What is a Warehouse Management System (WMS)?

A Warehouse Management System (WMS) is software designed to improve and optimize distribution center (DC) operations, regardless of business size or industry. An effective WMS can revolutionize customer satisfaction and cost performance for your business. As shown in the figure below, the WMS is often part of a broader software stack used to run the DC. 

When selecting a WMS, you must consider how the system will integrate with the WCS and WES. In DCs with automated material handling equipment (MHE), the WMS integrates with the warehouse control system (WCS) to provide overall control of automation systems. There also can be overlapping functionality between the WMS and WES, and you must be mindful of this when choosing the right WMS for your operation.

High-level benefits of a WMS include:

• Improved efficiency through process automation: an effective warehouse management system will automate manual processes to make for a more efficient and error-proof operation. By automating manual tasks, the WMS also enables you to shift your operators to focus on higher-value tasks such as exception handling, problem-solving, and continuous improvement. The WMS can integrate and automate all processes from receiving through order fulfillment.

• Actionable, data-driven insights: an effective system provides reporting capabilities to quickly escalate problems to operators and managers for rapid resolution (e.g., inventory level issues, high package dwell times putting service level at risk, staffing imbalances). This helps to improve customer experience and operational efficiency. 

• Integrate DC operations with other enterprise systems: many WMS options can integrate with other internal and external data sources, such as Enterprise Resource Planning (ERP), Order Management Systems (OMS) or Transportation Management Systems (TMS). This provides an opportunity to access and integrate data across the organization. 

Keep reading if you would like to learn how to leverage a WMS to automate and error-proof processes within your DC.

Common WMS Applications + Benefits

Receiving

The WMS replaces error-prone manual receiving processes to improve efficiency and accuracy. The WMS commonly uses technology such as barcode scanning and RFID to receive freight into the DC, reducing the need for manual data entry and paperwork. The system can assist with advanced planning and scheduling, providing real-time visibility into incoming shipments. This helps the operations team track the status of shipments and optimize labor allocation and resource planning. The system can integrate with suppliers, monitoring inbound shipments and providing real-time error feedback to vendors.

Put-Away

As the cost of warehousing square footage continues to rise, it is critical to use space as efficiently as possible. The WMS optimizes the put-away process by determining optimal storage locations based on factors like item characteristics, demand, and storage capacity. WMS dynamic slotting tools provide the operator with optimal put-away locations to maximize space utilization and minimize travel time.

Inventory Management

Inventory inaccuracy has many negative impacts including lost sales, shipping errors, customer service issues, and inaccurate financial reporting. Common WMS inventory management features include static inventory counts, real-time stock locating features, and historical inventory movement traceability. Many WMS feature demand forecasting and inventory analytics, which support informed decisions on the inventory levels, replenishment cycles, and stock rotation required to meet customer service levels. 

For industries with more stringent inventory costing or traceability requirements, a warehouse management system can automate the rotation and allocation of inventory based on set rules (e.g., FIFO) as well as support compliance with regulatory traceability and recall processes. Most systems can manage a high number of SKUs and can scale to accommodate large and complex operations.

Order Fulfillment

The order fulfillment process requires coordination across many warehouse processes, including inventory management, order picking, packing, and shipping. A warehouse management system can integrate and automate the entire order fulfillment process, ensuring consistent order prioritization, workload balancing, and resourcing at each step of the fulfillment process. The WMS not only improves efficiency by automating processes, but it also improves order accuracy by automating decisions to decrease human error.

Order Picking

The WMS can improve the efficiency and accuracy of the order-picking process. The system indirectly affects order-picking efficiency through the put-away and dynamic slotting process, optimizing product location in the DC based on demand patterns to reduce order-picking travel times. The WMS typically supports wave picking, which allows for the simultaneous picking of multiple orders. The system can group orders into batches based on criteria such as proximity, order type, or delivery route. It optimizes the picking sequence within each batch, reducing travel time for pick Associates. The WMS may also support features to prevent errors, such as pick-to-light technology and built-in quality control checks for damages, expired products, or other issues.

Packing

The WMS automates the packing process by providing instructions to staff based on order details, item dimensions, and packaging requirements. This supports the operator in quickly selecting the appropriate packaging material to minimize waste and reduce packaging costs. The WMS can incorporate quality control checks during the packing process to verify that the correct items and quantities are included in the package, preventing errors, and improving customer experience.

Shipping

Prior to sending items to the shipping area, the WMS verifies that the correct items and quantities are picked and packed for each order. The WMS can also integrate with multiple carriers and compare shipping rates to select the most cost-effective shipping option for each order to help reduce shipping costs.

After selecting the optimal shipping option, the WMS integrates with the shipping carrier system for seamless label printing, rate calculation, and shipment tracking. The system can also generate packing slips, bills of lading, and customs documents, automatically. These features all help to automate and simplify the process, improving efficiency and reducing the likelihood of error. 

Challenges of Implementing a WMS

Resistance to Change

As with any large project, resistance to change poses a risk to implementing a warehouse management system. An effective system will revolutionize the way that your business performs but will also require that operators learn new skills and change their processes to use the new WMS software. To counteract this natural resistance to change, there are many effective techniques to help people transition to a new way of working. Some of these techniques include: 

1. Engage stakeholders early during the warehouse management system implementation.
2. Clearly communicate the benefits of the WMS and collect feedback from operators who will use the WMS.
3. Trail all users in the new skills they will require (how to use the WMS).
4. Be flexible and willing to adjust implementation plans based on feedback and challenges.

Integration Complexities

Implementing a warehouse management system can be complex, especially if you want to harness the full power of a WMS by integrating with other warehouse systems (e.g., WES, WCS) or external systems such as ERP, OMS, TMS, etc. After selecting the right system for your business and objectives, a thorough implementation plan that follows best practices will help to streamline WMS integration. This will ensure that the WMS maps to key business priorities and KPI and will help to prioritize integration points and key project milestones. 

Data Migration and Cleanup

The warehouse management system will fundamentally change how your organization collects, stores, and uses data to run the business. There will be data migration, conversion, and clean-up challenges during WMS implementation. The first step in overcoming data challenges is assessing all sources of data that need to migrate to the WMS, including volume, format, and quality of data from each source. Only after this can you begin to standardize data and begin to develop and execute a migration plan to map your existing systems to the WMS. Be mindful to include data validation in the comprehensive testing plan, as this should not be underestimated as key to successful WMS implementation. 

Flexibility and Scalability

Flexibility to adapt and scale the warehouse management system without major customization or changes to the base system are key criteria you should consider when choosing the right WMS for your business. Most systems come with a suite of modules, and you will have the flexibility to select which modules to apply to your business (e.g., inventory management, order picking, labor management, etc.). You also can configure user interface and reporting tools, ensuring the WMS presents the right information to your operators. Most warehouse management systems are fully scalable and can grow to meet additional volume, operational processes, and users. Over time, you can adapt the features of the WMS to meet the changing needs of your business.

Resource Allocation

Successful implementation of a warehouse management system oftentimes requires dedicated project management and implementation resources with expertise in the field, as well as knowledge about the company. We recognize it may be challenging to run the business while managing a large-scale implementation. To realize the full benefit of a WMS, and to implement within the timeline and budget, it is important to dedicate or hire project management resources and subject matter experts who can help with key implementation tasks such as scope definition, resource assessment, plan development and execution.

Selecting the Right WMS

With the right warehouse management system, you have the potential to drive significant improvement in customer satisfaction and financial performance. It is important to document primary objectives and future business growth before selecting a system. Selecting the right WMS includes many factors to consider, and we recommend considering the following before making a WMS selection.

• Assess business needs: evaluate your operational pain points and requirements where is the biggest opportunity to impact the business? Align WMS features with these improvement opportunities and business goals.

• Consider scalability and future growth: Make sure to choose a WMS that can grow with your business and expanding needs.

• Evaluate integration capabilities: identify systems that you would like to integrate with the warehouse management system, for both current and future states. Ensure compatibility with these software systems, resulting in seamless connection with other business tools.

• Prioritize user experience and operator training: opt for an intuitive interface and develop a robust training plan for staff who will use the WMS.

• Calculate budget and Total Cost of Ownership (TCO): when budgeting for implementation, make sure to include initial setup costs and ongoing expenses. Perform cost-benefit analysis on WMS candidates, balancing costs with the long-term benefits of the WMS.

The Future of WMS

There are two key innovations that are offering new opportunities for optimization, efficiency, and responsiveness. The future of WMS is being driven by the integration of Internet of Things (IoT) technologies and the advancement of artificial intelligence (AI). These advancements are reshaping how warehouses operate, 

By leveraging real-time data and intelligent algorithms, warehouses can achieve new levels of efficiency, agility, and intelligence in their operations, ultimately driving greater competitiveness and success in the dynamic world of logistics and supply chain management. Let’s explore these advancements in more detail:

Internet of Things (IoT) and WMS

Integrating Internet of Things (IoT) technologies with WMS provides advanced visibility and control to warehouse operations. With sensors, RFID tags, and smart devices in the warehouse, facilities can collect real-time data on inventory levels, equipment status, and environmental conditions. This data enables potential equipment issues to be detected and addressed before they cause downtime. Furthermore, IoT facilitates dynamic inventory management by adjusting storage locations and replenishment schedules according to inventory movement data. A warehouse with integration between IoT devices and  WMS can optimize warehouse resources in real-time, maximizing efficiency, and minimizing operational costs.

AI and WMS

Artificial Intelligence (AI) is also providing exciting innovations for WMS. Decision-making and process optimization is enhanced by advanced AI algorithms. AI is capable of quickly analyzing large amounts of data to generate accurate demand forecasts, enabling inventory level optimization to reduce stockouts or overstocking. These advanced algorithms can be used to optimize order fulfillment processes by identifying the most efficient picking routes, consolidating complex orders, reallocating labor, and watching for safety violations, all while allocating resources based on real-time demand fluctuations. AI also provides insights and recommendations for inventory allocation, layout design, and resource management, allowing for additional optimization. When AI integrates with WMS, the warehouse managers have the power to make informed decisions quickly and effectively, improving overall operational efficiency and customer satisfaction.

Conclusion

By choosing the right warehouse management system for your business, you have the potential to revolutionize customer satisfaction and improve financial performance. The system can flex to meet the needs of your business and can impact process efficiency, inventory management, and overall warehouse management. Because of the complexities and variety of WMS solutions available to you, we recognize that a successful WMS selection and implementation requires expertise and resource availability. Please contact Maveneer if our team of experts can help you to select, integrate, and optimize your warehouse management system!