Warehouse Management System (WMS)

warehouse management system

What is a Warehouse Management System?

A Warehouse Management System (WMS) essentially consists of software and processes that let organisations control their warehouse operations and functions by automating their processes to form an end-to-end solution (E2ES).

Hence, in simple words, a Warehouse Management System is a software application that helps control and administer day-to-day functions in the warehouse from the time material or goods enter the warehouse until they move out.

In the era of increasingly complex global supply chains and manufacturing cycles that produce and deliver goods to customers faster than ever, traditional warehouse management has felt the urgent need to keep up. As these two trends continue, warehousing systems have sought software automation in the form of Warehouse Management Systems (WMS) to upgrade their processes, hold goods more efficiently and pick and deliver them faster.

What does a Warehouse Management System do?

A software application such as WMS is engineered to support and optimise warehouse functionality and distribution center management. It instructs inventory receiving and putaway, optimises picking and shipping of orders, and guides inventory replenishment.

A warehouse management system can decrease the possibility of errors that could occur when a product is shipped. It can also help a company fulfil orders more quickly and instantly trace ordered products within the warehouse or transit.

Ultimately, the overall goal of warehouse management system software is to achieve a paperless environment that directs the employees automatically on the optimal picking, putaway, and shipping of products.

Characteristics of Warehouse Management System

Among the wide variety of WMS Softwares available, there are many standard features that may be noticed. They include the following –

  1. Warehouse or workflow design: – WMS makes it possible for the companies to customise a workflow that includes advanced picking logic to ensure that the warehouse is designed for optimised inventory allocation. With a rise in holding costs and space becoming more expensive, using a WMS with the ability to slot bins to maximise storage space allows more efficient use of that space.
  2. Inventory tracking: – WMS allows the use of advanced monitoring and Automatic Identification and Data Capture (AIDC) systems, including Radio-Frequency Identification (RFID) and barcode scanners to help find goods easily when they need to be moved.
  3. Receiving and Location: – WMS enables inventory putaway and retrieval, often with advanced locating features like pick-to-light or pick-to-voice technology for accurate location of goods.
  4. Picking and packing: – WMS helps companies implement advanced picking systems that benefit from the power of the WMS analytics, which includes zone, wave, and batch picking methods. Workers can be instructed on the most efficient and feasible physical path for picking their goods to minimise time and fatigue.
  5. Shipping: – WMS helps send bills of lading (B/L) ahead of the shipment, generate packing lists and various invoices for shipment, and send advance shipment notifications to recipients automatically.
  6. Labour Management: – WMS optimises labour utilisation by giving managers the ability to monitor key performance indicators (KPIs) on worker performance, which indicate workers who perform above or below standards.
  7. Dock Management: – WMS aids truck drivers coming into a warehouse to find the proper loading docks and provide them with optimised dock times. A more intricate yard and dock management application provides for cross-docking and other functions of inbound and outbound logistics.
  8. Reporting: – WMS helps managers in analysing the performance of warehouse operations, finding areas to improve, and keeping a systematic record of the same.

Types of Warehouse Management Systems

In this day and age, several types of Warehouse Management Systems are available, all of which have unique benefits for different warehouse needs. The most widely used types of WMS are:

  • Standalone System: – A standalone warehouse management system is a classic “on-premises” type system that is installed on the native hardware and network of the business and typically consists of inventory management and warehouse operations.

Advantages: It includes only the best, most critical features of all the potential warehouse management system modules. It is low cost, simple, and can quickly be used without waiting for full integration.

Disadvantages:  It needs to be updated regularly, which can be costly and disruptive to the operation of the business. It is also complicated to scale a standalone system as the new version must be purchased and deployed, and training may be extensive.

Suitability: It comes with very basic and limited features, and might be the best fit for smaller warehouse operations, or for those looking to use it besides their other supply chain operations but not integrate a new system. This makes it a suitable solution for small or midsized businesses or businesses without much budget for software. 

  • Supply Chain Module: – A Supply Chain Module may be considered a subcategory of supply chain management (SCM). It can also feature customer service capabilities, material handling, inventory control, vendor management, transportation management, improved user interface, and customer relationship management.

Advantages: It bolsters holistic management of the whole supply chain and ensures plenty of cohesion between different parts of the business.

Disadvantages: It is comparatively costlier than the Standalone system.

Suitability:  It may be used where the needs of the business are more comprehensive and beyond the basic warehouse operations like picking, shipping, and receiving.

  • Enterprise Resource Planning (ERP) Module: – ERP is a powerful software system that combines the proficiencies of many other systems. It provides most of the core applications that make 3PL processes go smoothly- supply chain planning, accounting, human resource management, customer relationship management, and many more.

Advantages: These are specialised systems that provide robust supply chain execution and scalability. Because of this broad scope, ERP can replace a host of other software applications and centralise the operations into a single interface.

Disadvantages: It is relatively expensive, and many businesses may not be able to afford it.

Suitability: It is a good fit for businesses looking to upgrade their software solutions on a larger scale. ERP Module is also suitable for enterprises looking to get a competitive edge and improve their ROI or for 3PL businesses that want to expand their operations.

  • Cloud Based Platform: – Cloud-based WMS is a model that uses cloud technology to manage the WMS inputs. The software is managed and hosted by the WMS vendor or a cloud service provider, which takes the onus of installing, managing, and upgrading the system off the organisation’s IT department.

Advantages: Faster implementation, fewer upgrade hassles, lower costs, and scalability are among the benefits provided by Cloud-based WMS.

Disadvantages: Often, it can’t be customised, making it less suitable for organisations that need to tailor the software to meet their unique processes or industry requirements. Moreover, it requires regular updates and might entail high long-term costs involving licenses and premium packages.

Suitability: It can be used by any enterprise, regardless of its size, but it is beneficial for small and medium-sized businesses (SMBs) that need flexibility and modularity in their system. 

Benefits of Warehouse Management System

warehouse management system

Warehouse Management System provides a large number of advantages to both- the company and the customers. Some of them are-

  1. Fewer errors: – WMS helps reduce the number of mistakes, especially human errors that might take place over the entire warehousing process. For instance, coding everything with a barcode number and using an inventory barcode scanning system reduces the chance of items getting miss-picked. Moreover, using a barcode system creates a digital record of what’s being sold and the respective price, hence, making it easier to track if that item has been returned and put back in stock. 

  2. Optimised warehouse space: – WMS helps optimise warehouse flow by evaluating the best use of floor space according to the task and material characteristics. It is designed to locate items in relation to sell-by date, receiving assembly, packing, and shipping points, implying that the inventory holding costs may also be reduced.

  3. Effective labour: – An efficient WMS can effectively assign the right task to the right person at the right time. It can assign jobs on a daily basis and efficiently formulate schedules by using labour forecasting, which helps optimise labour efficiency, equipment efficiency, and space efficiency. KPIs may also be used to analyse staffing, which is imperative because labour is generally one of the highest costs of warehouse operations.

  4. Greater Inventory Turnover: – WMS can exponentially improve inventory management, creating a faster inventory turnover. It can help reduce lead times by limiting inventory movement and improving record accuracy, reducing safety stock requirements.

  5. Lowered costs: – WMSsignificantly brings down the overall cost with the best possible utilisation of storage space, human capital, and inventory resources, increasing productivity.

  6. Increased customer satisfaction: – WMS provides for paperwork to be reduced, meaning that various reports, tickets, and packing lists relating to inventory can be maintained electronically. By well-organised processes from order to delivery, product availability can be more accurately determined, giving more realistic delivery dates to customers, reducing the level of customer complaints, and enhancing overall customer service.

Hence, Warehouse Management System demonstrates various utility points in the modern world and starkly differentiates itself from its traditional counterpart. Careful selection of appropriate WMS software can go a long way in keeping the business afloat and even taking it to exceptional heights.

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