What Is a Warehouse Management System (WMS)?
The simplest definition of a WMS is a system in which the daily operations within a distribution center (DC) are controlled and managed. WMS software has come to encompass how you receive inventory, how you store it, how you pick items for shipment and how you know when to order more. Because there’s so much interconnectivity built in, software naturally makes these processes cleaner, easier to track, and less susceptible to human error. These software solutions offer visibility into a business’s entire inventory and manage supply chain fulfillment operations from the distribution center to the store shelf.
However, not all warehouse management systems are created equal. Although a WMS can be comparatively analog, it does not mean it has to be; just because some warehouse management systems come with every feature available, it does not mean you must adopt them all. When searching for the right WMS for your business, it’s a matter of finding what’s right for you and then being flexible enough to adapt as external factors and conditions shift or the business grows. Please note that WMS is not to be confused with WCS and/or WES, but how they overlap should be understood.
Table of Contents:
- What Is the Main Benefit of a WMS?
- How Does a Warehouse Management System Work?
- What Are the Types of Warehouse Management Systems?
- What Is the Best Warehouse Management System?
- How to Implement a Warehouse Management System
What Is the Main Benefit of a WMS?
An advanced warehouse management system offers a variety of benefits, with the primary feature being inventory control. A high level of inventory control where businesses can gain a 360-degree view of inventory levels and locations will enable greater efficiency throughout the entire supply chain, making it the most critical component of your WMS solution. Through the implementation of the proper warehouse management system, order management will become a strength and can boost your customer service levels. In a globally connected marketplace, an optimized WMS enables businesses to focus on other areas of growth.
How Does a Warehouse Management System Work?
Businesses running inefficient warehouses will be impacted much more severely in the event of disruption, whether a severe weather event, pandemic or even during an ill-prepared peak season. Your warehouse management process incorporates all the steps your staff needs to take in order to get your products from your warehouse to your customers—quickly and efficiently. This primarily consists of inventory delivery to your warehouse and how that inventory gets stored, in addition to order picking, packing and ultimately shipping to customers.
- Inventory Reception/Tracking – The first step in your WMS responsibilities begins when the inventory arrives. You need to track what arrives, when it arrives and store it in a way that allows you to retrieve it quickly.
- Picking and Packing – When an order comes through, it must be quickly and accurately picked from its storage location to match a client’s order. A WMS should generate pick lists for each picker to retrieve items in the most efficient way. From there, a packer will place items securely in a shipping container.
- Shipping – This includes the delivery options and shipping services offered to customers. Your WMS includes the completed order details and provides order tracking details for the customer.
- Reporting – Your software not only tracks where the inventory is in the system, but it can provide records that summarize the health of the overall system. These reports indicate how quickly orders are fulfilled and how accurate your fulfillment is, leading to data-driven decisions.
What Are the Types of Warehouse Management Systems?
There are four primary types of warehouse management systems:
- Standalone Systems – The most basic model is often used with a business’s original hardware and software.
- Supply Chain Modules – The focus is to automate common tasks, but it can also manage relationships with vendors, ongoing business processes and assessments of risk.
- Enterprise Resource Planning (ERP) Modules – ERP software is a powerful tool where the WMS is integrated into a broader software system encompassing almost all aspects of your business. An ERP System includes the warehouse management system features discussed and rolls them into a package combining things like supply chain planning, accounting, customer relationship management, human resources and more.
- Cloud-Based Systems – These are web-based models that employ cloud technology. A cloud-based WMS can supply the same benefits of a more traditional WMS, while also providing faster implementation and lower costs.
What Is the Best Warehouse Management System?
This depends on your specific business and the options potential vendors provide. It may be more helpful to first conceptualize how to choose a warehouse management system. This should lead to the best WMS vendor for you. Remember that choosing a warehouse management system should solve specific requirements you need to be fulfilled. If possible, avoid choosing based on price rather than function. A low-cost solution that doesn’t meet your needs can end up costing more down the line when it no longer meets your needs as the business shifts and grows. Make sure the vendor breaks down gaps in how its system overlays upon your processes prior to signing a contract with the vendor. These agreements will have long-lasting impacts on how your company functions.
How to Implement a Warehouse Management System:
Once you’ve selected the best system, you must turn your attention to execution. Warehouse management system implementation requires planning and proper expectations. You need to know the timeline and must consider the internal shareholders responsible for seeing it through. There are other serious dos and don’ts of WMS implementation you must keep in mind in order to efficiently manage the scope of the project such as budgeting for testing and training. Again, one size does not fit all when it comes to WMS implementation. Below are steps to follow in planning for a WMS implementation:
- Set expectations for the project
- Consider who will “own” the WMS
- Plan your WMS implementation timeline
- Get your IT team involved in your WMS project early on
- Determine your requirements before starting the vendor selection process
- Avoid modifications to control project costs
- Incorporate testing, training, and go-live elements into your project budget
- Manage project scope instead of forcing shortcuts
You’ll know you need a new WMS because you recognize there is untapped operational potential in your warehouse. What’s become increasingly beneficial, is the ability to capture sophisticated performance and inventory metrics in real-time to understand and visualize the status and quality of your inventory. By understanding the benefits that come in the short-term and last for the long-term with the right system and proper implementation, you can ensure a successful choosing and implementation.
Making sure your organization is following a proper WMS implementation methodology will significantly improve chances of successfully going live with a new, well-designed and thoroughly tested warehouse management system. To understand if it is time to purchase, upgrade or replace your WMS, take our WMS Readiness quiz here.
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