Warehouse Management Systems (WMS) are an integral component of the supply chain. WMS solutions aim to control the movement of items within a warehouse by automating and optimizing activities such as shipping and receiving, storing, and finding goods in the warehouse. Also, a WMS should provide real-time insight on storage space and inventory status. Some of the latest WMS software can also cover inventory, replenishment, and packing activities.
A typical WMS solution is made up of software (the on-premise or cloud application) and hardware components (e.g., barcode scanners, mobile scanning devices, and servers). The application can be standalone, SaaS, or integrated with the ERP (Enterprise Resource Planning) system.
The Functionality of a Warehouse Management System
Most enterprises typically want a customized version of a standard warehouse management software. It is equipped with all the functionalities they need, so they don’t have to pay for a custom solution (which can be costly to develop and deploy). Furthermore, modern warehouse management solutions have a modular structure with individual functionality being divided into 3 groups:
- Core functionality
- Additional functionality
- Expansion modules
The modularity of the modern WMS allows users to install only those modules they need instead of the complete WMS software. When a company grows and needs new functionalities to support new tasks, it can add and activate the required modules to their existing WMS. In other words, the scope of a WMS is defined by the user.
- Core functionality – The core functionality is the minimum installation of each warehouse management system and is necessary for its operation. The core functionality is only available in modules provided by the vendor and supports the main area of application of the software – from receiving goods to shipping.
- Additional functionality – Typically, some additional functionality is also part of the WMS core functionality. However, the additional functionality is installed only if the customer requires it. Additional functionality may also include modules offered separately by third-party developers.
- Expansion modules – These modules, such as Pick by Voice or RFID, typically come as separate packages that optimize the processes within a warehouse or expand the functionality of a WMS. They are usually developed by WMS vendors and can be integrated with almost any type of WMS.
What is the Purpose of WMS Software?
WMS software is used to track and control the storage and transfer of goods in a warehouse. It performs a number of different processes critical for receiving, putting away, and shipping items, and it integrates with other supply chain software to ensure data transparency throughout the organization. The basic benefits of effective warehouse management systems include:
- Tracking and visibility
For companies that need advanced inventory tracking capabilities, a warehouse management system software will allow them to track inventory details like expiry dates, lot information, serial numbers, and UPC. When superior visibility is required, each data point usually comes with great returns. By being able to trace the problem back, warranty issues and recalls can be resolved quickly by detecting and addressing the root problem (instead of just paying out to the customer).
- Receiving goods
When handling a newly-arrived shipment, WMS provides a straightforward and simple process to be followed. Enterprises can customize the process to the suit requirements of different users, but the core function is to make sure all shipments are handled correctly. This helps save on time and minimize losses.
- Inventory tracking
The software enables warehouse managers and owners to track all the warehouse inventory. This is important because it reduces the need for regular inventory count and ensures that warehouse workers are able to know when there’s enough inventory in the warehouse and when to order more to prevent shortages. For example, an efficient pick and pack process always begins and ends with an accurate inventory system. A WMS ensures that resources are well distributed and saves on space (by preventing overstocking) and improving warehouse management.
- Labor visibility
Because the WMS is not labor-intensive, it contributes to reducing labor that can further cut on expenditure. Some of the functions that used to be performed by labor can now be done by some of the WMS functions. Eliminating full inventory counts that often happen monthly (or even weekly) is one of the most significant labor savings because a WMS enables you to perform cycle counts without disrupting the daily workflow.
- Customer service
By ensuring that all orders are processed immediately, and the products are delivered to customers where and when they need them, a WMS can help improve the overall customer experience. When a brand is known for excellent customer experience, they can attract new customers and retain existing ones (all thanks to the use of WMS)
- Picking and shipping
With a proper WMS, you will ensure that the right product is picked for your business practices and rules – First-In, First-Out (FIFO), or Last-In, First-Out (LIFO). You can rest assured that the right items will be shipped to the right people at the right time. It is this accuracy that helps avoid costly mistakes related to transporting goods. All that translates into a less costly and more efficient transport system.
- Analysis and reporting
The best WMS software solutions are in an easy-to-use database, such as Microsoft SQL, and allow you to create different reports out of the box. The intelligent WMS dashboard enables real-time operational analysis, alert management, and reporting. Creating useful reports is essential to the success of any business because reports provide the information you need to see what is going on in your warehouse. Is everything optimized? Are all employees performing according to the standards? Are your processes as efficient as possible? Is your warehouse space over-utilized or under-utilized?
Besides creating reports for valuable insight, WMS enables you to go paperless. It removes the need for bulky paper documents and saves money that would otherwise be spent on paper. Besides automating many different processes, WMS also provides data visibility to everyone, so everyone has the data required to do their job.
Types of WMS
On today’s market, we can differentiate between four types of warehouse management system software:
- Standalone solution – Standalone WMS software is usually bought for its WMS features. These systems are sold as a specialized product without other supply chain functions but can be combined with other solutions.
- Cloud-Based solution – Cloud-based or SaaS (Software-as-a-Service) WMS solutions are web-based applications that can be accessed via any Internet-enabled computer. Since it is stored on the cloud, it allows users to get powerful, enterprise-level software at a fraction of the cost of in-house systems (which need to be developed and maintained regularly).
- Supply Chain Execution (SCE) Modules – SCM software solutions have a much broader scope than just warehouse management. They can help you manage everything from business processes to vendor relationships and risk assessment. SCE focuses on execution-oriented applications – warehouse management systems (WMS), global trade management (GTM) systems, transportation management systems (TMS), real-time decision support systems, and supply chain visibility systems.
- Enterprise Resource Planning (ERP) systems – These are all-in-one systems that combine the capabilities of many other systems (WMS is not a core function of ERP). ERP offers most of the core functions that make 3PL processes run smoothly – human resources, customer relationship management, supply chain planning, accounting, etc.
How to Choose a Warehouse Management System?
Because there are several types of warehouse management systems – from the simplest to more complex and robust ones – you should understand your warehouse requirements before choosing a WMS. There are several different factors you need to consider before settling on the right WMS, and those factors are:
What functions does your warehouse need to meet the needs of your customers, shareholders, and regulating bodies? Different warehouse management systems are built for different industries and can perform different functions. Look at configurable management systems that are able to scale, so it can support your expansion to the position you plan to be in after a few years.
The best WMS solution for you is one that’s able to adapt to a growing business and scale itself towards future requirements. If the system works with most ERP systems, this is a good sign that the WMS is scalable. As it gets bigger, your enterprise may change ERP systems, and you’d want to keep your WMS every time your company is scaling up. Another thing you should pay attention to is whether a WMS is built with the ability to integrate with any future operating systems and applications. Just like with the ERP, you don’t want to find yourself locked into one particular platform.
Flexibility applies to hardware as well. Your WMS should be compatible with hardware, such as scales, label printers, fork-truck-mounted RF terminals, and RF scanners and terminals. Eventually, you should check how flexible a warehouse management system is towards different business types and sizes. It should work well with all types and sizes of wholesale and industrial distributors. This is an investment in your business’s future, and you want a WMS that’s able to grow along with it.
- ERP Integration
It is important to choose a WMS that can seamlessly integrate with most ERP systems because that guarantees your WMS and ERP will work together in unison. Are you already using a certain ERP? Check whether a WMS that you think is worth investing in is compatible with your ERP software. Also, the WMS vendor should be able to develop additional ERP integrations.
- Ease of Use
With a WMS controlled by an intuitive and easy-to-use dashboard, you won’t have to spend much time and money on staff training. First of all, you don’t want training time to be excessive, especially if your WMS is completely integrated into your business. A well-designed WMS will reduce the time your employees need to set it up and monitor different operations. This is especially useful when onboarding new personnel. When a WMS is easy to learn, you can train your employees and have them working within hours or a few days, not weeks.
A WMS with clear navigation properties enables employees to utilize the WMS for optimal performance. Take a look at the application’s help screen and menu to see if they are easy to follow. It should also allow the user to simplify data entry, create template charts and reports, and provide users with a single access point to all critical data. Also, the dashboard view on your WMS should automatically update in real-time, so your personnel is always current on hourly and daily operations.
- Total Transaction Management
Your WMS should be able to track:
- Any kind of item movement
- Order picking
- Inventory audits/Cycle counting
Your WMS should allow you to oversee everything from receiving to shipping while providing you with detailed information on every step in the process. As your WMS tracks everything happening in the warehouse, you can perform a specialized analysis of your warehouse operations that will help you hire smarter and be more efficient at stocking (among other things).
- Warehouse Size
Smaller warehouses require less detailed systems than larger warehouses because more functions and activities are executed in larger facilities. Therefore, such functions and activities require a more robust and detailed system. The larger your warehouse, the higher the cost of travel between locations, and the more important detail tracking becomes.
When it comes to the cost of installing a WMS solution, the price can differ depending on the system vendor, the size of the warehouse, and the complexity of the WMS. If you choose a system that’s way too expensive for your enterprise, it may cause problems along the way and end up compromising efficiency and quality (which is what you want to improve). Instead, go with a system that will fulfill all the required functions and that your business can afford. If you choose an affordable but basic WMS solution, it may not serve you well if you have many functions in your facility.
When choosing the WMS that suits your warehouse requirements, it comes down to striking the right balance between functions and costs. Perhaps your business needs are simple now, but you need to consider where your business will be in 3-5 years. Then, choose a WMS that can take you there and beyond.
To make your work more efficient, you should consider teaming up with a 3PL company because this type of partnership can improve supply chain integration, reduce costs, increase inventory turns, bring products to market faster, adapt to market changes quickly, and improve customer experience. Also, your third-party logistics partner will have the right technology and set of warehouse management best practices that can help your business expand. If you are looking for a 3PL partner, Red Bird Logistics is ready to help. Feel free to contact us today!