What Is A Warehouse Management System (WMS)? How Does It Work?

For any business that deals in physical goods and materials, having a warehouse management system (WMS) enables them to more efficiently and smoothly control, manage, and analyze how they flow through their fulfillment or distribution center. 

WMS software systems not only provide a clear overview of operations and inventory flows through the warehouse, but also offer tools that can be used for other needs like pick and pack services and e-commerce order fulfillment.  

What is a WMS?

A WMS is a software system commonly used in any business that handles physical goods and materials. When raw materials arrive at the facility, they are processed into work-in-progress or finished goods that are then shipped out to clients. In some cases, the warehouse may just be used as a transit point for already finished products. 

Either way, it is important to have a way of monitoring the flow of materials and goods that go in and out of the warehouse. This tracking ability will enable the business to better understand its inventory movement and levels. With WMS, employees should also be able to easily locate whatever material or product they need for production or to fulfill an order. 

A WMS allows the business to easily access whatever information they need about their inventory and quickly determine if they have sufficient stock to fulfill an order as it comes in, without having to physically check the shelves. They can immediately confirm the order and have their employees go ahead with packing and sending out the order. 

Types of WMS

There are three main types of WMS that businesses can consider. Before we dive into the various types of warehouse management systems, here is a list of WMS reviews from Gartner.

1. Standalone WMS

These are customized systems that are deployed on the ground at the business’s warehouse facility. This lets the businesses have absolute control over the software and data, though it can prove an expensive investment. 

2. Cloud WMS

These cloud-based systems are more quickly delivered as software-as-a-service and can be easily integrated with other technologies. They can be scaled according to the needs of the business and updated regularly and remotely. It is a lower-cost option with the responsibility of maintenance and security remaining with the vendor.

3. Integrated ERP and SCM-based WMS

This is a different type of customized WMS that is built to integrate with existing ERP and supply chain systems. They are developed as add-ons, modules, or applications that can more effectively interact with other solutions while still providing a better overview across the business and logistics chain.

Benefits of WMS

Operating a manufacturing plant, distribution, or fulfillment center means having to manage a lot of moving parts. For businesses that have production lines, it means having to take delivery of raw materials, track their movement as they are processed, monitor the level of the output, and have further systems in place to manage their warehousing and order fulfillment. At any given time, you need to know inventory levels and where every product is stored within the warehouse. 

For the best results, you will need a system that can allow you to manage and monitor these operations as efficiently as possible. With a WMS, you can improve order latency, streamline operations, minimize costs, and reduce order errors. 

When you can easily track the flow of inventory, it also enables you to identify which products are in higher demand and adjust your orders for materials and goods so you are in less danger of running out. Besides improving your supply chain management and making for more accurate demand forecasting, it can also help in better organizing how you stock the warehouse, allowing for such goods that are in higher demand to be located closer to the packing or loading areas for faster fulfillment. 

When the layout of the warehouse and arrangement of storage is streamlined, management can optimize the travel time when fulfilling orders and better ensure that the right employee with the needed skills is at the right location. This better organization ensures easier labor management and a safer and more relaxing work environment for employees, boosting morale and job satisfaction. 

Beyond the warehouse, there is also the benefit of improved supplier and customer relations. When the flow of materials and goods is properly streamlined, it becomes easier and faster to take deliveries and fulfill orders with minimal errors. This helps create a positive working relationship with outsiders and builds a stronger brand reputation. 

How A WMS Works

Understanding how a WMS system works will require delving into how its features can support various operations in warehouse facilities. 

• Receiving and Put-Away Process

A WMS can be used to speed up the receiving and put-away process undertaken whenever the warehouse takes delivery of materials and goods. Rather than having to manually reconcile deliveries through physical counting and recording data using pen and paper, you can have a WMS that uses such technology as RFID and integration with billing to scan deliveries and have them automatically reconciled against digital purchase orders. 

• Inventory Management

A WMS allows for clear visibility of inventory across the warehouse, ensuring you can more effectively make adjustments to purchase orders so you can capably fulfil customer orders as needed. Using such tools as data capture technology and automatic identification, you can generate data for analysis and gain insight into different aspects of your operation. Proper inventory management means you can also better allocate resources as you monitor the flow of inventory in and out of the warehouse. 

• Labor management

The use of WMS systems allows businesses to better break down and understand their labor costs, staff performance, response times, and much more. The visibility and insights gained can help businesses to better organize how employees work so there is less wastage of time and money. 

• Order Fulfilment and Pick & Pack

Warehouses are increasingly being used to fulfill retail orders. WMS systems make it easier to undertake this order fulfillment by providing software and technologies that can track inventory levels to ensure customer demand can be satisfied, and streamline the quick retrieval, packing, and send-off of the items. 

• Shipping

As warehouses continually ship out orders, there is a need to coordinate with transporters. A WMS can be integrated with transport management and logistics software to better expedite order fulfillment. The software can provide tools for carrying out tasks such as generating invoices and bills of lading, and real-time tracking of shipments. 

• Metrics and Analysis

With a WMS system, data collection and analysis are more efficiently accomplished in real-time. The metrics generated can provide valuable insights related to such issues as order fulfillment rates, distribution costs, and inventory accuracy. These metrics can be presented using visual formats that stakeholders will find easier to understand.  

When choosing a WMS for your business, ensure that it offers the features that will help meet your operational needs and fit your budget. Work with your WMS provider to develop a system that is customized to these needs and will improve your ability to run your business more efficiently, effectively, and affordably. 

For smaller businesses that may find investing in a WMS and managing a warehouse daunting, it can make more sense to simply outsource their warehousing and fulfillment needs to better manage time and costs. This would allow them to focus better on other important aspects of their business while taking advantage of the expertise of specialists in warehousing and fulfillment logistics.