What is a Warehouse Management System (WMS)?

Everything you need to know about Warehouse Management Systems (WMS).

What is a Warehouse Management System?

Developed to optimize the functionality of warehouse operations, a warehouse management system is software that facilitates the planning, organization, control, management and monitoring of daily activities.  A warehouse management system handles the orchestration of tasks involved with:

Inbound and outbound operations

Inventory tracking

Processing orders and shipments

Inventory cycle counts

Order processing and shipping

Using a database that has been configured to support the operation of a warehouse, a warehouse management system is a powerful tool to drive efficiency and accuracy across the business.  The software provides the means of warehouse control, enabling facility managers to have visibility into processes, labor resource activity, and much more.

Today, most warehouses, distribution centers, 3PLs and fulfillment centers rely on warehouse management system (WMS) technology as the “brains” of their operations. 

Data involving operational processes flows into the warehouse management software from automated data capture methods such as barcode scanners, mobile computers and RFID enabled devices.  The data is then used throughout the system to track inventory through the progression of warehouse processes.

Automated data capture ensures that valuable information reaches the system so that it can be used in a wide variety of ways, not only for inventory management and inventory tracking and other warehouse processes but also for reporting, dashboards and business intelligence.

Having the ability to use real time data in reports and dashboards helps to empower more accurate, effective decision making.

How Does Using a Warehouse Management System Help a Business Be More Competitive?

Today, businesses across the supply chain use warehouses to store goods on their way to customers.  Whether the goods are destined for consumers, retailers, manufacturers or other business entities, it is important that whatever goods are ordered, shipped and delivered are processed properly, quickly, reliably and accurately.

The speed at which operational processes are performed, whether in a fulfillment center, 3PL warehouse or distribution center is often a critical factor.

Getting the correct goods to the required location with the appropriate amount of handling, packaging, etc. is essential and can mean the difference between success and failure.

Using a WMS solution that is appropriate for the needs of your operation can help you optimize operational processes for greater efficiency, enhance labor productivity, provide valuable insight into your operation and enable you to compete for, win and retain clients.

Here are some other reasons why using a WMS solution gives your business a competitive edge:

Enables stringent inventory management and inventory control capabilities .

Helps ensure optimal handling, storage, processing and tracking of inventory.  Increased operational efficiency helps keep costs and errors down, critical in attracting and retaining clients.

Real time information visibility.

These days, data is seamlessly transmitted across the warehouse and along the supply chain.  Using warehouse management software with automated data collection such as barcode scanners, mobile computers or RFID enables the capture and use of vital information for quick decision making and planning.

Automated operations reduce errors, wasted time and inefficiency from manual operations and workarounds.

Many warehouse management solutions are now workflow-based or workflow-driven.  This means that the warehouse management system can automate the execution of work, step-by-step to ensure greater accuracy.  Not only is this important for efficiency and error reduction but also for ensuring that quality control and quality assurance processes are carried out in conjunction with established SOPs.  This can prove especially critical when dealing with temperature-sensitive products, fragile inventory and perishable goods.  A warehouse management system ensures warehouse control over operations to help ensure continuity, consistency and reliability.

Speed, agility and reliability of warehouse operations.

Over the past few years, the U.S. supply chain has experienced significant uncertainty.  From tariffs and trade wars to cybersecurity breaches, disasters, the rapid escalation of omnichannel e-commerce retail and last mile delivery to the Amazon effect, warehouses operating across the supply chain have had to be nimble in their operations, able to turn on a dime when conditions were altered.  Speed and agility are critical factors in warehouse operations and provide keen competitive advantage, especially if you are competing against a rival that is still using a legacy WMS or no system at all.  A cutting-edge warehouse management system makes use of data to plan, execute and report on operations reliably, quickly and efficiently and can adapt to changing business conditions.

Enhanced workforce productivity, essential to daily operations

Today, warehouses are struggling to hire and retain quality warehouse workers.  Using a warehouse management system helps provide your business with key metrics to use to properly manage, train and engage with your workforce.  Getting the most work done in less time with fewer errors means that there will be less work done researching and correcting errors and billing.  This lowers the burden on customer service representatives so that they can focus on providing top quality support.

How Have Warehouse Management Systems Changed Over the Years?

Warehouses used to be situated away from populated areas where land and labor were cheap and readily available.  Goods of all kinds were handled and stored on pallets.  Warehouse operations were handled manually and largely without technology.

As access to affordable Internet service became widely available, more consumers and businesses began to depend upon it for everyday use.  Combined with the rampant use of Smartphones and mobile technologies, warehouse operations began to change. 

Along came the boom of e-commerce.  Amazon spoiled us.

Consumers ordered more goods online and have come to expect increasingly faster, low cost delivery.  To do this, warehouses need to be positioned closer to population centers, shortening the distance of transportation.

To improve the speed and accuracy of warehouse operations and ensure that orders are processed and delivered on time, technology is needed in warehouse facilities.

Wireless access (WiFi) in warehouses is now common and enables faster handling and processing of inventory across distribution and fulfillment centers and 3PL warehouses.  As Baby Boomer warehouse workers leave the workforce and Millennials enter, warehouse operators need to adapt.

The incidence of warehouse management system adoption has steadily increased over the past five years or so and continues to rise.

Leveraging Internet connectivity, wireless communications and other technologies has provided the means for improved visibility across supply chains and has facilitated more collaboration.

Warehouses handle tremendous volumes of data.  By harnessing this information, businesses can now analyze it to gain valuable insight into business operations, improving efficiency and productivity.

Cloud computing is now more widely adopted for use with warehouse management systems.  Initially, there was a lag time in adoption partially because of security concerns.

Widespread usage of cloud warehouse management software with mobile devices including Smartphones, tablets and computers has improved mobility, transparency and visibility in warehouse operations.

From voice enablement to robots, drones, warehouse automation and material handling equipment including conveyors, sorters and more, warehouses use technology to supplement the workforce, speed up throughput and increase accuracy and efficiency.

Warehouses connect seamlessly to a variety of systems, software, shipping carriers, warehouse automation and material handling equipment and e-commerce shopping carts.

Warehouse operations are no longer limited to what happens only within the four walls.

Warehouse Management Systems and Warehousing Technology Trends

Warehouse System User Interface

One area of new focus in warehouse management software is the WMS user interface.  Many WMS solution providers are paying much more attention to simplifying user interfaces to showcase data in more logical formats that are specific to each user’s role.

For example, the user interface for a customer service representative may be designed to focus on streamlining the order entry process with less clicks and boxes to check.  This helps each worker focus and helps to decrease errors and response time.

Streamlined Returns Processing

With up to a 30% return rate, goods purchased online need to find their way quickly back into inventory so that they can be sold again.  A warehouse management system needs to be capable of executing inspection of goods, documentation of condition, instituting holds and other activities.

Many 3PLs now provide a full array of value-added services (VAS) for returned goods processing including minor repairs, refurbishment, pressing, labeling, re-packaging and much more in preparation for putting the goods back into inventory.

For a 3PL that provides these VAS, it is critical that the WMS that is used be able to capture and bill for every service performed.

Warehouse Automation

Warehouse automation utilizes specialized equipment such as automated storage and retrieval systems (ASRS) to perform or augment tasks typically accomplished by human workers.

Forms of warehouse automation includes mechanized automation such as robots and robotic systems, driverless automated guided vehicles (AGVs), goods-to-person technology (GTP).

Robotics in the Warehouse

With the shortage of supply chain labor and warehouse workers, warehouse operators are looking for alternatives to augment labor resources.  Some warehouses use robotics to replace human labor and others elect to use co-bots, robots which work alongside human workers.  Autonomous mobile robots (AMRs) and collaborative picking arms have become popular tools of distribution center operations.

Using robotics in warehouse operations does more than simply augment the workforce.

Of equal importance, the use of robotics improves the quality of the work environment for human workers by reducing the time they spend walking around the warehouse, reducing the stress of repetitive, time consuming tasks and more.  Using robotics in the warehouse can boost the productivity and retention of the workforce.

  • Lights-out DCs that eliminate human workers entirely by using robotics with warehouse automation
  • Warehouse robots specifically for pick and pack operations
  • Collaborative robots which assist human workers in aisles or with material handling tasks
  • Goods-to-person systems that transport goods needed to fill orders to pick/put stations where humans pick the orders
  • Goods-to-person AMR solution with collaborative picking arm used at pick/put station to magnify human work efforts

Cloud Computing

Although initially the adoption of cloud warehouse management systems was minimal, largely due to concerns about security, over the past few years there has been significant and widespread adoption of this technology.

Cloud software deployment eliminates the use, cost and maintenance of local servers to host software applications.  Instead the warehouse management software is hosted off-site.

Costs for cloud warehouse management systems have come down, providing more affordable, minimized risk options.  Additionally, supply chain companies often favor the low maintenance approach as updates and maintenance are handled remotely.  This minimizes the need for technical assistance as well as downtime for updates.

Cloud technology has proven to be a game changer with enterprise software.

For many years, only businesses who had the financial resources to invest in software and the associated technology and resources could afford to make these purchases, giving them a distinct competitive advantage.  Now small businesses, even start ups have access to warehouse management systems, enabling them to compete more effectively with larger scale competitors.

Using a Warehouse Management System to Manage the Complexities of Inventory

Warehouse management software solutions help you to handle, store and manage a wide variety of goods in one facility or multiple warehouses.

Many WMS software applications now can help you to manage goods across multiple channels including e-commerce and brick and mortar retail and aid in providing a consistently excellent customer experience.

Integrating with other systems and software used in warehouses and distribution centers will extend the functionality of the WMS.

Warehousing Space and the Changing Need for Warehouse Management Systems

What factors have had the greatest impact on warehouses in the past ten years?

Warehouse operations today are much faster paced and more complicated.  As the online shopping trend has become so dominant, the need for warehouses closer to populated areas has greatly increased.

Initially warehouses were positioned outside of cities so as to take advantage of lower cost land and labor.  Today because consumers demand immediate, low cost delivery, goods need to be stored much closer to where people live.

Today warehouses are built taller, with high ceilings to enable the use of warehouse automation.

Did you know that 89% of warehouses in the United States were built prior to 2000?

Over 1 billion square feet of total warehouse space inventory in the U.S. is over 50 years old and has ceiling clearance heights of less than 20 feet.

With an anticipated growth rate of 150% in e-commerce over the next five years, the United States certainly needs more warehouse space!

New warehouse design and construction now considers the frequent need for warehouse automation, material handling systems including conveyors and sortation systems as well as the speed of processing high volumes of individual orders direct to consumers.

It also factors into transportation and logistics issues such as last mile delivery, final mile delivery and much more.

How does this all impact a warehouse management system?  In numerous ways.  Integrations are a necessity to connect the warehouse to all the various systems, software and sophisticated equipment.

In addition, a warehouse management system must be EDI ready.   E-commerce fulfillment businesses often run a higher volume of individual orders, picked by the piece rather than goods by the pallet.

A WMS used for e-commerce must be able to handle pick and pack, wave processing, cartonization, rate shopping, automated operational processes and reliably handle the speedy processing of a huge number of orders.

What Are the Benefits of Using a Warehouse Management System?

Leveraging the use of a warehouse management system for your operation provides you with a wealth of knowledge and insight into your warehouse operation, helping you to ensure solid levels of labor productivity, excellent customer service, and efficient, cost-saving operations.

Here are some other benefits of using a warehouse management system:

Real Time Information Visibility and Insight

When used with automated data capture methods such as barcode scanners, mobile computers or RFID, a warehouse management system provides real time visibility into warehouse operations.

This can help you better understand how to optimize processes for efficiency, make better business decisions, arrange the placement of inventory, providing fast, easy access for fast-moving goods and much more including:

Systems Designed for Warehouse Efficiency 

  • WMS systems determine the most effective use of workforce labor and space, maximizing the facility footprint
  • Helps control the handling, movement and storage of inventory in the most efficient manner
  • Increasing the efficiency of warehousing operations equates to cost savings from the loading dock to the shipping dock
  • Helps increase throughput
  • Aids in providing the necessary flexibility in handling differing order and product profiles
  • Connects to a variety of systems, such as transportation management systems, enterprise resource planning software and more 
  • Improves the capability of warehouse operators to manage inventory based on allocation rules (FIFO, FEFO etc.)
  • Streamlines operations to facilitate best route for picking inventory, using variety of picking strategies
  • Extends software systems functionality outside the four walls of the warehouse via interfaces to shipping carriers, e-commerce platforms, payment gateways and more
  • Facilitates the use of sophisticated technologies in the warehouse via interface to sortation and conveyor systems, material handling solutions, warehouse automation and more

 

Why Does a Company Need a Warehouse Management System?

Tips for Evaluating and Selecting a Warehouse Management System

STEP ONE:  How to Prepare for a Warehouse Management System Selection Process

Identify key stakeholders and influences in the selection process. Involve team members from areas across the organization and pay careful attention to the needs and concerns of each team.

Research and structure a business case for investing in a new WMS. In other words, identify what challenges you are trying to solve in your business and how new warehouse management software can help improve your operation.

Know the pain points and business requirements.

Form a selection committee. Make sure that you have at least one or two individuals on the committee who have a clear understanding of operational processes used in your business.

Know the basics of what will be needed for your project before contacting a WMS software vendor:

Identify and document the weaknesses and strengths of your existing warehouse management system. Know what you like and do not like about your current warehouse management system.  In addition, be aware of all manual workarounds your operation is currently using.

Specify what areas of the business you want to improve.

Provide a list of the current (and anticipated future) challenges you need to have solved or improved by a WMS.

Know the basics about your project first before engaging with WMS software vendors:

  • Anticipated budget for entire project as well as cost of maintaining the system over the next few years.
  • Specify what you want to have included in the project, i.e. for how many and which specific warehouses, add-on modules of functionality, integrations, etc.
  • Timeline: when will the project need to start and end
  • Parameters: what features and functionality are required vs. what is “nice to have”.
  • Will the project be implemented in phases? If so, what constitutes the phases?
  • Realistic expectations of your team, especially your IT resources. This will let the WMS software vendor know how much professional assistance you will need from the vendor.
  • Are you hiring or have you hired a consultant? What are the parameters of the engagement:  will the consultant help select the new WMS?  Help with implementation?
  • Number of software users, desktop and mobile
  • Are you implementing other technologies in the warehouse at the same time?
  • Will EDI be needed? For how many trading partners?  Which documents will be involved?
  • How many integrations will be needed and for what software, systems and solutions?
  • How many warehouses will use the warehouse management system in question? Do they all have WiFi networks with the needed coverage?
  • What type of mobile devices, RFID, etc. will be used? Will you need to invest in more hardware?  What hardware will be needed and under what conditions?
  • Does your WMS project already have budgetary and executive approval?
  • Will your business be adding any other technology or systems?

If possible, identify the metrics you want to improve. This can aid in helping you benchmark the relative rate of success of the project.  Make sure that you discuss this with each WMS vendor to see if your expectations are reasonable.

Consider everyday use of the system from each team’s perspective. Identify if there are specific issues involving the user interface involving ease of use, language barriers, etc.  For example, a customer service representative needs to be able to navigate quickly from point to point in order to take and process orders.

Having a system with too many windows to open and close, “too many clicks” can waste valuable time.  Some WMS systems require that the same information must be manually input in multiple locations of the software.  This is tedious and can lead to wasted time and errors.

Review the technical requirements and limitations involved with your project. Know the limitations of your technical resources in terms of capabilities, time and experience.  The WMS vendor will to know how much your technical team can and will want to do on their own versus paying for professional services.

Do some research before reaching out to warehouse management software vendors:

Ask companies that you trust which warehouse management system they use. If they have invested in a WMS in the past two years or so, ask about what they learned during the process.  Did they find other systems they really liked but did not buy.  If so, why?

If your company is a member of an industry association, you may find it useful to speak with other members and find out which WMS they use and why.

Research trends in your industry. Make a list of specific trends, challenges and needs and consider these factors when searching for new warehousing software.

Consider technology trends, especially how this influences your operation. For example, perhaps a cloud solution used with RFID portals may be useful for your operation, given the types of inventory with which you deal and the industry you service.

Consider other technologies already in use in your warehouse or which may be used in the future.

STEP TWO:  Evaluating Warehouse Management Systems

If you completed the list in step one above, you are off to a great start.  Once you have completed the initial preparation and are ready to contact vendors,

Reaching out to WMS Software Vendors

Reach out to WMS software vendors that deal with your specific type of business:

If the type of inventory you handle is a type of regulated goods (food and beverage, pharmaceuticals and life sciences, precious metals, etc.), it would be a good idea to check and see which warehouse management systems have been used for those goods.

Warehousing software to handle regulated goods often involves aiding the client in the documentation of regulatory compliance.

See if the WMS software vendor mentions the type of inventory, regulations, etc. on its website.  This is a good indication if the system has the needed functionality and that the WMS software vendor has experience and expertise in this field.

Warehouse Management Software Demonstrations

Plan on having an initial meeting to review the parameters of your project and to get acquainted before seeing the software.

Make sure you have a list of questions to ask every vendor.  Try to see the same functionality and features of every system.  If possible, request a recording of the software demonstration.  After the demonstration, assemble your team and discuss your perceptions.

If anything was unclear, email questions immediately to the software vendor. 

Try and use a simple rating system so that you can compare the warehouse management systems and narrow the field down when you find warehousing software that does not measure up or fit your needs.

Ask for software demonstrations for each department or functional area. Include team members from each respective department and have questions prepared beforehand.  Make sure that each WMS vendor shows the same features and functionality so that you can compare them all fairly.  Again, holding a brief meeting after the software demonstration can help clarify issues and questions and keep the process on track.

Request a scripted demonstration. Provide the WMS software vendor with real world data and scenarios so that you can see how you would use the warehouse management system for your business in real time.  Having diagrams or documentation of key operational processes can help each WMS vendor understand and demonstrate the value of their software for your business.

With all the software demonstrations, it is useful to the evaluation process to communicate clearly with the WMS software vendors. Scheduling brief feedback sessions or sending an email to communicate questions, concern and feedback to software vendors is advisable and can cut out time and misunderstandings.

Steps to Selecting a New Warehouse Management System

Encourage WMS software vendors to conduct an on-site visit(s) to your warehouse(s). An experienced Business Analyst or Sales Engineer should visit and tour your facilities rather than a sales representative.

Think about this: a WMS vendor that sends an experienced analyst or engineer to visit is one that is interested and capable of forming a long-term collaborative partnership with your organization.

This type of WMS vendor wants to make sure that its software will fit your business needs.  A company that send a sales representative to do a presentation is less concerned about adding value to your business.

Considering the type of inventory you handle and the industries you service is important when selecting a warehouse management system. For example, if your business is involved with e-commerce fulfilment, you need warehouse management software that can handle a high volume of individual orders, not goods by the pallet.  Here are some additional factors to consider when making your final selection of a WMS for your business.

Consider the system’s:

Flexibility:

Can it be easily configured and adapted?  As a client, can you make changes, customizing processes, labels, reports and documentation as needed?

Scalability:

Can the system be readily scaled up or down, depending upon what your business needs?

Reliability:

Does the system tend to experience lag time, lock up or stalling?  Can the software handle a high volume of activity?

Ease of Use:

Does the system have a user interface that is simple to understand and navigate?

Investing in Technology and ROI:

Are the support and maintenance fees, upgrades and services needed affordable and within parameters?

Deployment Models:

Determine how you want the warehouse management system deployed, i.e. on premise, SaaS or cloud. 

Product Traceability:

Does the WMS provide a full audit trail?  Do the WMS capabilities for traceability meet the needs of your inventory?

Ensuring Governmental Regulatory Compliance:

Can the warehouse management system help ensure regulatory compliance, provide documentation, validation services, etc.?

Technology Platform:

Does the WMS rely on outdated technology?  Was this warehouse management system all developed by one software vendor or was it acquired and combined into one system?  Will any of the technology involved by discontinued in the next few years?  Does the product roadmap fit the future needs of your business?

Availability of Real Time Data:

Will automated data capture methods be used with the warehouse management system?  Can the WMS use real time data to develop reports and dashboards?

Client references. Consider asking to speak with 2 or 3 WMS clients for references. 

Develop and use a scoresheet to compare the various warehouse management system competitors.

Factor in feedback from all team members who participated in the WMS evaluation process.

Carefully evaluate and compare the costs of the various warehouse management systems fairly.

Make sure that whatever warehouse management software you select can work now and for the foreseeable future for your company as it grows and changes.

Summary

To conduct a search for a new warehouse management system requires preparation, organization, diligence and good communication.  Assemble a cross-departmental team to obtain differing perspectives and ensure that each department

Make sure to do your homework before engaging with any WMS vendor.  Remember that you are the authority on your business.  You and your team need to meet, gather information and get prepared to answer questions, review documents and be ready to engage with a variety of WMS vendors.

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