What is Warehouse Management System (WMS)?

Introduction

A Warehouse Management System is software used to manage the warehouse operations cycle from receiving to dispatching items. The software helps companies manage stock, personnel, shipping operations, and more. 

ClickPost defines a Warehouse Management System as an application that enables companies to manage and automate their warehousing operations including collection, storage, packaging, and dispatch.

The application enables the management of materials and goods from arrival to shipping, and the handling of inventory within the warehouse facility. 

What is the purpose of a Warehouse Management System (WMS)?

The purpose of a WMS is to ensure that the materials and goods of a company are stored and moved within the warehouse in an efficient manner to improve accessibility and visibility. Further, the system helps businesses keep accurate records and move goods in and out of the facility accurately.

What are the functions of a Warehouse Management System (WMS)?

There are 3 primary functions of a Warehouse Management System (WMS). 

1. Collection

One of the most basic functions of a warehouse is the storage of goods. Therefore, one of WMS’ primary is to manage the collection and aggregation of goods in the facility, and ensure that information on goods that are received by a warehouse is duly recorded and updated.  

2. Putaway

Putaway is the process of storing and moving goods within the warehouse to ensure optimum use of storage space and maximum accessibility and visibility of products. A WMS enables companies to manage putaway by recording and presenting information on the location, quantity, dimensions, and weight of the product. 

3. Dispatch

A WMS enables companies to manage the dispatch of products by assigning orders to shipping partners as orders are received. Further, it also enables companies to manage the movement of products between multiple warehouses, and even back to sellers in case of returns. 

What are the components of a Warehouse Management System (WMS)?

There are 4 primary components of a Warehouse Management System.

1. Receipt

A WMS generally includes a component responsible for managing the receipt of items into the warehouse. It allows the system to generate a receipt of orders, generate labels for incoming products, and assign a specific location for the items to be stored. 

2. Storage

A WMS enables companies to manage the storage of products within the facility. It allows companies to track the location of an item in the facility, get information on quantities, and strategically store products for optimum utilization of space. 

3. Shipping

A WMS generally includes a shipping managing component that allows companies to generate invoices for outgoing products and print labels to be placed on packages for shipping. 

4. Fulfillment

Finally, a WMS includes the fulfillment component which allows companies to plan their supply depending on demand forecasts. Further, the system generally enables companies to streamline the picking and packing of products, manage returns, and more. 

Key features of WMS

As mentioned above, WMS is software used to control and track the storage of products in the warehouse. This system involves several processes which are the key to efficient shipping, receiving, storing, and further integrating it with the remaining systems of the supply chain.

Listed below in detail are the key functions of a WMS: 

1. Receiving goods

This software provides a simple process that is required to be followed while dealing with a shipment once it has arrived at the warehouse. The process can be customized in ways that best suit your requirements.

However, the core purpose of this process is to make sure that all shipments are handled properly and with care, which further helps minimize losses and save time.

2. Tracking Inventory 

A WMS enables the user to keep a track of all the stock present in the warehouse. This is essential because, through this, the warehouse management team can see when there is enough stock and when to order for more to avoid shortage.

Additionally, this prevents overstocking and ensures that all the existing resources are being well distributed for the smooth running of the warehouse. 

3. Slotting for Efficiency 

A WMS provides an opportunity for business owners to model an efficient way of storing their products depending on factors like demand and weight. This makes sure that the products in the warehouse are arranged in an efficient way, making it easier to process orders. 

4. Labor visibility 

The WMS removes the requirement of extra labor required to undertake the functions that can be managed centrally. Taking full inventory counts, monthly or even weekly, is a major cost and involves quite a bit of labor.

However, this can be eliminated with a WMS, for the system allows you to conduct periodic cycle counts without disturbing daily operations. Furthermore, this is a major reduction in expenditure because this system is not at all labor intensive. 

5. Document preparation

Most processes are automated under a WMS, and this eliminates the need for printed documents which eat into a large chunk of money. By giving the right visibility to the appropriate people, everyone can easily access the data they require to do their job. 

6. Picking and Shipping 

A WMS ensures the right products are being picked and packed the right way to the right people at the right time. This system improves efficiency and avoids mistakes that could happen during transport. 

7. Customer Service

A WMS assists in processing the products efficiently and delivering them to the customers on time, all while maintaining the quality. This improves customer service, enabling business owners to increase loyalty amongst existing customers and attract new customers. 

8. Tracking and Visibility 

A WMS keeps track of information such as expiry dates, UPC, and serial numbers. Although each point of data adds to the cost of maintaining the software, it comes with high returns wherever high visibility is required. With this system, issues of recall and warranty are easily resolved by a simple traceback instead of a payout to the customer. 

9. Reporting

The hidden advantage of having a WMS on a database like Microsoft SQL is that the system can present the data in new and exciting ways.

The data could provide you with answers to questions like “What percentage of your warehouse is being utilized”, “Should you expand”, “How many transactions are being done by each employee per hour/day”, and more.

Benefits of a Warehouse Management System

Using the right WMS can help boost operations and ensure customers are receiving the right products on time. A couple of additional benefits include:

1. Reduced waste

It will help with better inventory, space, and labor management that can help minimize waste and reduce losses 

2. Optimized warehouse processes

It uses data analytics to pinpoint any bottleneck and inefficient processes. This can help you track progress and make informed decisions. 

3. Reduced human error 

With a WMS, simple and efficient practices can be put into place that can increase order accuracy and decrease the time spent walking around the warehouse. 

4. Track material in real-time 

Inventory can be tracked and every product can be seen at each stage of its journey throughout the supply chain. 

5. Improved customer and supplier relationships 

Such a system facilitates communication with suppliers for the smooth and efficient functioning of inbound and outbound operations, which helps in efficient shipping to customers. 

6. Increased flexibility 

Such a system can adapt to changes in order volume or assist the business to respond to unexpected disruptions like shipping delays etc. 

Relationship between Warehouse Management and Inventory Management?

While warehouse management organizes the stock in a particular warehouse, inventory management manages the stock and trends for several warehouses or the entire company. 

Warehouse management is mainly focused on the management of goods within one warehouse, such as raw materials, materials in the process of becoming finished products, and finished products.

The process includes ordering, handling, storing, and picking inventory, either to make new products or to fulfill existing orders. 

Inventory management on the other hand is focused on optimizing material and product levels to save space and money. Inventory management is a step in warehouse management, along with other tasks such as warehouse organization, design, monitoring, reporting, task optimization, labor management, and resource scheduling. 

Types of Warehouse Management Systems

There are three primary types of WMS:

1. Standalone On-premises WMS

This type of WMS offers core warehouse management features like inventory management, shipping, and order fulfillment.

This software generally requires an IT team to troubleshoot problems, maintain, and upgrade the system.

In comparison with other software, premises WMS takes longer to implement because it requires custom integration with the already existing business system. 

2. Cloud WMS

This is a web-based SaaS (Software as a service) solution that provides warehouse layout access to the users via the Internet.

The main benefit from this software is that it has got a lighter footprint as compared to an on-premise solution, and there’s not much requirement from on-site hardware and IT specialists.

This software is generally faster to implement and is highly configurable, allowing businesses to get the software customized specifically for their needs and processes. A cloud-based solution can easily be integrated with mobile devices, sorting machines, and conveyors. 

3. WMS ERP modules 

ERP is generally integrated with a unified ERP solution which includes modules for accounting, CRM (customer relationship management) inventory, order management, and human resources. Everyone in the organization has access to the same updated information all the time. 

How to implement Warehouse Management Software in the right manner?

It is crucial to have a planned implementation of WMS to achieve maximum efficiency. To help you with the task, here’s a list of some of the best practices:

1. Clear plan for Warehouse Operations

Have a clear objective about what exactly you are trying to gain out of implementing the system. Go about creating a structured plan and decide who is going to be in charge of key roles such as project management, training, and data migration. 

2. Effective change management

Ensure all the teams in the organization understand the steps of implementation and how this change will affect their workflow. 

3. Data migration

Data should be transferred carefully to the new WMS, otherwise, important information could get lost or corrupted. 

4. Thorough training

A well-trained employee who can understand how to use WMS will contribute to the company. Vendors of WMS provide on-site training, online courses, and other training materials. 

5. Adequate testing

It’s best to test every possible scenario using real data to check if the software works as expected and then compare the results with the results of your previous methods, just to ensure your business is not missing anything. 

How to choose the best WMS?

Choosing the right WMS for your business could either make or break you. If you implement the wrong one, it could cost your business a large amount of money on a system that can’t meet your requirements.

That being said, picking the right WMS for your business isn’t an easy task, for you will have to decide which aspects of the software are imperative for your purpose. 

Although price is a key factor while considering a WMS, there’s no guarantee that costlier software will meet the needs of your business. Thus, while choosing the software, here are some key traits to keep an eye out for from the start. 

1. Accuracy 

Having software that can collect data accurately is essential. One wrong number can create a huge glitch in the entire network for that item. This is why you need an accurate WMS that will record your inventory transitions appropriately.

By looking out for accuracy in the software, you can save yourself from harm control in the future. 

2. Training 

Ensure that the selected WMS comes in built with training modules to help your workers adjust to the system. This is essential especially when peaks are hit and temporary workers have to be brought in.

Likewise, the WMS software should be user-friendly, easy to navigate, and simple enough for all team members to adapt to without any stress or error. 

3. Scalability 

eCommerce is a constantly growing industry. It is a big pond with plenty of room for you to grow. And if you’re planning to become a competition for any of the bigger companies, the ability to scale up is crucial.

Selecting a WMS that can expand with you, especially in the dynamic eCommerce world, is important. You must consider longevity, commitment, the attitude towards technology, and upgrades that your WMS partner is offering.

4. Data

Most companies fall under either one of the categories - either they don’t have enough data, or they have tons of data and don’t know what to do with it. For accurate planning and forecasting, data integrity is crucial. With the right WMS, you can get several data-rich reports that will help you make informed decisions. 

5. Return on Investment 

While selecting a new WMS for your eCommerce business, you must know your figures thoroughly. If you opt for the wrong system, it could cost your business a significant amount of money, sometimes, even more than your returns.

Beware of the hidden cost of a supposedly cheaper WMS software, like customizations, updates, integrations, maintenance, and other additional fixed licenses.