It’s no secret that warehouses have a lot of moving parts. From storing inventory according to regulatory standards to optimizing a facility’s picking and packing processes to ensure accuracy—all of these operations make it difficult to manage an entire facility the old pen-and-paper way.
That’s where a warehouse management system (WMS) comes in. In this blog, we’ll explore what a warehouse management system is, how it helps companies maximize their labor and space usage, and why you should partner with a 3PL that has a fully integrated WMS in place.
But to start, what is a warehouse management system exactly?
What Is A Warehouse Management System?
A warehouse management system (WMS) is software designed to control, manage, and optimize operations in a warehouse.
A WMS provides real-time visibility of picking, packing, put-away, shipping processes, inventory tracking/replenishment, and daily storage levels. 3PL warehouse management systems also provide data and insight into big-picture planning.
Types of Warehouse Management Systems: Warehouse Management System vs. Inventory Management System
So what’s the difference between a warehouse management system and an inventory management system?
At a high-level overview, a warehouse management system manages stock storage and picking and packing activities. A WMS’s main function is to control the storage and movement of products and materials within a warehouse.
An inventory management system typically allows a company to know how much of a certain product they have left, whereas WMS software can also allow a warehouse to easily find where that product is located.
While both systems can work together, a WMS generally gives companies more control over their operations and more insight into how the 3PL they’re partnering with is helping them move and manage inventory.
3 Most Common Types of Warehouse Management Systems
The 3 most common types of WMS software are standalone, cloud-based WMS, and applications integrated with ERP. No one WMS is best, and each has its pros and cons. We’ll break down which WMS might be best for you depending on your specific priorities, industry, and business model.
1. Standalone Warehouse Management System
A standalone system is usually found on a company’s premises using its own technology.
- A standalone WMS often supports greater customization capabilities.
- Your company maintains complete control over your data.
- The initial cost is much higher than other WMS options.
- Costs, updates, and maintenance for the WMS are your company’s responsibility.
- Over time as your WMS ages, it becomes increasingly hard to build in new technologies and integrate with other platforms like Shopify.
2. Cloud-Based Warehouse Management System
A cloud-based WMS offers faster, more flexible warehouse management solutions, and it’s usually delivered as software-as-a-service (SaaS).
- Lower initial costs.
- Faster implementation (easier to scale as your company grows).
- Better at forecasting demand to support seasonal shifts and other market changes.
- A 3PL partner takes on the responsibility of handling logistics, updates, and maintenance.
- SaaS tends to offer higher security measures and disaster recovery solutions than standalone WMS.
- A cloud WMS integrates more easily with other software and platforms.
- Fewer customization capabilities than a standalone WMS.
- Your company does not maintain total control over your data when you outsource.
3. Integrated ERP And SCM-Based Warehouse Management System
A WMS that integrates with an ERP (enterprise resource planning) system or SCM (supply chain management) system is commonly built to support multiple applications.
- These systems integrate more easily in overlapping areas like business intelligence, accounting, marketing, and human resources.
- If you’re concerned primarily with your supply chain, ERP and SCM-based warehouse management systems provide a holistic overview of your end-to-end order fulfillment, allowing for maximum warehousing transparency.
- Can be complex for inexperienced users.
- Installation is expensive up front, and implementation is slow.
- May be overkill if you don’t want to automate processes across your entire business.
5 Benefits Of Having A Warehouse Management System
1. Real-Time Inventory Tracking
A WMS gives you a real-time snapshot of your inventory as it moves through your warehouse by using sensors, barcoding, RFID tagging, and other location-tracking methods.
You need a real-time inventory tracking system in place to accurately forecast demand and pinpoint the exact location of goods if a product recall occurs.
2. Optimized Labor Management
A warehouse management system can improve labor management in 2 ways:
1) More efficient labor forecasting and scheduling, and
2) Higher employee morale overall.
Labor forecasting improves because a WMS can account for travel times inside of a warehouse and the skill levels and real-time locations of warehouse employees to assign the right people to the right locations more efficiently. By optimizing labor, you also reduce labor costs.
Plus, employee morale increases with the certainty, organization, and improved safety that comes with using a WMS. It takes out the guesswork of picking, packing, and shipping, so employees’ skills are being put to good use, and they feel their time isn’t going to waste.
3. Improved Operational Efficiency and Accuracy
In a more general sense, WMS software streamlines operations for higher efficiency and accuracy. It gives your 3PL partner the ability to handle higher volumes of orders without compromising speed or precision.
However goods move and flow through your warehouse, a WMS will make sure they travel in the most cost-effective way possible. You save time and money, plus reduce the chance of human error.
4. Maximized Warehouse Design
Among other things, a warehouse management system improves workflow within your warehouse. You maximize storage space when you use a WMS because the software uses picking logic to optimize where goods should go.
Effectively, a WMS redesigns your warehouse floor for optimized inventory management. It even accounts for seasonal shifts and changes in forecasting to modify inventory allocation in real-time.
5. Minimized Waste
WMS software reduces waste if you have perishable or date-restricted inventory by locating which items need to be picked first (a function of FIFO accounting).
It also makes more efficient use of your warehouse space. Certain advanced warehouse management systems can identify optimal travel paths, simulate improved floor plans, and recommend where equipment, pallets, and shelves should go to save time and money and operate more efficiently.
Looking for a 3PL partner with advanced warehouse management system capabilities? Contact our team of experts today to learn more.
This blog was originally published on December 2, 2021. It was updated on January 19, 2024.