What Is a Warehouse Management System?

Modern shippers, wholesalers, and third-party logistics (3PL) providers are expected to provide expedited fulfillment and delivery services on par with e-commerce behemoths like Amazon. To achieve the efficiency sellers expect and consumers demand, warehouse and distribution businesses need robust warehouse management systems.

A warehouse management system, or WMS, is software designed to help organizations manage, control, and optimize their day-to-day warehouse operations. A WMS plays a crucial role in controlling the supply chain by providing decision-makers instant real-time access to their complete inventory. 

Below, we’ll explore a few notable warehouse management system examples, discuss the key benefits of using a WMS solution, and highlight the different types of platforms available.

How does a warehouse management system work?

A top WMS solution can positively impact each process that occurs within a warehouse. WMS technology also encourages downstream and upstream improvements to supply chain efficiency.

These are some critical processes facilitated by warehouse management system features:

Inventory management

WMS software offers real-time visibility into a company’s inventory across all locations. Leading solutions also provide visibility into inventory that’s already in-store or in transit. 

Order management

A warehouse management system can streamline every facet of order management, from receiving to picking, packing, and fulfillment. With a robust WMS, businesses can pinpoint and remedy bottlenecks, implement new processes, and prepare shipments faster.

Receiving and put-away

A warehouse management system integrates with other mission-critical software to enhance receiving and put-away processes. WMS technology can reconcile shipments against digital purchase orders, check printed labels to verify they match good receipts, and eliminate the need for manual product intake. 

Tracking and reporting

The best warehouse management systems include reporting and analytics tools designed to help decision-makers monitor their facilities’ performance. With these insights, they can improve core processes, address potential logjams before they impact productivity, and optimize resource management.

Shipping

Many WMS platforms integrate with logistics applications and transportation management software (TMS) to expedite shipping workflows. Together, these platforms can automatically generate packing lists, invoices, and bills of lading, thereby accelerating delivery timetables and reducing the likelihood of shipping mishaps.

Primary types of warehouse management systems

Familiarity with the various types of warehouse management systems lets you choose the appropriate deployment methods for your organization’s unique needs. Let’s examine the four main types of warehouse management systems.

Standalone WMS

A standalone WMS platform is typically deployed on-premises, meaning it’s supported by servers and other hardware the organization manages.

A standalone warehouse management system offers significant customizability and allows the organization to maintain complete control over its data. However, there are substantial startup costs and ongoing maintenance associated with an in-house solution. 

Cloud WMS

A cloud-based warehouse management system can be deployed quickly and involves far lower upfront costs. Cloud-based solutions are delivered as software-as-a-service (SaaS), meaning businesses receive ongoing support from the vendor in exchange for a monthly or annual fee. 

The cloud-based approach ensures the organization retains access to the latest features and updates while shifting the burden of system maintenance onto the vendor. 

ERP-integrated WMS

Many manufacturers and logistics providers prefer using a WMS that’s integrated with their enterprise resource planning (ERP). Under this deployment model, the WMS is offered as an add-on module that integrates with the core ERP solution.

In addition to WMS modules, Leading ERP platforms often feature other add-ons, including customer relationship management (CRM) applications, accounting tools, and more. 

MRP-integrated WMS

Although ERP solutions have largely replaced materials resource planning (MRP) platforms, the latter is still used by many manufacturers and warehouses.

MRPs include a variety of add-on modules, including WMS software, but they aren’t as versatile as ERP systems. They primarily address material and inventory management functions, as well as delivery and fulfillment processes.

Warehouse management system examples

There’s a multitude of warehouse management systems on the market. Some function as standalone options, whereas others are a component of an ERP platform.

Two well-known examples of WMS platforms are SAP Extended Warehouse Management and Oracle NetSuite Warehouse Management System. Both are modules that operate within ERPs. 

In many instances, business leaders find ERPs are the right fit for their organizations due to their versatility. In addition to WMS software, leading ERPs include product lifecycle management (PLM), accounting, and forecasting modules.

Finding the best warehouse management system

With so many warehouse management systems available, it’s important to weigh the various options carefully and schedule a demonstration whenever the opportunity arises.

Demoing a prospective WMS solution gives decision-makers a firsthand look at its features, useability, and overall performance. By exploring multiple solutions, business leaders can find a platform that aligns with their unique goals and achieve a strong ROI. 

5 processes of warehouse management

Warehouse management software delivers measurable value for businesses by addressing all core warehouse management processes. Here is how it integrates into existing tasks:

1. Receiving

Without WMS technology, warehouses and distribution centers must process incoming goods manually, which is inefficient and tedious. However, WMS solutions support RFID technology and modern tracking strategies, simplifying receiving processes and promoting efficiency. 

2. Put-away

The best WMS platforms also feature customizable business rules, which provide guidance on where to store incoming goods. This feature eliminates decision fatigue and allows personnel to quickly route goods to the appropriate location within the warehouse.

3. Order picking

A warehouse management system’s order-picking tools help staff determine the most efficient way to pick and pack products, reducing work and increasing productivity. The best platforms can also integrate with picking technologies, such as RFID scanners, robotics solutions, and pick-to-voice solutions. 

4. Packing

From printing labels to optimizing packing processes, warehouse management systems empower fulfillment center personnel to get more done. The leading WMS solutions also support advanced picking and packing techniques, such as cross-docking and zone picking.

5. Shipping

By integrating with logistics and TMS solutions, warehouse management systems can send out automated shipping notifications to customers to remove friction from the client experience. They can also support real-time tracking, letting companies monitor on-time delivery rates and gauge overall shipping performance. 

Benefits of a warehouse management system

There are many warehouse management system benefits to speak of. These are five of the most noteworthy:

• Improved inventory accuracy: With WMS technology, decision-makers can access real-time inventory visibility, ensure stock accuracy, and proactively prevent shortages.
• Increased operational efficiency: By streamlining every facet of warehouse management, WMS technologies help facilities handle higher order volumes, reduce errors, and maximize output. 
• More repeat customers: Faster deliveries and fewer errors translate to enhanced client satisfaction, which promotes business continuity and boosts customer loyalty. 
• Better labor management: A WMS solution helps businesses forecast labor needs and create optimized schedules, resulting in a more balanced workload for team members and, ultimately, better morale. 
• Reduced waste: Warehouse management software can help facilities reduce waste and optimize space utilization to increase profitability.  

Inventory management versus warehouse management

Although inventory management and warehouse management often pop up in the same discussions, they aren’t synonymous. Here are the three key differences:

1. Scope: Warehouse management involves physical operation within the warehouse, whereas inventory management focuses on tracking and replenishing inventory levels.
2. Process focus: Warehouse management covers various warehouse operations, but inventory management handles only inventory-related processes. 
3. Business impact: Inventory management tools can provide real-time inventory visibility and help improve the flow of goods in and out of a facility. WMS technology can positively impact every warehouse workflow and share indirect benefits with other members of the supply chain.

Smart warehousing: From AI to machine learning

To keep pace in the ultra-competitive logistics ecosystem, companies are embracing smart warehousing technologies, including the following:

AI

Artificial intelligence tools can analyze warehouse performance data, guide decision-making, power critical business software, and streamline operations. They’re often employed in conjunction with internet of things (IoT) devices, including internet-connected conveyors, smartphones, and other handheld tech.

Mobile devices

Smartphones and tablets keep users connected to the WMS while receiving shipments, picking orders, and engaging in other essential tasks. 

Robots

Warehouse robots are used to transport inventory, pick orders, perform inventory checks, and execute other core tasks.

Automation

Top-performing warehouses use automation technologies to reduce the need for manual processes and enhance productivity. Data collection, scanning, picking, and other tasks can be partially or entirely automated.

Modernize your warehouse management system with Orderful

Getting your hands on the right warehouse management system is just the beginning of your digital transformation. To streamline your inventory and warehouse management processes, you need modern, fast, fully integrated technology, such as Orderful’s custom electronic data interchange (EDI) solution.

Orderful connects your entire business, facilitates expedited information sharing, and provides the real-time insights you need to outpace the competition. Contact us today to talk to an EDI expert about how you can upgrade your organization.