What is a Warehouse Management System?

A warehouse management system (WMS) is a software application that supports the day-to-day operations in a warehouse. WMS programs enable centralized management of tasks such as tracking inventory levels and stock locations. The application does this by allowing the users to have a centralized system where different warehouse tasks are managed through an interface on a handheld device or a tablet working in the warehouse or a desktop in the office. This makes running a warehouse both efficient and easy, and also ensures that minimal if any losses occur in the different warehouse processes. The real gain is in customer service. Imagine knowing exactly where every product is, knowing when to re-order, and how much to re-order or produce. These things seem like a business goal, but for a customer it means they can get the product faster, without backorders or errors, so they are more likely to return.

What does a WMS do?

A warehouse management system is used to control and track the transfer and storage of materials in a warehouse. The system involves a number of processes that are important when shipping, receiving, or even putting away materials and integrates with other systems in the supply chain to ensure data transparency throughout your enterprise.

Receiving goods

The WMS provides a simple process that is to be followed when handling a shipment that has arrived at the warehouse. The process can be customized to suit different users’ requirements but its core function is to ensure that all shipments are handled properly to minimize on losses and also save on time.

Tracking inventory

A WMS enables warehouse owners to keep a tab of all the stock in the warehouse. This is important because it ensures that the warehouse manager is able to know when there is enough stock in the warehouse and know when to order for more stock to prevent shortages. This saves on space as overstocking is prevented and also ensures that resources are well distributed to ensure a smooth running of the warehouse.

Slotting for Efficiency

A WMS enables users to model an efficient way of storing different products in a warehouse depending on different factors like demand and weight. This ensures that the warehouse is arranged in such a way that products that move faster or are heavier are stored close to the door for faster processing of orders, and products that are used together are stored in close proximity. This makes running the warehouse easy and efficient.

Labor visibility

The WMS system eliminates the need to get more labor to undertake some of the functions that are managed at a central point in WMS. Probably the biggest labor savings is eliminating full inventory counts which can often happen monthly or even weekly. A WMS can allow you to do periodic cycle counts without interfering with day to day operations. Reducing on labor can obviously greatly cut back on expenditure simply because the system is not labor intensive.

Document preparation

A WMS automates most of the different processes, eliminating the need for paper documents that are bulky, and eat up quite a huge chunk of money when it comes to purchasing them and storing them appropriately. By giving visibility to the system to everyone simultaneously, everyone has the data needed to do their job at their fingertips.

Picking and Shipping

A proper WMS ensures that the right product is picked based on your business rules (LIFO or FIFO). A good WMS will make sure that the right orders are shipped to the right people at the right time. With this accuracy, the mistakes that can arise when transporting goods are avoided and ends up as a more efficient and less costly transport system.

Customer service

A WMS improves the overall customer service by ensuring that orders are received and processed on time, and the right products are delivered to all customers when and where they need them. The quality of products is maintained enabling users to retain their customers and attract new ones.

Tracking and Visibility

For industries that require advanced tracking capabilities, a WMS will allow you to track lot information, expiry dates, UPC, and serial numbers. Each data point adds to the cost to maintain, but often comes with great returns when advanced visibility is required. Recalls and warranty issues are quickly resolved by solving the root problem through trace back instead of just a payout to the customer.

Reporting

The best Warehouse Management Systems will be in an easy to use database, like Microsoft SQL and include many reports out of the box. One hidden advantage to having systems is the ability to look at data in new and exciting ways. What percentage of your warehouse is utilized? Should you expand, or find a smaller space? How many transactions are each employee doing per hour? Can you reduce headcount? Can you negotiate better rates with your parcel service based on your cube and weight throughput? Is your pick path setup to be as efficient as possible for your pickers?

How does a WMS fit into your supply chain?

In a fully integrated solution you will have your raw materials received into your Warehouse Management System, be consumed by your Material Requirement Planning system and the finished goods be deposited back into the WMS. The WMS will facilitate the tracking of the product through moves and cycle counts while in the warehouse, then finally be picked and sent to either the shipping system or Transportation Management System to route your trucks. The entire time your Enterprise Resource Planning system will be tracking the values, orders, sales, and invoices with all of the systems.

What to look for in a WMS

There are different types of WMS ranging from simple uncomplicated systems to more complex ones that are more suited for large warehouses. When looking for a WMS system for your warehouse, there are different factors you need to consider before you can settle on one WMS. Some of the things to consider include

Functions

Different WMS can perform different functions and are built for different industries. What functions does your business need to meet to satisfy the needs of your customers, any regulating bodies, and your shareholders? Look for a warehouse management system that is configurable and able to scale past where you are, but to where you plan to be in five years.

Warehouse size

Larger warehouses require more detailed systems than smaller ones. This is because more activities and functions are carried out in a large warehouse and all such activities and functions require a more detailed system. The larger the warehouse, the higher the cost of travel between locations, and therefore the more important detailed tracking is.

Customer needs

By identifying the loopholes in your current system, you will be in a position to determine the functions you require in a WMS, and select a WMS that will ensure that you are able to serve your customers better and increase their satisfaction with the services you provide. Are you an ecommerce site that needs auto-allocation so your available inventory is always accurate? Do you need to post tracking numbers to your customers? Do you need lot tracking to comply with FDA regulation?

Cost

The cost of installing a WMS system differs greatly depending on the complexity of the system and the system vendor. Choose a WMS system that will serve your warehouse better by fulfilling all the required functions, and also one that your business can afford. Choosing a system that is way too expensive for you will only put your business in trouble and end up compromising the quality and efficiency you so much want to improve. Choosing a basic WMS system on the other hand might not serve you sufficiently, especially, if you have many functions in your warehouse. You have to find the right balance between cost and functions when choosing the right WMS for your business. Don’t get caught thinking what your business needs are today, think of where your business needs to be in 5 years and choose a product that can take you there and beyond