In this guide
In today’s commercial climate, warehouses are the beating heart of trade and commerce operations. The supply chain landscape is inherently complex, and efficiency in warehouse management can be a key strategic differentiator for businesses. The role of a warehouse management system (WMS) is to provide granular visibility and reporting capabilities needed to simplify warehousing activities at scale.
Warehouse Management System in logistics has become vital to maintaining a dynamic base of operations with real-time data analytics, RFID integration, and cloud-based adaptability, making it a tool and a strategic asset for modern businesses.
What is a Warehouse Management System?
A warehouse management system is an intelligent digital platform designed to enhance warehouse operations and streamline everything from inventory tracking to order fulfillment. It functions as a centralized control tower that ensures goods are stored, managed, and dispatched efficiently.
Amidst the growing demand for faster deliveries and growing complexities in global trade, businesses need a dynamic and scalable management tool that can adapt and respond to market needs in real time. A warehouse management system in logistics provides businesses with this adaptability, ensuring a flexible backbone of operations.
Today, the warehouse management system in the supply chain is ubiquitous; it plays a key role in assisting dynamic, fulfillment operations across multiple industries. Below is a high-level overview of the different types of warehouse management systems:
- E-commerce/DTC: E-commerce platforms and direct-to-consumer brands require robust systems to manage vast inventories and ensure speedy deliveries. The role of warehouse management systems is to enable the tracking of product movements accurately, optimize storage space, and expedite order processing.
- Third-party Logistics: As intermediaries managing storage and transportation for multiple clients, third-party logistics providers must maintain superior efficiency and transparency. WMS empowers them to offer clients real-time insights, optimize cargo movements, and reduce overheads.
- Distribution: Distributors are responsible for transporting goods from manufacturers to retailers, and must manage diverse inventories and cater to varying demands. WMS streamlines fulfillment operations by enhancing route planning, ensuring timely deliveries, and automating many manual tasks.
- Manufacturing: Manufacturers utilize different types of warehouse management systems to monitor raw materials, manage finished goods storage, and ensure a consistent supply chain. The warehouse management system process flow is designed to reduce potential downtimes, improve ROI, and maximize productivity.
Today’s omnichannel fulfillment requirements demand that businesses manage both online and offline channels efficiently. The best warehouse management systems help businesses navigate these complexities by offering a unified view of inventory, automating order routing, and providing insights for smarter decision-making. Moreover, in an age where business models are evolving rapidly, from subscription services to on-demand deliveries, a WMS ensures that businesses remain agile, adaptable, and customer-centric.
How Does a Warehouse Management System Benefit the Warehouse?
With business needs evolving rapidly, organizations are facing challenges that need a more robust and dynamic system.
When warehouses experience inefficiencies due to manual processes, witness escalating operational costs, or grapple with inventory management issues, it strongly indicates that a WMS might be the solution. Additionally, if there's a drive towards digitization, a desire to integrate various commercial systems, or a need to improve customer/supplier relationships, the signs are clear. Warehouse management systems in supply chain allow businesses to expand without being weighed down by ballooning overheads.
For businesses looking to scale and capitalize on growth opportunities, there are several benefits of warehouse management systems.
Benefits of Warehouse Management System (WMS)
The role of a warehouse management system is to transform the warehousing process into a fully digital system. RFID tagging, barcodes, and sensors provide warehouses with a real-time record of inventory and fulfillment operations, accessible round-the-clock.
Digitization plays a crucial role in ensuring the accuracy and traceability of warehouse products. With inventory insights, businesses can forecast demand more accurately and run just-in-time strategies for different scenarios, especially in the event of a recall.
Elimination of Manual Processes
Traditional warehouse processes depended heavily on manual tasks and cumbersome pen, paper, and spreadsheet-based operations, making them prone to errors.
A warehouse management system benefits the warehouse by automating tasks like generating picklists, removing manual data entry, and ensuring synchronization between order and inventory information with other integrated systems. The speed of data validation and inventory consolidation is significantly higher, leading to quicker remediation of fulfillment errors.
A well-implemented warehouse management system in logistics can overcome challenges in picking, packing, inventorying, and shipping. These process optimizations have an indirect impact on cost reductions while automation-driven improvements directly reduce operational expenses.
A warehouse management solution assists in maintaining optimal inventory levels, automating processes like liquidation, and maximizing space utilization. You can identify date-restricted or perishable stock to determine picking priorities, leading to reduced wastage. This holistic approach leads to a significant cost reduction across all stages of the fulfillment pipeline.
The features of warehouse management systems optimize the utilization of warehouse space, which makes up a huge chunk of operating expenses. In 2022, the average warehouse space utilization was 85.6%. It’s possible to maximize yield by capitalizing on vertical space, implementing efficient layout designs and pallet racking systems, and performing regular audits.
Enhanced Operational Visibility
The role of warehouse management systems in the supply chain is to drive operational efficiency and customer satisfaction through a holistic approach to process-driven optimization.
With a warehouse management system, businesses can gain unprecedented insights into every aspect of warehouse operations. The extra visibility provides an overarching view of resource utilization and performance metrics into the entire warehousing lifecycle.
Historical data analysis, inventory tracking, automation, and optimal resource utilization reduce the likelihood of errors. It’s easier to identify and remedy bottlenecks, ensuring smoother workflows and expedited movement of products across the warehouse.
The best warehouse management systems act as the centerpiece in an interconnected network of integrated systems such as TMS (Transport Management Systems), ERP (Enterprise Resource Planning), sales channels, and accounting systems. These WMS integrations facilitate a two-way flow of information. For warehouse managers, this translates to freedom from silos and a unified, single view of truth across all channels and systems.
A connected approach to commerce is essential to adapt to increasing order volumes and capitalize on market opportunities without disruptions.
Strengthened Customer and Supplier Relations
A warehouse management system benefits communication capabilities by responding to customers in real time. Better response rates, accurate delivery estimation, and swift remediations are key to establishing trust in the commercial capabilities of the warehouse. Consistent engagement with the customers positively impacts overall satisfaction, loyalty, and reputation.
Apart from the improved order visibility, a warehouse management solution allows the warehouse to handle higher volumes of orders and meet expedited delivery expectations. Built-in functionalities allow warehouses to provide personalized shopping experiences for end consumers through specialized bundles, labeling, and kitting.
An intelligent warehouse management system functions as a reporting tool by providing insights into the purchasing journey. Businesses can leverage these insights to improve the customer experience.
Scalability for Future Growth
As businesses grow, so do the complexity and scope of their operations. Warehouse management systems in logistics are designed to effortlessly handle increased fulfillment volumes without adding significant overheads. This scalability ensures that businesses can handle increased inventory and orders without the need for disproportionate investment.
For cloud-based warehouse management systems, the modular system architecture can always accommodate additional modules or features without a complete overhaul. Adaptive resource utilization, cloud scalability, and demand forecasting can make warehouses resilient to market changes, be it sudden demand spikes, supply chain disruptions, or shifts in consumer behavior.
Evolution of Warehouse Management Systems
The earliest warehouses can be traced back to ancient Egypt, and the term ‘warehouse’ was first officially introduced in the 1300s in Great Britain. Today’s warehouses have come a long way from the centralized storehouses and guildrooms of the past, with modernity adding layers of complexity to present warehousing operations. This complexity was primarily driven by advancements in transportation, commerce, and digital technology.
From Simple Storage to Digitized Systems
During the Second Industrial Revolution around the mid-1900s, rapid technological advancements drove the digitization of warehouse management. A significant stride was the development of the AS/RS (Automated Storage and Retrieval System), pioneered by Demag (now Dematic) in the 1960s.
Initially implemented in a German book club warehouse, the AS/RS was a robotic device underpinned by a dedicated software system to simplify processing and logistics and improve accessibility to and utilization of storage space. This integration of hardware and software brought forth unprecedented changes in warehousing, marking the beginning of the digital age in warehouse management.
The Birth of the Modern WMS
In the 1970s, advancements in computer technology and application mainframes led to the birth of the first warehouse management systems.
Walmart inaugurated its first distribution center in 1971, and linear barcodes became the standard for retail and grocery items. The first product to be scanned with a UPC was a packet of Wrigley's chewing gum in 1974. The concept of the barcode originated from Morse code and was conceived as early as the 1940s by Norman Joseph Woodland and Bernard Silver. Before barcoding, warehousing operations often depended on manual data entry which was not only slow but also prone to errors. The adoption of barcoding transformed this, leading to faster and more accurate data capture.
In 1974, J.C. Penney revolutionized inventorying and warehouse management with the development and implementation of the first real-time WMS; it transformed supply chains, enabling easier inventory tracking with barcodes.
WMS Proliferation in the 1990s
As global trade boomed in the early 1990s, giants like JDA, Manugistics, and Red Prairie drew from the first warehouse management system example to create their own proprietary versions. The sudden increase was to cater to the complex needs of expanding warehouses and distribution centers. With global trade gradually picking up pace, the spotlight was already on driving efficiency and process optimizations.
By the mid-1990s, the supply chain industry had already become a densely contested space. Growing demand necessitated better visibility and control for efficient management of warehousing workloads.
The warehouse control system emerged as a fundamental module, focusing on equipment automation, inventory control, order management, process execution, and task processing. These advancements set the stage for a more powerful second-generation WMS, featuring key features like cross-docking, RFID integration, and automated task creation.
Developments in software, networking, and telecommunications made it possible to integrate data from disparate systems. By this stage, warehouse management systems in logistics had significantly reduced manual labor wherever possible. This, in turn, drove better labor utilization to expedite the order fulfillment process. Businesses could now scale to new heights and seamlessly adapt to market changes.
Cloud: The Modern Paradigm Shift
Modern technology, particularly cloud-based architecture, has revolutionized warehouse management systems in logistics. Unlike traditional client-server systems, cloud solutions offer enhanced control, security, and transparency, enabling real-time access from anywhere. They are resource-efficient, cost-effective, and ideal for small to medium-sized warehouses.
The pay-as-you-use model allows businesses to avoid upfront investments in expensive server infrastructure. Moreover, a cloud-based warehouse management system in logistics scales seamlessly with business growth, eliminating the hefty costs of setting up and maintaining physical servers. It provides a unique opportunity to cut down on both operating expenses and capital expenses, making the way for better ROI.
With e-commerce booming and consumer demands growing, the warehouse management system benefits are out in the open for everyone to see. Businesses of all sizes require robust, adaptive warehousing solutions, highlighting the ever-evolving role and importance of different types of warehouse management systems in modern commerce.
Looking back at the history of warehouse digitization systems, it might take a minute to appreciate how far we have come. With more and more people shifting toward online shopping, AI-powered optimization modules, robotics, and RPA are heralding a new era of warehouse management.
Key Features of Warehouse Management Systems
Beyond inventory management, the role of warehouse management systems is to streamline every single process from receiving to shipping. Along with essential processes, different types of warehouse management systems provide a connected experience within and across warehouses, seamless automation integration, and adaptability to dynamic warehousing needs. This includes the ability to synchronize operations within and between warehouses and automate manual processes, eliminating spreadsheet dependency.
The following key features of warehouse management systems facilitate efficient order fulfillment, adapt to evolving warehousing demands, and enhance overall efficiency, accuracy, and order fulfillment while sustaining connectivity across the supply chain.
Space and Layout Management
It’s not possible to expand the available volume of warehouse space without additional investment in procurement. However, it is possible to maximize storage yield through precise configuration of the warehouse space.
A WMS allows users to create and define specific storage types, such as bin storage, pallet storage, buffer zones, and more. With access to CAD software for layout design, insights into warehouse layout and optimal space utilization, and IoT sensors for real-time space monitoring, it’s possible to maximize the value of your warehouse space.
Effective space management is crucial to maximize storage capability, streamline the movement of goods, and ensure that products are accessible and easily retrievable.
A warehouse management system in logistics offers real-time visibility into a warehouse’s inventory and stock levels, from inbound shipments to storage. Below, we have included a high-level overview of the role of warehouse management system in inventory optimization:
- WMS provides an uninterrupted view of stock levels. This continuous monitoring ensures that inventory is stored appropriately, considering factors like product perishability and priority.
- By leveraging artificial intelligence, the best warehouse management systems can predict future inventory requirements. This forecasting assists warehouses in preparing for demand surges or lulls, ensuring they neither overstock nor run out of essential items.
- Analytics-driven insights assist in maintaining the right balance of stock. Not only does this prevent costly overstocking or stock-outs, but it also ensures products are available when customers need them, boosting overall satisfaction.
- In instances where overstocking does occur, a WMS can recommend strategies for effective liquidation, ensuring minimal losses. Research by Avery Dennison Corp indicates that $163 billion worth of inventory is discarded each year due to expiry or overproduction.
- With a WMS, the tracking of perishable goods becomes streamlined, ensuring products are dispatched and consumed before their expiration. This optimization not only reduces waste but also enhances order fill rates and efficiency.
Inventory optimization is essential to track perishable goods and improve order rates. With rules-based logic tailor-made for your warehouse, you can ensure your orders reach the end consumers on time and without errors.
A WMS centralizes orders from various sales channels and sets specific fulfillment protocols based on their source and type, ensuring uniformity and accuracy. Integration with order management systems (OMS), EDI for order synchronization, billing, and automated sorting systems can capture and consolidate billables based on a built-in rules engine. This ensures accuracy and transparency in capturing your billables.
Streamlined order management reduces processing time, minimizes errors, and ensures timely delivery to clients. You can retain order history to benchmark product performance and efficiency metrics.
Inbound and Outbound Orchestration
The best warehouse management systems orchestrate the entire lifecycle of products in the warehouse, from the receiving phase to shipping. Upon receiving the products, the WMS generates tasks for unloading, prints the appropriate warehouse labels, and guides workers to assigned storage locations. It optimizes the putaway process by identifying suitable locations based on product attributes and storage availability.
The warehouse management system process flow integrates with automated guided vehicles (AGVs) for material movement, conveyor systems for swift transfers, and barcoding systems for accurate tracking. A streamlined process increases throughput, reduces errors, and shortens lead times.
Advanced recommendation engines determine optimal picking strategies based on order characteristics and warehouse layout. Intelligent picking paths and routing systems can guide pickers to the relevant products, reducing errors and inaccuracies. It can communicate with transportation management systems and carriers for accurate rate shopping and shipping coordination.
A warehouse management system in logistics functions as a control tower with a 360-degree view of all warehouse activities. It allows managers to monitor, identify, and address bottlenecks and exceptions centrally. Advanced analytics platforms, real-time dashboard visualization tools, and alert systems make for exceptional handling of warehouse operations, both from management and execution standpoints.
A smart WMS is the best warehouse management system; it can combine granular visibility with reporting and analytics to enhance decision-making capabilities, optimize resource allocation, and improve response time.
Workforce Management and Performance
Warehouse management systems can streamline worker onboarding, task allocation, performance tracking, and continuous feedback. Efficient workforce management is key to leaner and more efficient warehouse operations. A centralized control system can allow you to match your warehouse workers with their areas of expertise, dynamically adjust task scheduling, and minimize productivity gaps.
Integration with time-tracking tools, performance analytics software, and task management platforms can help you identify potential areas of improvement. These metrics can also inform labor allotment decisions for optimal workforce management during seasonal peaks.
Vendor and Customer Management
Modern warehouse management systems simplify data exchange and communication with suppliers and customers. It provides a centralized hub for vendor interactions and order integration. Built-in connectors and ESBs can simplify integration with the vendor’s systems, leading to faster onboarding and an improved partner experience.
Building strong vendor and customer relationships is essential for ensuring consistent supply and demand fulfillment. A streamlined vendor experience translates to a better customer experience, especially in e-commerce. The WMS can consolidate orders from various sales channels and prioritize based on fulfillment rules and other predefined criteria.
Warehouse management systems provide end consumers with self-service capabilities for a better customer experience. Expedited delivery timelines, accurate deliveries, order tracking, and returns management improve engagement and brand recognition. The WMS provides a centralized hub to identify and resolve customer issues at the earliest, improving relationships with both vendors and customers.
Shipping and Freight Management
The warehouse management system can integrate with transportation management systems to perform rate shopping and provide comprehensive tracking for the delivery process. Carrier performance analytics means you can negotiate better rates and SLAs for your warehouse. Efficient shipping is crucial for timely deliveries, cost savings, and maintaining carrier relationships. The WMS integration can automate a large chunk of daily tasks, like billing and generation of packing lists and shipment invoices.
A variety of shipping options provides more flexibility for the customers to choose between delivery timelines, schedules, and delivery charges. The WMS can track the exact location of the packages and automatically notify the relevant parties of any unexpected delays.
Device and Robotic Control
A WMS integration provides a hub to manage and control automated devices and robotics within the warehouse, from autonomous mobile robots (AMRs) to sorter belts. IoT integration for real-time device monitoring can centrally track device health and schedule preventive maintenance.
AMRs work side by side with warehouse workers to minimize errors and exponentially increase productivity. Introducing robotics and automated devices like conveyor belts, AS/RS, and drones can also improve safety and working conditions for the labor force, reducing instances of burnout, fatigue, or workplace accidents.
A warehouse management system functions as a critical enabler in managing multi-client warehouse operations. This process involves connecting multiple warehouses, intelligently routing orders, optimizing inventory distribution, and ensuring cohesive resource allocation. The best warehouse management systems provide a range of services that include:
Managing multiple warehouses or a warehouse network:
- Centralized Management: A warehouse management system in logistics provides a unified platform to manage inventory, workforce, and equipment across different warehouse locations. This helps in coordinating operations and ensuring uniformity in practices across all the warehouses.
- Streamlined Processes: It automates tasks, minimizes human errors, and streamlines processes such as receiving, put-away, picking, and shipping across all warehouses.
Centralized and localized view depending on user level and use case:
- Centralized View: Administrators and top-level management can get a holistic view of the entire warehouse network. They can monitor inventory levels, workflow, and operational performance of all warehouses from a single dashboard.
- Localized View: Features of warehouse management systems allow local managers and supervisors to get a detailed view of their respective warehouse operations, allowing them to focus on day-to-day tasks, troubleshoot issues, and manage their teams more effectively.
- Order and Consignment Routing: WMS can automatically determine the best warehouse to fulfill a particular order based on factors like proximity to the delivery point, stock availability, and cost of shipping.
- Stock Transfer: In cases where a particular product is out of stock in one warehouse but available in another, a WMS can facilitate inter-warehouse stock transfers. This ensures efficient stock rotation and minimizes the chances of stock-outs.
- Synchronized Inventory Management: It helps in tracking inventory levels across all warehouses in real time, thus aiding in replenishment decisions and reducing holding costs.
- Key Metrics Tracking: WMS provides insights into critical performance metrics such as order accuracy, order fulfillment time, inventory turnover rate, and equipment utilization rate, among others.
- Individual Warehouse Performance: Businesses can gauge the performance of each warehouse in terms of productivity, efficiency, and accuracy.
- Overall Network Analysis: By aggregating data from all warehouses, organizations can assess the overall health and efficiency of their warehouse network. This helps in making strategic decisions, forecasting, and long-term planning.
A 3PL WMS can address the various complexities within 3PL warehousing operations through tailor-made integrations and adaptable, modular architectures. The centralized warehouse management solution enables real-time data flow in a multi-client warehousing setup. These out-of-the-box 3PL integrations are especially effective for e-commerce operations, as they unify sales and fulfillment channels with ERP, accounting, TMS, and shipping systems. 3PL billing capabilities improve the timeliness and transparency of your invoices and ensure all billables have been accurately captured.
Various types of warehouse management systems provide multi-client capabilities to ensure organized management of client-specific operations. In addition, performance metrics and reporting tools provide a clear overview of each client's supply chain performance.
The combined results allow 3PL providers to effectively manage diverse client requirements, streamline operations, and deliver exceptional service levels within a unified framework.
Dock Scheduling and Yard Management
Various features of warehouse management systems streamline dock scheduling and efficient yard management to ensure smooth inbound and outbound operations. This includes everything from coordinating truck appointments to optimizing resource allocation, ultimately enhancing operational efficiency and overall warehouse productivity.
- Truck Appointments: WMS enables the scheduling of inbound shipments, ensuring organized truck arrivals and preventing congestion.
- Dock Door Allocation: The system intelligently allocates dock doors based on real-time resource availability and shipment priorities.
- Resource Planning: WMS considers receiving personnel and equipment availability for efficient dock utilization.
- Inbound Visibility: Real-time tracking of inbound shipments allows for accurate scheduling and minimizes delays.
- Asset Movement Optimization: WMS tracks, organizes, and optimizes the movement of vehicles and assets within the yard, reducing congestion and improving overall flow.
- Cross-Docking Support: For products like fresh groceries, WMS supports cross-docking by immediately placing goods into outgoing shipments without interim storage.
- ASN Integration: WMS seamlessly integrates electronic Advanced Shipping Notices (ASNs) sent by suppliers to match with shipments, ensuring efficient cross-referencing and verification.
- Efficient Receiving: The system streamlines receiving operations by accepting, inspecting, and recording inbound shipments accurately.
Analytics and Reporting
A smart WMS can reshape how warehouses harness data for informed decision-making. This data-driven approach lays the groundwork for meaningful insights via automated data collection, seamless integration with analytics, and dynamic visual reporting.
You can run reports at the ERP level for a comprehensive understanding of vital warehouse metrics like on-time shipping, inventory accuracy, distribution costs, and order fill rate. Different types of warehouse management systems can generate visually engaging reports that stakeholders can readily access, enabling strategic adjustments and improved operational outcomes.
Real-time inventory tracking empowers proactive management by revealing stock levels and ensuring prompt restocking or resource optimization. Workflow management tools offer an in-depth look into warehouse activities, identifying inefficiencies and anomalies. Various types of warehouse management system vendors extend their support across national boundaries, featuring multi-location tracking and accommodating diverse languages, tax structures, and currencies.
Role of Warehouse Management System in Smart Warehousing
Smart warehousing is the future of warehouse management systems. According to a recent survey, more than 40% of respondents are prioritizing the transformation of their supply chains.
At the heart of this transformation are crucial elements such as IoT integrations, machine learning, advanced process optimization, predictive analytics, and real-time visibility. These elements collectively elevate warehouse efficiency, accuracy, and decision-making capabilities, creating a seamless and agile warehousing ecosystem.
IoT Integrations and Machine Learning
WMS integration with the Internet of Things (IoT) breathes life into smart warehousing, enabling real-time tracking of assets, products, and even workers. Modern warehouses feature IoT applications across multiple fronts — sensors track asset movement, monitor environmental conditions, track worker movements, record energy utilization, warehouse hardware performance, and more.
Meanwhile, machine learning, fueled by data collected from various sources, continuously learns and adapts to historical patterns, allowing for predictive insights that optimize processes. It anticipates demand, suggests efficient routes for picking, and allocates resources smartly, minimizing bottlenecks and inefficiencies.
Predictive Analytics and Real-time Visibility
Smart warehouses anticipate inventory needs, labor requirements, and potential disruptions by analyzing historical and real-time data. With visibility into every aspect of the supply chain, including inventory levels, order statuses, equipment utilization, and even employee performance, smart warehouse management systems can create a digital replica to test different scenarios and drive better predictions. Predictive insights empower warehouse managers to promptly address issues, capitalize on opportunities, and maintain optimal efficiency.
Unveiling WES and WCS
As the warehousing industry evolves, warehouse management systems are becoming increasingly specialized. In today’s hyper-fast commercial landscape warehouse execution systems (WES) and warehouse control systems (WCS) have emerged as the software solutions of choice to address very specific stages within the order fulfillment journey.
WES focuses on orchestrating order fulfillment processes and intelligently directing tasks to optimize efficiency. WCS, on the other hand, focuses on managing material handling equipment, ensuring smooth equipment operation and flow.
While a warehouse management system benefits broad processes like inventory, order management, and resource allocation, WES and WCS enhance the synergy. They complement different types of warehouse management systems by driving specific aspects of warehouse operation, ultimately creating a trifecta of efficiency.
The rapid growth of trade and commerce operations has put supply chain operations through the grinder. Modern warehouses must step up to the challenge by using the right technology or risk being left behind. Today, the features of warehouse management systems represent the best of automation, robotics, and process optimization, making them the best option for managing warehouse operations.
While technology is key for success in the hyper-competitive logistics and supply chain landscape, even the best warehouse management system will never be a guarantee for success unless it’s placed in the context of your business needs. In an ideal warehouse environment, technology seamlessly integrates with the people and processes to streamline warehouse operations at scale. At Hopstack, we specialize in identifying your warehousing needs and helping you realize business objectives with our specialized warehouse management system.