/ROI

By reviewing the gains you stand to benefit from the warehouse management system, you can determine a budget. Think of receiving a return on investment in better customer service for increased customer retention and revenue, improved processes and efficiency, increased productivity, reduced costs from efficiency gains, and better inventory management. 

  • Functionality 

When choosing a WMS, look for one that can perform your business’s most important functions. Some essentials are space, labor, equipment utilization, and better operational insight. You also want a WMS with up-to-date barcoding, serialization, and mobility technology. 

  • Vendors 

Look for vendors that offer solutions that best fit your needs and budget. Consider their experience and expertise in your industry, how they handle upgrades if you need customization for their software, and what their training process involves. 

  • Request related information 

You should maintain a broad list of vendors and target at least two to three of your essential requirements. You should also consider the time to value where after implementing the warehouse management system, it may take between a month or a year to see the required ROI. Therefore you must request information on how quickly you can reach your ROI target based on the time to value. 

  • Build a project team

A project team should oversee the process of researching available vendors’ solutions and implementations, from designing to going live. Depending on the organization, this team may be known as the supply chain management team. Your team should have the required management privileges to ensure that the WMS is tailored to fit your business’s needs. Your organization’s business units should determine how the WMS should work for the organization instead of the IT department. A WMS impact on business unit operations can be structured when there are correct inputs at the right time. 

Top Warehouse Management System Vendors 

Numerous suppliers offer WMS software as standalone systems and components of complete enterprise resource planning (ERP) suites. Some of these suppliers consist of: 

  • SAP
  • Microsoft 
  • IBM
  • Oracle 

Many other different WMS software providers concentrate on particular industries and business sizes. Some of them consist of:

  • Softeon
  • Fishbowl
  • Basware
  • SnapFulfil
  • Infor
  • Sage
  • Aptean
  • ASCTrac 

Conclusion

Regardless of your industry, warehouse management system software benefits your organization. If you want to run a successful firm in today’s world, you should consider adding a WMS to your business operations to help streamline your inventory and process orders rapidly. However, before acquiring a system, you must first understand your business goals and what you aim to achieve, as different types of software offer different characteristics. While immensely advantageous, WMS has various drawbacks, including that they may necessitate expert knowledge to maximize their benefits, attention, and regular updates. Also, look for a vendor that understands your industry and requirements.

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