What Is A Warehouse Management System And How Can It Help Your Business?
If you’ve found yourself wondering what a warehouse management system (WMS) can bring to your business, then read on.
I’ll delve into how a WMS can benefit your business, what options are available, and some key considerations for choosing the best solution for you.
Jump to:
- What Is A Warehouse Management System?
- How Can Warehouse Management Software Benefit Your Business?
- Types Of Warehouse Management System
- How To Choose The Best WMS For You
What Is A Warehouse Management System?
A Warehouse Management System is a software tool that provides a holistic view of stock control, warehouse operative resourcing, supply chain management, and order fulfillment processes. These processes, and more, can be applied at a single warehouse location or at multiple sites, even across multiple countries.
With the ever-increasing drive to improve efficiency, customer experience, and responsiveness to market trends and forces, businesses are looking at how they can remain agile and streamlined across several international markets.
This is thanks to software functionality and web-based applications making the cost of entry/total ownership available to many, not just global retail empires.
In part due to the rise in availability of strong WMS solutions, the ability to utilize multiple warehouses or distribution centers (DCs) across several countries or continents is becoming far easier for eCommerce businesses of all sizes
Great examples of this strategy are businesses trading in mainland Europe who may not be based there but benefit from a warehouse within an EU country. The extra warehouse can simplify logistics and the costs of freight and taxes when fulfilling orders destined for customers in other EU countries. This has been particularly pertinent for UK-based eCommerce businesses since the UK left the EU officially at the end of 2019.
As we’ll go into, some ERP (Enterprise Resource Planning) applications offer WMS functionality as part of their solution.
There are also dedicated tools specifically designed to handle all of the warehouse operations. Such dedicated WMS solutions may integrate with existing ERP, finance, or eCommerce/Order Management systems depending on the type of tech stack a business has opted for.
How Can Warehouse Management Software Benefit Your Business?
Let’s start with the basics in regards to your business's basic warehouse functions and then go from there.
You might have a single or multiple physical warehousing spaces to store your inventory. These warehouses may also be across one or multiple locations and countries as we have described above.
The key thing to remember is that a warehouse doesn’t just store items. In fact, there are many different warehouse operations occurring daily across your supply chain. All of them should be auditable and access controlled within your WMS software.
A WMS will help you streamline warehouse operations and processes for your global team. You will be able to better plan your warehouse resources thanks to a much wider and more advanced view of day-to-day warehouse operations.
Implementing a WMS can also help you quickly add advanced functionality to help you with your daily warehouse operations, for example:
Barcode Scanning
Typically, warehouse processes can be enhanced by adding in ancillary technology such as handheld devices to scan barcodes or QR codes of stock items or warehouse storage bays/locations.
This can opens up a wealth of functionality and process improvement possibilities. For example, barcode scanning outbound consignments, by the process of ‘scan packing’ against each order, ensures correct products and quantities are dispatched.
This also removes paper-based processes too, boosting the eco-credentials of any business whilst improving accuracy and accountability regarding warehouse transactions.
Barcode scanning is especially useful within highly transactional warehouses where lots of order fulfillment tasks happen on multi-item despatches every day.
Of course, the accuracy of pick and pack is paramount to a great customer experience. Scanning items into despatches as they are packed makes the risk of a mis-pick far less likely.
Virtual inventories and warehouse locations/bins
With a WMS, virtual inventories and virtual warehouse locations/bins can be mapped to physical racking space within your existing warehouse.
This process allows you to store products of the same SKU, or variants of an SKU, across multiple physical warehouse storage locations in a dynamic manner.
This both optimizes and maximizes your available warehouse storage capacity at any given time.
If integrating with ERP or order management systems, it’s possible to highlight the most frequently picked items to keep them at the closest available warehouse locations.
Radio-frequency identification (RFID)
Some of the more advanced WMS software also offers RFID technology. This can track the movement of items within an automated workflow, or assist with locating items in real-time and at scale when queries or audits require.
This can be particularly useful in larger operations where customers could be raising queries about order progress and customer services teams are looking for real-time availability updates.
Automation
Warehouse management systems make use of automation to further optimize inventory management tasks and processes.
Tasks that can be improved through automation include:
- Forecasting
- Raising of purchase orders for auto-replenishment of stock before you get anywhere near to being out of stock
- Detailed inventory control around both component and finished goods at the header SKU and detailed size/color variant level.
- Advising warehouse operatives on the best warehouse locations for certain items to be stored based on metrics such as cubic measurements or popularity/frequency of pick being required.
Types Of Warehouse Management System
As I mentioned earlier, there are several ways of implementing a WMS within your business.
Like with all software procurement processes, there are benefits and bottlenecks that come to light during the research and due diligence phase.
Often there is no exact fit for your needs, so looking at an array of offerings from various vendors is always advisable.
Now I’ll take you through the most common options regarding systems architecture within a typical WMS implementation and the pros and cons to each of them.
Fully Integrated
A fully integrated WMS is one that’s integrated as part of a suite of software tools (for example an ERP). A fully integrated WMS system typically utilizes the same databases and configuration as other/existing systems you use, thus offering much closer integration and speed of data updates.
Most eCommerce businesses will have some form of inventory management system or ERP system that are a natural integration with a WMS.
The benefit of a fully integrated WMS is the ease of implementation because there are no tricky integrations that need to be built to ensure data flows smoothly between each system. Often the training phase for your users is faster too.
But there is a catch. While using an existing vendor’s software solution for your WMS will help with implementation, scalability, and less disruption to the business, a lack of functionality may be a trade-off to consider.
Sometimes a WMS solution from an existing vendor offers lots of broad functionality, but may be limited when it comes to more advanced and detailed functionality or options for configuration.
It’s also worth considering the development roadmap for new functionality to be added could be slower. This is because the WMS may not be the vendors’ core focus amongst their suite of products that all need continued improvements.
Fully Integrated WMS Pros
- Real-time data updates across key business-critical systems.
- Potentially not having to tender for any new vendors.
- Speed of implementation.
- Lower cost of total ownership.
Fully Integrated WMS Cons
- May lack functionality vs some standalone pure-play WMS rivals.
- Development roadmap may be slower in adding new functionality.
- System upgrades may become more complicated due to any changes potentially having a wider impact across entire systems.
Standalone
A standalone WMS solution is sold as a completely separate software application. Therefore, it may not have any pre-existing connections with any of your other business-critical systems.
A standalone WMS will often provide best-in-class functionality and scalability for your warehouse operation because WMS functionality is the software vendors' core and potentially only focus.
Many standalone WMS options are hosted for you as a web-based application on a SaaS basis, thus becoming an Op ex cost as a regular recurring fee vs a Cap ex project.
A standalone WMS may also be proposed to you as an on-premise solution requiring additional server hardware and software licenses to bring to production. That, of course, increases the total cost of ownership.
Whilst the functionality of a standalone WMS solution may be broader than an integrated product, there are also tech overheads to bear in mind and plan for.
The main point to tackle early within your research phase is the available options for connecting to your existing systems.
Understanding the API/interfacing potential of any prospective standalone WMS software tool, and also the same of your current business-critical systems such as finance, ERP, or an inventory tracking platform, is critical.
If APIs aren’t supported, are there other options for passing data between systems available to you? Do these other comms methods update on a frequency as regularly as you need them to?
Having delays in data updating across your suite of core software can be really frustrating and hamper business agility and growth.
It pays dividends to bring in the correct tech resource from your team to assess these requirements as early as possible.
Standalone WMS Pros
- Advanced WMS functionality.
- Potentially web SaaS-based.
- May have wider API or connectivity options to access data.
Standalone WMS Potential Cons
- No instant integration with existing business-critical software.
- Increased total costs of ownership.
- Potential lack of real-time data updates across systems and risk of siloed data.
Modular
You have a third option in implementing a WMS solution. There are vendors that can offer smaller pieces of WMS functionality on a modular basis.
In essence, this means you can tackle the implementation of your WMS in smaller chunks as your business objectives and priorities change.
If the prospective WMS solution you are considering allows for functionality to be enabled on a modular basis, you can potentially leverage this based on the needs of the business and phase the implementation over a longer period of time.
This can be especially useful if your team isn’t tech native and the users need a little bit of time to adapt to new warehouse processes and tools.
Also, if you are using a SaaS-based WMS and there needs to be development work, or changes made to existing systems to allow data to flow freely, the modular approach allows time for specific areas of WMS functionality to be focused on and mastered before moving on to the next.
This is useful if you like to use an Agile-based methodology within your tech/IT operations.
If taking a modular approach to implementing a WMS, it’s pertinent to drill a little deeper into the requirements of your business so you can tackle the key challenges and quick wins early on.
Consider existing processes such as finance systems, inventory management, order management, or integration with carriers and transportation management.
Modular WMS Pros
- Smaller pieces of functionality to enable and manage.
- Opportunity to only implement areas of functionality that you need.
- Easy to onboard users with a new software solution.
Modular WMS Cons
- Potentially long and drawn-out overall project lifetime.
- Total cost of ownership can be higher due to extended implementation and potentially fragmented integration work across modules.
- Fragmented tech integration may cause doubled-up work overtime.
Considerations For Choosing The Best WMS For Your eCommerce Business
As we have eluded to already, there are quite a few considerations to make during the WMS procurement process.
There are also external forces to be considered that may impact project costs overall that shouldn’t be underestimated.
I’ve listed a few ‘gotcha’ points that I have seen catch businesses out in the past I have worked with!
Wi-Fi coverage of your warehouse
Typically, most WMS solutions will utilize some form of handheld device to be used in and around the warehouse space.
These are typically used for scanning warehouse locations, stock during the putaway and pick and pack processes, and stock taking or regular cycle counting.
Most of these devices will require a Wi-Fi or data connection of sorts. If you have poor or no coverage across the key aisles, then it is key to understand and address this issue before you set expectations of WMS seamlessly slotting into everyday use.
3rd party technology already in use
Although we have mentioned the obvious considerations already such as eCommerce, finance systems, ERP, or order management systems, there are often many other areas to be considered.
Think about carrier and transportation management and current supply chain management that may require a WMS touchpoint/overlap.
If operating at scale already, what automation is at play within the warehouse operation as a whole? Where could there be touchpoints where these systems overlap with your preferred WMS? Do you have the correct peripheral devices to get your WMS into production?
Think about the basics such as thermal printers for labeling, or barcode scanners and devices that may already utilize rfID-based technology. Needing to buy these items in any kind of bulk quantity can quickly increase costs.
Staff and warehouse operative adoption
Having the best software you can possibly deploy into your business can still fail to deliver on the business goals if user adoption or affinity for using the tool is low.
Ensuring you have the correct stakeholders to deliver the project is essential, as is properly training and deploying amongst your warehousing staff.
Speaking from experience again, it can also be wise to check with your HR team around any union requirements with staff using technology.
You may find it triggers a bigger discussion around staff contracted roles and their required skill set if they’re asked to use more technology than you’re currently using.
‘Wrapping up’ On Warehouse Management Systems (Pun Intended)
Implementing a warehouse management solution can bring quick and measurable improvements over a fairly short space of time.
A WMS should help you lower labor costs and better handle seasonal trading peaks by understanding the flow of your trading patterns.
As we all know, eCommerce on the whole is driven by consumer trust, price, and availability of goods.
Whilst a WMS solution can’t help with selling prices or your top-line metrics, it can help to bring operational overheads down, becoming cost-effective over a short space of time.
A WMS will help with stock and inventory management to ensure that the right products are available in the right locations as part of an omnichannel strategy based on online and offline sales.
I hope this article has given you an insight into what a WMS can provide for your business.
Ready to take the next step? Check out our pick of the best warehouse management systems on the market today.
Related Read: Best Cloud Based Warehouse Management Systems Shortlist
Related Lists of Tools:
Also Worth Checking Out: Order Tracking Software for Online Stores