Warehousing

Warehouse Management System - A Complete Guide 2022

A warehouse management system (WMS) is software that is specifically designed to provide real-time visibility of the entire order fulfillment process, from the moment goods enter a fulfillment center until they leave the warehouse to end customers.

Team Hopstack
November 20, 2022
A Complete Guide to Warehouse Management

Introduction

E-commerce firms of all sizes and types are now leveraging retail technology to cater to their global customers. A winning e-commerce strategy is essential to meet customer demand that also fulfills managing inventory. Here comes the need for efficient warehouse management system software. According to the Credence research report, the WMS market will witness a CAGR of 16% from 2019 to 2027.

WMS software aids in seamless warehouse operations thereby driving the business’s profit margins in the logistics industry. This blog will explain the in and outs of warehouse management systems that will help retailers choose the right for upscaling their whole supply chain warehousing procedures which will eventually enhance customer experience.

What is Warehouse Management?

Warehouse management is a process to manage the daily operations of a warehouse from inventory entry until products are sold. Effective warehouse logistics management involves integrating and optimizing the processes. It ensures every aspect of a warehouse operation is working perfectly leading to enhanced productivity and lowering costs.

What is a Warehouse Management System?

A warehouse management system (WMS) is software that is specifically designed to provide real-time visibility of the entire order fulfillment process, from the moment goods enter a fulfillment center until they leave the warehouse to end customers. Implementation of WMS helps in predicting stock levels, staff productivity, storage, demand forecasting, order fulfillment, and other workflows within the warehouse.

WMS software also eliminates the manual processes by streamlining warehouse logistics operations which not only saves time but also provides snapshots of the areas of improvement without conducting continuous audits. Modern WMS solutions support the entire phases of efficient supply chain management by providing scalability, real-time visibility, and market reactivity.

What does a Warehouse Management System (WMS) do?

Generally, warehouse logistics operations are invisible to customers, however, they play a crucial role in ensuring the timely delivery of orders. An effective warehousing solution optimizes and integrates different processes of warehouses while increasing productivity and keeping costs low.

E-commerce retailers using warehousing solutions can become more competitive, by keeping up with constantly changing customer demands, maximizing customer satisfaction, and optimizing the entire supply chain management. Following are the core features of a warehouse management system described in detail.

Receiving and Putaway

Based on the layout of the warehouse and business processes, WMS software must showcase clear instructions for each user for effective receiving, unpacking, retrieving, picking, packing, and shipping orders. Compared to doing it manually, not only does it save time for the warehouse associates, but also the accuracy level of inventory storage has been increased.

Peerless Research survey 2018 claims that during the receiving process more than 87% of the respondents handled materials manually which caused delays. A warehouse management system uses RFID technology to receive, validate, and reconcile items automatically against the purchase order with barcode scanning and the other information labeled for easier retrieval and storage.

Inventory Tracking and Management

Inventory tracking in a WMS is the process where warehouse managers can monitor the stock levels by knowing the actual numbers of SKUs present in the warehouse, their exact location, and status i.e. whether the SKUs are en route to a store, or in transit from a fulfillment center. It is important to fulfill customer expectations by delivering orders on time.

On the other hand, inventory management helps a warehouse manager to know about the actual status of the stocks like whether they are ready for shipment or not, or how many raw materials the warehouse should store to prevent stock shortages. Thus, WMS prevents overstocking and ensures that items are kept in an optimized way for smoother operations.

Picking and Packing

According to Logistics Magazine, the warehouse is the most commonly cited place for picking, packing, and shipping activities. Implementation of WMS software can significantly lower warehousing costs by providing clear instructions for effective picking, storing, retrieving, and packing products, which otherwise becomes 55% of the total warehousing costs.

WMS systems are integrated with different technologies like radio frequency, robotics, and voice recognition that help in streamlining the picking process. A few WMS solutions make the order fulfillment process easier by using techniques such as batch picking, zone picking, cross-docking, put-to-order, wave picking, etc.

Shipping Orders

The process of shipping products starts once a customer places an order. The shipping carrier partners pick up the products from the warehouse and then deliver them to the end customer. To expedite the process of shipping orders, there is no other better option than using a WMS software suiting your needs.

Retailers can also track their packages by using real-time tracking features whether the order has reached the correct destination within time or whether there is any delay. WMS integrates with different logistics and transport management software which generates shipment invoices, packing lists, and bills automatically which expedites the process.

Return Management

Return management is a vital aspect for an e-commerce retailer, as 92% of customers claim that return options are an important factor in buying decisions. When a product returns to an inventory ledger, it incurs stock carrying costs, takes valuable storage, depreciates quickly, and challenges the efficiency of warehouse operations.

With the usage of warehouse management software, returned goods that are damaged can be dealt promptly for disposal or repackaging, and quicker identification of reusable products can be allocated for picking. It also allows complete traceability of all types of returns and integrates with multiple ERP systems so that replacements are done faster by ensuring credits.

Labor Management

A warehouse management system offers detailed real-time visibility into labor costs, productivity gaps, response time, and trends to plan, so that warehouse managers can plan leaner and more efficient management of warehouse operations.

WMS software also helps in planning and creating flexible schedules based on skill sets that minimize the wasted time of each associate. Along with the information on stocks, workers can work more efficiently while saving time in finding products and doing all work manually.

Reporting

A warehouse manager depends on reports that will be easy to understand and detailed enough to manage warehouse logistics operations efficiently. WMS software provides detailed reports of inventory management such as total mis-packs, mis-picks, orders fulfilled per hour, accuracy level in order fulfillment, order shipment, staff efficiency, and many more.

Reports like staffing needs, demand, and inventory forecasting help in fulfilling customer demands during peak hours. When compared to manually creating reports, WMS can provide instant detailed reports that help warehouse managers to make the necessary improvement and plan for the future.

Types of Warehouse Management Systems

To integrate WMS software for optimizing warehouse logistics operations, it is important to understand different types of warehousing solutions. Based on the functionalities, WMS software can be classified into five types which are described below.

Standalone WMS

As the name suggests, standalone warehouse management systems comprise feature-rich software that primarily focuses on optimizing warehouse logistics operations. It has limited functionality for other supply chains warehousing functions such as distribution, finance, and customer service. These systems are on-premise systems that are used along with the hardware and network of a warehouse.

Ideal for:

Standalone WMS is ideal for small businesses because they are affordable and have the most basic features such as barcode scanning, put away, receiving, picking, packing, shipping, slotting, cycle counting, etc. Sometimes many businesses use this WMS software as an inventory management system which makes this WMS ideal for small businesses. However, it has advanced reporting capabilities that help small businesses to level up their warehouse management operations.

ERP-Based WMS

Integrated ERP-based WMS offers scalability, and supply chain execution while incorporating the core applications that enable retailers and 3PL companies to manage their operations smoothly. The core applications of an ERP-based WMS are accounting, human resources, supply chain management, customer relationship management, etc. ERP systems can centralize warehouse logistics operations in a single interface.

This system provides detailed insight across the logistics chain while allowing transparency so that all the logistics and warehouse processes are executed and orchestrated together. These features of ERP systems are used to optimize operations while offering agile and fast fulfillment experiences.

Ideal for:

ERP-based WMS systems are ideal for retailers which are looking for scaling their software solutions to the next level at a larger scale. ERP WMS can help firms to get a higher competitive advantage and improved ROI as it provides robust scalability and supply chain execution. Additionally, if any firm is looking to consolidate all software into a single platform, ERP warehousing services are the best solution in this case.

Cloud-based WMS

Cloud-based WMS is a centralized and web-based computing platform that works on cloud technology. These are provided as Software as a Service (SaaS) and are known for their quick deployment and scalability. It also has lower IT maintenance as it is hosted on a cloud server.

These systems can easily adapt to the warehouse environment thus increasing productivity regardless of volume, complexity, and operational size. The users of this WMS software get software updates free of cost which enhances technological competitiveness.

Ideal for:

Cloud-based WMS is ideal for retailers that have warehouses in multiple locations. It provides ample flexibility and compatibility. A growing business can ideally use cloud-based WMS as it can scale itself with the growing business while enabling more licenses whenever needed.

Due to its ease of usability, scalability, and flexible pricing, cloud-based WMS software is ideal for small and medium businesses. They are enabling the supply chain managers to focus more on customer experience and track real-time performance that keeps data safe, which is the reason retailers prefer this.

Supply Chain Execution Module

A supply chain execution module WMS is a system that manages multiple aspects of supply chain warehousing management by automating tasks like product cycles, sourcing materials, inventory management, etc. It also plays an important role in managing vendor relationships, risk assessments, and ongoing business processes. It enables the 3PL firms in exploring multiple benefits of supply chain management while streamlining them.

Ideal for:

A Supply chain module warehousing solution is ideal for a growing or established organization that is using all the facets of supply chain management. To get a cohesive warehouse experience, these companies can combine Supply Chain Module WMS with other applications. It optimizes and enhances the whole process of supply chain warehousing.

On-Premise WMS

On-premise WMS solutions are software that is maintained and hosted on-site using the server of the warehouse. This WMS solution is used to optimize specific warehouse logistics workflow which is run by the It department and other internal support teams of a company. Many organizations prefer this warehousing solution as this provides greater control over operating it.

What to look for in a WMS?

Choosing the best-suited warehousing solution for your business is a tedious job as it requires time, patience, and other due diligence from warehouse managers. The right WMS software can help your fulfillment centers and warehouses to achieve higher efficiency and productivity by lowering costs and fulfilling orders accurately.

While looking for warehouse management system software, multiple factors need to be considered before settling on one. Below are some of the key criteria to select the best WMS for your business.

Functionality

There are different types of WMS software available in the market that cater to different functionalities of warehouse management operations. The main agenda of using warehouse management software is to improve productivity while reducing manual operations and automating procedures of warehouse operations by priority and proximity.

Hence, the functionality of WMS software is important to consider which will streamline warehouse logistics operations. Some of the functionalities that might expedite the warehouse management process are

  1. Efficient space utilization, and labor management
  2. Accuracy in picking, packing, and shipping
  3. Real-time visibility in inventory tracking, and demand forecasting
  4. Seamlessly connects with e-commerce platforms, robotics, and carrier partners
  5. Updated technology including barcode scanners, RFID serialization, mobility, etc.

Ease of Use

The easier a WMS software is to use, the less time it will take to implement in warehouse logistics operations. A well-crafted WMS solution will help the warehouse associates to monitor operations faster thereby enabling more time in adjusting to the ongoing workflow. Clear and crisp navigation properties within WMS imply the optimal performance of the system faster than ever.

Warehouse associates should look for WMS solutions that allow a simpler dashboard view, simplified data entry process, and ease of getting reports and scheduling works. A simple UI is a crucial yet underrated feature of a WMS that makes it easy to access and operate by the warehouse staff, preventing any sort of errors.

End-to-End Visibility

End-to-end visibility in warehousing solutions will help oversee every aspect starting from order receiving to shipping. It will provide a detailed insight into every step of the fulfillment process such as receiving products, putting away, shipping, order picking, inventory audits, demand forecasting, and any sort of movement of products within the warehouse.

However, other features simplify the process of managing warehouse logistics operations efficiently as the software tracks labor management, and stock movement, happening in the fulfillment centers. Hence, warehouse managers can plan the work more effectively by leveraging the skills of the associates and their bandwidth.

Flexibility

A warehouse management system software should be flexible enough to scale itself as per the increased business demands. It is very important to check whether the WMS is compatible with most ERP systems or not because when the business grows, it might change ERP systems. WMS software should be scalable to manage all the changes and able to handle the expansion of the business. 

Not only does the flexibility of warehousing solutions apply to software, but also it must apply to the hardware. An ideal WMS solution must comply with the multiple versions of equipment like scales, label printers, RF terminals, scanners, etc. It’s always better to check whether the WMS has success stories in handling all kinds of retailers and wholesale distributors.

Impeccable ERP Integration

ERP integration is an aspect that should be considered by warehouse managers who have decided to use ERP systems in optimizing their operations. During the process of choosing the right WMS solutions, always check for flawless integration with critical ERP systems.

Seamless ERP integration guarantees that the WMS will be compatible with the current ERP system or the vendor should be able to develop any substantial integrations required for the smooth flow of warehouse operations.

Proven Track Record

While choosing any WMS, getting information about the client testimonials plays a crucial role in understanding the brand credibility as well as it would reflect the type of industries the software has served. Reading case studies or reaching the clientele will help to gain insights regarding the software. The purpose of this is to check what are the adverse conditions the WMS is familiar with.

The nature of every business is different and so are the business operations. Some points that can be cleared out while checking the track record of the WMS vendor: are whether our expectations are met or not, customer support received from the vendor, post-purchase follow-up, etc. It will provide a clear picture to understand whether the vendor is capable of fulfilling the warehouse needs or not.

ROI Value

Pricing is an important aspect in choosing a WMS, however, multiple aspects come into play that determines the price. Considering long-term benefits while choosing a WMS is recommended for managing warehouse operations as per the business growth. The factors that need to be considered while determining the ROI value of the WMS solutions are integration, scalability, ease of use, customer support, etc.

The cost of WMS installation in the warehouse varies depending on the complexity of the system or the vendor. However, it is better to choose a WMS which can handle your business operations 5 years later, then the cost of the software will be justified appropriately.

Efficiency Metrics

Best warehouse management practices need some efficient metrics or KPIs that determine the progress of the operations and find out the scope of improvement. Warehouse management systems must have metrics like the ease of creating reports, real-time tracking of inventory, demand analysis, labor management, creating schedules, managing multiple warehouses, etc.

Warehouse managers must consider whether the WMS can check the performance of the workers or not based on their skills so that optimal performance can be maintained. It should also have the ability to integrate with the preferred carrier partners and hardware to guarantee a faster fulfillment process.

Customer Needs

Focusing on customer needs is the aspect that e-commerce retailers must focus on while fulfilling orders on time. Identifying loopholes in the current warehouse management system and customer demands will help warehouse managers to select the right WMS for their distribution centers.

Does your company need an auto-allocation feature so that the goods level showcases accurately on the website? Or a strong tracking system that would comply with the FDA regulations? All these aspects will help a company choose the right warehousing solutions.

Top Benefits of Warehouse Management System

As the supply chain becomes more complex, delivery time accelerates while information is becoming more critical to effective supply chain warehousing management. It boosts the role of WMS software. A robust warehouse management system can help global retailers to leverage data while optimizing warehouse operations efficiently.

Before choosing WMS software for the business, supply chain vendors must know about the benefits of WMS that will help them to identify their business needs.

Better Inventory Visibility

Modern WMS software offers real-time visibility of product movement through RFID tagging, serial numbers, and barcoding. These processes help the users to keep track of the movements of each item, starting from entry to the warehouse to the end user. It also predicts demand forecasting that provides insights into the high-demand products during rush hours.

Inventory traceability in WMS software is extremely helpful to warehouse managers for recalling damaged products. Serial numbers engraved on the final items help to identify whether that product is part of a faulty batch or not.

Effective Workforce Management

Warehouse management systems help in forecasting labor needs, optimizing travel time between the warehouses, creating workday schedules, and assigning the right tasks to associates based on skills, proximity, etc. During the rush hours of the year, WMS software can act as a boon to warehouse managers as it can manage periodic cycle counts, and stock counts thus freeing many workers’ time.

Compared to the traditional approach, warehouse managers can plan staff rotations and appropriate shift times more precisely while assessing the skillsets of a particular associate. Moreover, fulfillment managers can establish KPIs for each associate by estimating daily worker performance targets based on staffing, and daily volume.

Optimum Use of Warehouse Space

One of the best uses of WMS software is to enhance warehouse productivity by providing clear instructions about the efficient use of warehouse space depending on the sales cycle and the layout of the warehouse. WMS provides floor space analysis that identifies the optimum utilization of space reducing waste space.

Thus workers can minimize the misuse of the space and keep fast-moving items in front and slow-moving items inside the warehouse. Efficient WMS can reduce excessive product movement, retrieval, and time-consuming placement. Thus, operating costs can be cut by finding the optimum storage locations for supplies, items, and equipment.

Intelligent Order Fulfillment and Routing

During the peak season, retailers face multiple challenges in different aspects of the supply chain. Retailers will pay an additional surcharge of $1.15 to $6.15 per package during the peak season depending on the distance of the shipments.

Efficient order fulfillment and intelligent routing in this situation help in minimizing the hassle of shipment by streamlining the pick-pack-ship methods. It reduces operational costs by speeding up the fulfillment process to meet customer expectations.

WMS software can segment product details across the marketplace and integrates with various carrier partners, and third-party logistics companies to enhance the speed of fulfillment helping in bin-level barcode scanning that improves the quality, and efficiency, of warehouse operations while reducing human intervention.

Improved Customer Experience

Nowadays, customers' expectations have reached same-day delivery and personalized shopping experiences which led them to spend more for an enriched experience. WMS enables the creation of that personalized touch to the customers by making custom product bundles, labeling, and kitting. Users can prioritize customers' orders based on their physical considerations like size, shape, weight, and distance of delivery, through WMS.

Implementation of WMS helps in providing insights about customers’ past and future purchases, updating customers regarding their order status and delivery updates. With its inventory accuracy, order tracking, and faster fulfillment speeds, brands can live up to customer expectations while fulfilling their demands.

Reduced Expenses and Wastes

WMS software helps in reducing warehouse operating expenses by providing the most efficient use of space and labor by minimizing waste. Warehouse space can be utilized in the maximum efficient way possible with WMS as it can suggest where to keep the items and equipment. It also allows the users to configure the warehouse that runs at peak efficiency.

Advanced WMS has features like warehouse floor simulators that enable the users in creating efficient floor plans that will help in placing the shelves, pallets, machinery, and equipment in such a way that will increase the speed of warehouse operations.

Auditing and Offer Security

The majority of warehouse management operations require associates’ unique identities as they enter various transactions. The audit trail feature of WMS solutions provides information on every transaction by the associates thus increasing accountability for each task. WMS provides feature audits that enable retailers to spot the blockers on the workflow.

In terms of security, WMS has user-defined access control to different facets of warehouses that safeguard against any unwanted access to particular data and reports. It also has a feature that restricts specific users to view or edit reports thus maintaining security. Thus, warehouse managers can secure their data and information to themselves without risking the competitive advantage.

Optimized Billing Management

Having information regarding shipping which is processed immediately and sent to the accounting department allows for generating invoices faster, thus leading to faster payments. An ideal WMS software offers an integrated billing management feature that enables employing activity-based billing systems.

It keeps track of the warehouse operations of each provider and charges accordingly based on the activity. However, many retailers integrate WMS solutions in their sales channels that enable online payment systems between the distributors and suppliers. It also processes credit card payments while connecting to major players in the e-commerce industry.

Advanced Shipping Solutions

Managing inbound and outbound logistics becomes smoother with a WMS integrated into the warehouse that can track product movements easily. With WMS, warehouse managers can easily track the need for inventory and can smoothly receive the stock, store it in specific areas, and provide inbound planning such as putaway and scheduling.

It also provides the suppliers and the warehouse managers with the perfect date based on storage, equipment, and labor availability for receiving the shipment. WMS software also offers specific picking and packing routes depending on the nature and type of the products.

A few WMS also integrate transport management systems that enhance the supply chain warehousing activities smoothly. It also notifies the users regarding the status of shipments starting from dispatch from the warehouse to post-dispatch. Thus, e-commerce brands can enhance customer experience significantly.

Enable Automation

Enabling automation solutions within a fulfillment center and a warehouse is the sole agenda of e-commerce retailers. Automation enables both hardware and software integrations that streamline the scalability and flexibility of warehouse operations significantly. Due to automation in WMS, warehouse managers can not only improve the process of warehouse operations but also, they can find loopholes in the existing system.

The automation process includes automated picking, packing, shipping by using robotics, and hardware integrations like AMRs, handheld scanners, automated sorters, conveyor belts, etc. WMS assists in implementing these integrations while offering the core elements of recording, capturing, and communicating with the warehouse associates.

Wrapping Up

Managing warehouse operations sometimes can be overwhelming yet hectic to meet customer demands during certain times of the year. A well-designed WMS software is the most efficient way to handle warehouse operations while increasing profitability and lowering costs.

When it comes to choosing the right warehouse management system for your company, no one-size-fits-all will work as the nature and scope of every warehouse operation are different. An optimal WMS software is one that not only complements the business model but also offers scalability, flexibility, agility, and functionality that can be expanded to suit business needs.

About Hopstack’s Warehouse Operating System

Hopstack’s cloud-based digital warehouse operating system automates and optimizes warehouse operations seamlessly by integrating hardware and software effortlessly. From enhancing warehouse throughput to stock management, Hopstack manages inventory smarter and the fulfillment process more efficiently while providing accurate demand forecasting.

Hopstack’s best-in-class warehouse management system encompasses everything from inventory management to device integration on a single platform. It also provides more than 50 hardware and software integrations that streamline warehouse processes and provide real-time visibility. With Hopstack’s warehouse operating system, companies can enhance customer experience while leveraging economies of scale.

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Team Hopstack

Hopstack brings you the latest articles, guides and long-form explainers on topics relating to warehousing technology and automation, supply chain and robotics