Importance of a Warehouse Management System

In today’s fast-paced economy, efficiency in receiving, storing and shipping products has never been more important. Modern warehouse owners and operators across America, and around the world, experience increased demand on supplying well-priced goods to a market expecting speed from order placement to delivery. Competition to supply and serve the market has never been fiercer. To profitably compete in today’s world, you must have a first-class warehouse management system.

Jump To:

• What Is a Warehouse Management System?
• Why Is a Warehouse Management System Important?
• Benefits of a Warehouse Management System
• How Does a Warehouse Management System Work?
• Choosing the Right Warehouse Management System
• Integrating a Warehouse Management System Into a Facility’s Processes
• Get Your Industrial Equipment From Cherry’s

Managing a warehouse is a highly involved skill. That’s especially true as e-commerce continues to grow at a breakneck pace. Tech-savvy consumers expect two key drivers in a 21st century supply chain — immediate product availability and competitive product cost. The best warehouse management systems fill this need and are designed to smoothly integrate all functions in a warehouse operation.

What Is a Warehouse Management System?

A warehouse management system (WMS) is a software application that supports and optimizes warehouse and distribution center operations through automated management functions. A good warehouse management system facilitates daily planning and controlling warehouse resources to transport and store every conceivable part of a business inventory process.

A software-based warehouse management system organizes inventory processes in a manner that no manual system could compare with. Computerized WMS applications manage stock and storage far more efficiently than paper flow or even first-generation spreadsheets can ever accomplish. A data-based system optimizes product management in real time and with precise accuracy. At the core, all types of warehouse management systems achieve these two tasks:

• Intralogistics: These are processes involving product movement. Intralogistics in warehouse management entails every task from receipt to dispatch. A proper warehouse management system accounts for all inventory whether it’s in motion or stationary. All logistical information concerning warehouse operations is stored, monitored and managed within an integrated software application.
• Interlogistics: Although the terms sound similar, interlogistics is a different concept from intralogistics. This task involves internal management of a warehouse facility such as inventory identification through individual stock keeping units (SKUs) and barcode identification. Interlogistics also accounts for worker and equipment efficiency.

In medium- to large-scale warehouse operations, it’s not possible to achieve maximum efficiency without a software-based management system. A study of warehouse efficiency by the Georgia Institute of Technology — Benchmarking Warehouse Performance — examined over 150 American warehouses and reached an alarming conclusion. They determined only 20 to 30 percent of warehouses are “efficient” within the standard of not having a significant opportunity for operational efficiency improvement.

Current information from Supply & Demand Chain Executive that refers to the Georgia Institute of Technology study reports that just 30 percent of the estimated 600,000 American warehouses have a modern warehouse management software system installed. From this, there’s a clear correlation between the percentage of “efficient” warehouses and those recognizing the benefits of warehouse management software.

It’s also clear that the benefits of a warehouse management system turn efficiency into profitability. If you’re wondering whether you need a warehouse management system, the simple answer is yes. There is no doubt that a WMS improves warehouse operations at every level. This includes activities such as ordering, receiving, storing or put-away, replenishment, sorting, order picking, packaging and shipping. A proper warehouse management system significantly improves operational functions and increases the bottom line.

Why Is a Warehouse Management System Important?

Integrating a modern software-based warehouse management system is important for efficiency in all warehouses. A data-based software application becomes the logistical eyes for warehouse managers and informs them in real time of what’s occurring anywhere inside the facility and throughout the supply chain. A computerized WMS replaces error-prone human management with repetitive and dependable information handling that no human could achieve.

The advantages of a warehouse management system go beyond providing real-time information. A well-designed warehouse software system also tracks and delivers historical information, which can help managers predict future needs. This database allows inventory management at unprecedented levels so current needs are always met and customer service is optimized.

Regardless of warehouse size and scope, it’s necessary for managers and operators to be on top of their business. Computerized management systems are invaluable when it comes to processing information. But not all WMS software applications are created equal. It’s necessary to match a system’s capability type with a particular facility’s needs. These are the three warehouse management system types:

1. Basic WMS: The simplest WMS type only supports stock location control. It’s primarily designed to register information such as product storing location and stock picking instructions. Most basic warehouse management systems only focus on throughput. They’re not sophisticated enough to handle advanced tasks like stock movement trends and management analysis. However, basic WMS programs are relatively inexpensive and designed for budget-conscious owners.
2. Advanced WMS: Mid-level WMS software applications take on more advanced tasks than basic models. An advanced warehouse management system allows facility operators to plan all types of activities and resources. These programs integrate operations and synchronize good flow in and out of a warehouse. Focusing on stock capacity and throughput is what advanced WMS programs do best. Although the cost of an advanced system is higher than a base program, the return through tighter stock management is worth the investment.
3. Complex WMS: Top-end WMS programs are complex systems designed for optimum performance in large warehouses with high throughput and volumes of assorted stock. Complex warehouse management systems know where every product unit is at all times. These systems track and trace unit destinations and monitor every facet of control, planning and execution. A complex WMS system can also integrate multiple warehouses into one business model as well as communicate with suppliers and end users throughout the chain. Complex warehouse management systems are expensive but high-efficiency tools when leading warehouse operations.

Regardless of WMS type or size, the system needs to meet the business needs. That includes future operations where limited warehouse management systems might impede growth management. Part of a WMS concept is enterprise resource planning (ERP), which is a process examining business resource needs from a 30,000-foot level rather than right at the warehouse floor.

Enterprise resource planning is a key part of selecting and implementing a warehouse management system. It’s as important to completely analyze the big picture of a warehouse as it is to integrate a WMS with front-line operations. Most WMS software providers include ERP assistance as part of their package. This cooperative consultation service is an essential part of acquiring any type of warehouse management system.

Benefits of a Warehouse Management System

The benefits of a WMS far outweigh the disadvantages of a warehouse management system. In fact, the only downside a warehouse manager might see to a WMS software application is the implementation and learning time. Experienced operators will weigh the purchase cost and installation expenses against their return on investment. They’ll quickly realize that the benefits of a warehouse management system are significant.

Like all business decisions, owners need to check the pros and cons of a warehouse management system before making a significant purchase like the right software. The list of benefits is long. Here are some of the core advantages of a warehouse management system:

• Increased efficiency: Once a proper and compatible WMS is installed and the learning curve is passed, every warehouse facility will experience increased efficiency in stock procurement, movement and storage. This efficiency improvement cuts down on throughput time and reduces stock handling errors. In turn, that efficiency is passed on to the customer through reduced costs, heightened innovation and increased satisfaction.

• Space saving: Warehouse space is a premium expense in the stock handling industry. A functional WMS will help operators maximize useable space by analyzing and optimizing the best location for every inventoried product. The ratio of stock to space dramatically increases with a computerized warehouse management system.
• Additional security: Stock shrinkage is a big issue for many warehouse managers. Whether the problem is theft, damage or misplacement, a WMS software program continually accounts for products no matter what part of the supply chain they’re in. Missing products are immediately identified and alerted for intervention.
• Just-in-time inventory (JIT): One of the peak efficiency factors in a warehouse business is just-in-time inventory management. This concept involves products arriving and departing exactly when needed so storage time is minimized. A good warehouse management system monitors just-in-time inventory far more accurately than a manual system can handle.
• Continuous improvement: Warehouse management systems are excellent tools to help managers continuously improve their throughput operations. Because sophisticated software programs track and calculate all inventory movements, they give valuable feedback to help improve business functions. All leading warehouse managers strive for continuous improvement and rely on their WMS programs for help.
• Enhanced billing management: Well-designed WMS programs have integrated invoicing tools that coordinate orders with necessary and required billing. This system function allows activity-based billing management rather than delayed response invoicing. Most advanced and complex WMS software apps integrate with e-commerce and B2B platforms.
• Efficient labor organizing: Labor is usually the most significant overhead expense in every business. The warehouse industry is no different. Investing in a WMS quickly returns considerable labor savings by assisting employees in daily tasks. A warehouse management system optimizes pick and place route locations. It can even indicate the best roles for individual workers.

• Improved employee morale: There’s no question that efficient workers are satisfied people. By increasing efficiency, a WMS contributes to overall employee morale. Workers are happier in an automated system that removes the guesswork and inevitable human errors. As an additional benefit, employees with high morale are safer workers. That is beneficial to everyone in the entire supply chain.
• Increased customer satisfaction: There’s nothing more beneficial to a warehouse company’s welfare than satisfied customers. Automated WMS businesses pass on their efficiency and cost savings to their customers that leave them satisfied with their products and service. This leads to repeat deliveries and long-term relationships.
• Better bottom line: Every warehouse business needs to return a profit. Making and retaining money is vital for a company’s financial health and stability. Investing in warehouse management software clearly contributes to a company’s long-term survival. All of the above benefits translate into a better bottom line.

How Does a Warehouse Management System Work?

No matter how simple or complex a warehouse management system’s inner workings are, they all do one essential service — build a core database that returns useful information about the facility. Key data includes vital information about inventory flow processes.

Warehouse management systems work by informing facility operators with crucial data on best practices on receiving and shipping products as well as making the highest use of available space in the building. WMS software also works by dividing this information into these three separate inventory flow processes:

• Receiving and shipping: Effective warehouse management systems track and record all aspects of receiving and shipping products. WMS applications do this by managing data points linked to product identifiers such as SKUs, barcodes or radio frequency identifiers (RFIDs). A management system continually knows when goods arrive and when they’re destined to depart.
• Inventoried storage: A WMS knows precisely what products are in a warehouse inventory and exactly where they’re located. This is real-time information, and the system works by monitoring storage conditions including current capacity. Warehouse management system software alerts operators when capacity increases or decreases. A fully integrated WMS will automatically compensate for excess or decreased stock fluctuations.
• Handling and picking: An effectively working warehouse management system is an irreplaceable tool for picking and handling inventoried products. Advanced WMS software works on-demand to plan handling and picking tasks that allow workers to reach maximum efficiency. An effective WMS works throughout the facility’s processes, including put-away, production orders, inner movement, outbound activities and stock replenishment requisitions.

Warehouse management systems also work on the “best practices” principle. This means the software recognizes and recommends the most efficient and effective manner of inventory management. Within the best practices definition, efficient means using the least amount of effort and effective refers to getting the best result or way of accomplishing a task. For the facility operator, a warehouse management system works by delivering results faster, easier and cheaper.

Choosing the Right Warehouse Management System

The hardest part of procuring and implementing a warehouse management system might be identifying the most suitable software product from the right vendor. With over 100 warehouse management systems on the market, narrowing down a compatible program might seem a challenge. It doesn’t have to be, provided certain steps are taken.

The WMS market is quite mature although new advancements regularly happen as technology advances. According to a global warehouse management systems market report covering projections from 2018 to 2024, the WMS sector will reach $4.82 billion. The WMS industry’s compound annual growth rate (CAGR) projects at 15.2 percent. Considering that many American warehouse facilities don’t yet have integrated WMS software, that’s a large and untapped market.

Choosing the right warehouse management system is a fundamental movement towards automating a product moving and storage business. The best practice for long-term success is to find a consultant who’s familiar with the various products. They will be of valuable assistance in making a choice that could ultimately save a lot of time and money. Although every warehouse needs are somewhat unique to the facility, the process of choosing a software provider is universal. These are the steps towards finding the right WMS program:

• Make a list: The search starts with listing various WMS software systems. One of the best resources for independent and impartial WMS information is the world-leading research and advisory company, Gartner. The Gartner site records and compares warehouse management systems from a technical aspect as well as gives helpful marketplace information. There are also many websites, trade publications and industry-related shows giving good tips for WMS list building.
• Review materials: WMS information can be overwhelming. This step should just be a broad view to see if a system is a technical fit for the existing facility’s infrastructure and current technology. The material review takes in what support services the vendor provides and what add-on modules are available for future growth. It’s also wise to review special processes like vendor managed inventory controls.
• Speak to salespeople: Speaking with product experts is a logical step in choosing the right warehouse management system. It stands to reason that the software provider’s sales force intimately know their product. That includes understanding a particular company’s needs for proper product placement. Discussing applications and options with salespeople will determine if their software is the right fit and if it’s flexible enough to work in the existing environment.
• Demo a live product: This is a hands-on selection step. All WMS vendors should refer a new client to existing operations where their product is used. This allows a tour of a system in place where the actual logistics are live and operational. Some vendors may have virtual tours within their software demonstrations which alleviate any time-consuming or expensive travel.
• Send out a request for proposals: Once identifying qualified WMS providers, it’s time to discuss acquisition specifics. Usually, this is through price quotes and requests for proposals. It’s prudent to use the apples-to-apples test as there can be a wide spread in price points and inclusions or exclusions. Reputable companies will be transparent and likely open to negotiations.
• Sign the contract: A warehouse management system provider will provide a detailed contract outlining their product and services. Buying a WMS can be an expensive undertaking, and it’s prudent to examine the contract details. One critical point is licensing issues. It’s also wise to have a review from an attorney who specializes in business contract law.

Integrating a Warehouse Management System Into a Facility’s Processes

Choosing a warehouse management system that’s compatible with the facility’s existing process is paramount. This is a case of making the WMS software work with current infrastructure, not having to change or replace in-place systems. Selecting a non-compatible system would be an expensive mistake, not to mention being nearly impossible to integrate.

Integrating a warehouse management system is going to take time and effort, regardless of the vendor and their product. There will likely be a learning curve for operators and employees to feel comfortable with the WMS software. Getting it operating efficiently and effectively is a process in itself and not one to rush.

Choosing the right warehouse management system includes choosing a software supplier who will help integrate the product. That means training staff on its bells, whistles and quirks. It will take time and effort to integrate a new process, but the benefits of warehouse automation are well worth the effort and expense.

Get Your Industrial Equipment From Cherry’s

At Cherry’s Industrial Equipment, we leave warehouse management systems to the software specialists and focus on providing you with the best warehouse products and material handling equipment available in America.

Cherry’s Industrial Equipment believes in making your throughput and storage processes easy and dependable. We’re a leading provider for all forms of material handling equipment as well as custom solutions for your material handling problems. For more information on how Cherry’s can partner with you for warehouse supplies, call us today at 800-350-0011. You can also reach us through our online contact form.