What is a warehouse management system?
Simply put, a warehouse management system (WMS) is a software solution that supports the monitor and management of daily activities in the warehouse remotely. WMS software helps user keep track of stock level, aid shipping of orders and advises on inventory replenishment.
• Arrange the warehouse and its inventory.
• Maintain and keeping the appropriate equipment in check.
• Supervise receiving and delivering inventory in the facility.
• Support order picking, packing, and shipping.
• Track and aid overall warehouse performance.
• Provide automation tools that eliminate manual and repetitive tasks
At an early age, warehouse management systems are designed to fulfill simple tasks and involve a lot of manual processes written on paper. With the advent of new ideas and advanced technology, warehouse management has become “smarter”, involving more automated processes. Nowadays, WMS can perform various functions, ranging from basic practices in pick, pack to sophisticated inventory forecast and automated programs.
Nowadays, using WMS software to monitor warehouse activities has become a common practice in many industries. With the help of WMS, companies can better manage the flow of inventory in and out as well as reduce costly errors due to manual data entry. The system can also speed up order fulfillment and provide live tracking of moving inventory within the warehouse. According to a report by Grand View Research, the market for WMS is valued at $2640 million in 2020 and is expected to grow by 15.3% from 2021 to 2028.
How Warehouse management system can benefit your business?
The introduction of internet and digital technology has caused a disruption to customer behaviors and the global supply chain- higher customer expectation leads to rising material and delivery cost and hence, more integrated and agile system is required to support all the complex functions of the supply chain. So how can a comprehensive WMS can benefit supply chain operation?
Faster Inventory Turnover
Efficient inventory management is one of the key factors to retail success. Traditional inventory management strategies relied heavily on manual counts and paperwork to keep track of stock levels in the warehouse. This method is often time-consuming and is highly error-prone, making it impossible for businesses to keep up with the ever-changing logistics and distribution industry.
Outdated and inaccurate inventory data also limit your visibility into the flow of goods, leading to more serious problems like abundant inventory and decreased cash flow. In worst cases, you might encounter stock running out when customer orders come in, which very likely might destroy your relationship with customers.
By automating manual data entry and track inventory in real-time using barcode technology, efficient WMS can vastly improve inventory management, improve record accuracy and create a faster inventory turnover.
Enhanced Customer Service
Warehouse operations comprise six fundamental functions: receiving, putaway, storage, picking, packing, and shipping. Each function involves lots of paperwork like pick tickets, packing lists, move tickets, which can be managed electronically using WMS. By integrating with EDI technology, WMS can also streamline order processing, reduce lead time and costs associated with hiring additional staff. At the same time, data records about product availability and inventory in and out can be more accurate, reducing customer complaints and help improve overall customer satisfaction.
Reduce labor costs
As mentioned in the previous parts, a good WMS can increase efficiency within the warehouse and significantly reduce operational costs by automating processes done manually.
Many tasks such as entering product details, preparing order information, and send it to business partners take time and require hiring additional personnel in the warehouse. These human-involved activities are error-prone and can be resource-intensive. With the right warehouse management system, you can easily automate your replenishment system to optimize the stock flow.
Better stock management
Inventory management is one of the core functions of warehouse operations. Stock in the warehouse is constantly moving in and out, make it hard to track them.
The nature of warehouses means that stock is constantly on the move. Whether it is coming in, being stored, or going out, there are goods traveling in multiple directions, which can make the process confusing. We recommend that you track which items of stock have the quickest turnover so that you can store them more efficiently and keep downtime to a minimum.
Tracking each of your product’s whereabouts in your warehouse is a mammoth task and losing track can have costly consequences for your business. A warehouse management system allows you to locate and retrieve goods in an instant. Better still, using a portal allows you to view this information too, so you never lose track of how much stock you have, and you know exactly where it is in your warehouse.
Optimize Warehouse Space
Finding a effective solution to ultize the warehouse’s storage capacity is the top priority to any warehouse operators. As the storage demand continues to surge, warehouse space now comes at a premium price, and the cost of under-utilizing your warehouse can add up quickly.
By efficiently organize items in the warehouse and eliminate the waste, you can maximize the number of goods that can be stored, hence lower inventory cost. Moreover, WMS that ultilizes barcode technology allows users to accurately locate each item down to zone, shelf, and aisle and hence, derive the best way to optimize warehouse space. You can quickly determine fast-selling products and slow-moving stocks, reducing wasted space for slow-moving goods.
Type of warehouse management system
In this article, we list out three most commonly used Warehouse Management System, including:
- Standalone System
- Supply chain Modules
- ERP Modules
Standalone Warehouse Management System
A standalone warehouse management system, also known as a freestanding WMS is an on-premises system that is installed on your company’s server. A typical WMS standalone system includes all warehouse management features and doesn’t require any additional software to operate.
Generally, if your company decide to go for a standalone WMS, here are a few features you can expect:
- Pick and Pack
- Bar code scanning
- Expiration date tracking
- Cycle count
A standalone system doesn’t come with any extra supply chain function so you need to combine it with the rest of your business management package such as ERP.
While it’s possible to integrate standalone WMS with external programs, the process is difficult and often results in errors such as duplicate data entry, information delays, and silos, interface issues, and customization expenses.
With regard to WMS, the standalone system might be the cheapest option, but the benefits it offers are limited compared to an integrated WMS system.
Supply chain execution module
Other than the standalone type, WMS can also be part of a supply chain management system. Supply chain management software often covers a broader scope and helps support users in optimizing various touchpoints in the supply chain. The main focus of an SCM system is automating repetitive tasks in inventory management, procurement, and shipment of goods, but it can offer support in managing vendors’ networks, and other parties in the supply chain.
In comparison to a standalone system, this type of WMS is more expensive since you need to obtain the supply chain management system to use the warehouse managing features that come along. If you haven’t used any supply chain management software for your business, an SCM system is ideal since it gives better visibility into the supply chain operation than a standalone WMS.
If you choose to adopt a supply chain management system, remember to check if you have any existing applications that overlap with the new system. A good way to avoid duplicated modules is to combine all your applications into one SCM platform or find an SCM system that can easily integrate with other programs.
ERP (Enterprise Resource Planning) is an integrated management system companies use to manage key operations in their business such as financial planning, accounting, marketing, and supply chain. Some ERP provider offers features to monitor warehouse operations built on their ERP system.
ERP is a good option for companies operating on a large scale since it offers much more than just supply chain or warehouse management functions. The benefit of a robust and comprehensive management system is beyond cost-effective; it allows companies to get a competitive edge and improve their revenue.
As it’s the most well-rounded management software among the three, this type of warehouse management system also requires the highest upfront cost among the three. Another thing that you need to keep in mind when opting for ERP software is that warehouse management is not a core function of an ERP system. So if you want a software that puts emphasis on handling inventory and warehouse activities, it’s better to pick a cloud-based supply chain management system. It often provides scalable and future-proof features on warehouse management.
By using advanced technology such as barcode scanning or EDI in an integrated WMS, they can create a paperless WMS environment that minimizes the risk of manual data error and improve the accuracy of data transferred.
Why should you choose an integrated WMS system?
Compared to standalone software, integrated WMS in SCM/ERP bring extensive benefits. With a comprehensive management system, businesses can gain real-time information and responsiveness, employee accountability, and end-to-end visibility.
In addition to the benefits a normal WM system can offer, users can benefit from the added values using an integrated system such as:
- Increase business transparency.
- Data are centralized, making it more manageable.
- Better sale and inventory forecast from accurate and up-to-date data.
- Improve the efficiency of the business cycle.
- Significantly reduce operational cost.
Having the right warehouse management software can make a significant improvement on not only warehouse efficiency but also on overall business performance. If you’re looking to run a leaner, more efficient business in the long term, an integrated WMS would be a good choice for you. For more information about WMS systems, you can follow us on LinkedIn, Twitter, or Facebook. If you have other inquiries or suggestions, feel free to contact us here. We’ll be happy to hear from you.