What is a warehouse management system (WMS)? 

Simply put, a warehouse management system (WMS) is a software solution that supports the monitoring and management of daily activities in the warehouse remotely. WMS software:

• Keeps track of stock level,
• Aids shipping of orders, and
• Advice on inventory replenishment.  

This includes:

• Arranging the warehouse and its inventory.

• Maintaining 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 (WMS) are designed to fulfill simple tasks. It used to involve a lot of manual processes written on paper. With the arrival of new ideas and advanced technology, warehouse management has become “smarter” – it includes more automated processes. Nowadays, WMS can perform various functions, ranging from basic practices in pick and pack to sophisticated inventory forecasts and automated programs. 

These days, 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 and 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. This market is expected to grow by 15.3% from 2021 to 2028.

How can a Warehouse management system benefit your business?

The introduction of the internet and digital technology has changed customer behaviors and the global supply chain. Higher customer expectation leads to rising material and delivery cost. Hence, a more integrated and agile system is required to support all the complex functions of the supply chain. So how does a comprehensive WMS 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Outdated and inaccurate inventory data also limit your visibility into the flow of goods. This causes more serious problems like abundant inventory and decreased cash flow. In the worst cases, you might encounter stock running out when customer orders come in, which might destroy your relationship with customers. 

By automating manual data entry and tracking inventory in real-time using barcode technology, efficient WMS can vastly improve inventory management, record accuracy, and create a faster inventory turnover. 

Better Customer Service

Warehouse operations have six fundamental functions: receiving, putaway, storage, picking, packing, and shipping. Each function involves lots of paperwork like picking tickets, packing lists, move tickets. These steps can be managed electronically using WMS. By integrating with EDI technology, WMS can streamline order processing, and reduce lead time and costs of hiring additional staff. At the same time, data records about product availability and inventory in and out can be more accurate. Therefore, there will be fewer customer complaints and an improvement in overall customer satisfaction. 

Reduce labor costs

As mentioned in the previous parts, a good WMS can increase efficiency within the warehouse. It also significantly reduces operational costs by automating processes done manually. 

Many tasks such as entering product details, preparing order information, and sending 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 WMS, 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, making it hard to track them. Whether it is coming in, being stored, or going out, goods are traveling in multiple directions. We recommend that you track which items of stock have the quickest turnover to store them more efficiently and keep downtime to a minimum. 

Tracking each of your product’s whereabouts in your warehouse is a mammoth task. 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 will enable you to view this information too, so you never lose track of how much stock you have. You know exactly where the stock is in your warehouse. 

Optimize Warehouse Space 

Finding an effective solution to utilize the warehouse’s storage capacity is the top priority of any warehouse operator. As the storage demand continues to surge, warehouse space now comes at a premium price. The cost of under-utilizing your warehouse can add up quickly.  

By efficiently organizing items in the warehouse and eliminating waste, you can maximize the number of goods stored and lower inventory costs. Moreover, WMS that utilizes barcode technology allows users to accurately locate each item down to zone, shelf, and aisle. Hence, it derives 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. 

Types of warehouse management systems 

In this article, we list out three most commonly used Warehouse Management Systems, 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 standalone WMS includes all warehouse management features and doesn’t require any additional software to operate.  

Generally, if your company decides to go for a standalone WMS, here are a few features you can expect: 

• Receiving 
• Put-away 
• Pick and Pack 
• Slotting 
• Shipping 
• 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  (duplicate data entry, information delays, silos, interface issues, and customization expenses). 

Concerning WMS, the standalone system might be the cheapest option. However, 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 (SCM) system. SCM software often covers a broader scope and supports 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. Still, 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 SCM to use the warehouse managing features that come along. If you haven’t used any SCM 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 Modules 

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 providers offer 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 strong 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. 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 software that emphasizes handling inventory and warehouse activities, it’s better to pick a cloud-based SCM system. It often provides scalable and future-proof features for warehouse management. 

By using advanced technology such as barcode scanning or EDI in an integrated WMS, you can create a paperless WMS environment that minimizes the risk of manual data error and improves data transfer accuracy. 

Why should you choose an integrated WMS system? 

Compared to standalone software, integrated WMS in SCM/ERP brings 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. 
• Centralized data, 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 in not only warehouse efficiency but also 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.