16 min read
What is a Warehouse Management System (WMS)
Published 21 Jul 2024
If your business depends on warehouses for supply chain management, multiple challenges are inevitable, especially if you conduct manual workflows. There is always a high risk of human error and inefficiency in handling large volumes of inventory, which can lead to delays and inaccuracies in order fulfillment.
One of the must-have solutions for you is a Warehouse Management System (WMS). In this article, you will learn how implementing a WMS can streamline operations, reduce costs, and improve inventory accuracy and efficiency in your warehouse.
One of the must-have solutions for you is a Warehouse Management System (WMS). In this article, you will learn how implementing a WMS can streamline operations, reduce costs, and improve inventory accuracy and efficiency in your warehouse.
Contents
Understanding the Meaning of WMS
A warehouse management system is software that supports and optimizes warehouse functionality and distribution center management. These systems facilitate the control and management of daily operations from when goods or materials enter a warehouse until they move out.
The system streamlines all warehouse management activities through a single interface, covering aspects from receiving and put-away to inventory tracking and replenishment. Additionally, the WMS system integrates with other technological tools, such as bar code scanning, RFID labeling, advanced robotics, augmented reality (AR) wearables, and vital business systems like transportation management systems (TMS), enterprise resource planning (ERP), and other logistics software.
This comprehensive framework ensures that warehouses respond effectively to shifting demand dynamics while maintaining efficiency and meeting modern logistical challenges.
The system streamlines all warehouse management activities through a single interface, covering aspects from receiving and put-away to inventory tracking and replenishment. Additionally, the WMS system integrates with other technological tools, such as bar code scanning, RFID labeling, advanced robotics, augmented reality (AR) wearables, and vital business systems like transportation management systems (TMS), enterprise resource planning (ERP), and other logistics software.
This comprehensive framework ensures that warehouses respond effectively to shifting demand dynamics while maintaining efficiency and meeting modern logistical challenges.
Where Does WMS Fit Into the Supply Chain?
A warehouse is the place where materials and inventory are delivered, stored, and transported from, forming an essential part of the supply chain. A Warehouse Management System (WMS) makes this chain work effectively by tracking everything digitally, ensuring no materials are lost, and preventing delays. It keeps each item visible by showing when something will be delivered and where it is currently located. This real-time data helps businesses make the right and timely decisions about what to buy and when to transport items, ensuring smooth and efficient supply chain operations.
Why Do Businesses Today Need a WMS?
If your business is struggling with warehouse management, a WMS can address those challenges. Let's explore how it works.
Inventory and Shipping Monitoring
Warehouse management systems provide inventory and shipping data access, which enables businesses to identify bottlenecks and delays:
Difficulties with carriers. Businesses often face delays in coordinating shipments due to poor communication with carriers, leading to scheduling conflicts, missed delivery windows, and increased transportation costs. These issues can disrupt the entire supply chain.
Handling returns. Managing returns can quickly become chaotic without a system in place to track them. Without the aid of WMS for inspection, it's difficult to efficiently allocate returned items for restocking, repair, recycling, or disposal. Manual inspections also significantly delay the availability of items for resale.
No real time tracking. The absence of the real time tracking feature can cause delays in tracking shipments and in predicting their arrival times. Furthermore, the potential for goods to get lost in the shipping process can negatively affect both the business operations and customer service.
With features like automated alerts, real-time tracking, and centralized data management, a WMS ensures that both warehouse staff and carriers are aligned, reducing the likelihood of delays and optimizing delivery routes.
Customer Service Issues
Customers demand transparency and reliability in tracking their shipments. The following points are essential in ensuring that your customers remain satisfied:
High order accuracy so your customers do not get the wrong products
Faster order fulfillment without unnecessary delays
Accurate tracking information to keep the customer updated on the delivery of their order
Smoother return process to keep customers believing in your service
Achieving these tasks through manual workflows is difficult and often leads to errors and inefficiencies. Warehouse management systems streamline these processes, enhancing customer service.
Competitive Edge
Businesses today face several key challenges in maintaining a competitive edge in the warehouse management landscape:
Customer expectations for faster and more accurate order fulfillment are higher than ever.
Managing a large and diverse inventory efficiently has become increasingly complex.
Operational inefficiencies and reliance on manual processes can lead to higher costs and slower order fulfillment times.
Effective coordination with suppliers and other parts of the supply chain is crucial for smooth operations. Making informed decisions in real time is essential for maintaining competitiveness, yet it can be challenging without comprehensive data.
As businesses grow, their operational needs become more complex, requiring scalable and flexible solutions to handle increased volumes and new challenges. A WMS offers solutions to all of these challenges to help your business stay competitive.
Additionally, with almost every business automating processes using a WMS, it’s no longer an opportunity but a core requirement in order to not lag behind.
Additionally, with almost every business automating processes using a WMS, it’s no longer an opportunity but a core requirement in order to not lag behind.
Benefits of Implementing a WMS in UAE
Using WMS systems will not make you wait long for profits. The system allows you to improve the efficiency of your business in the following ways:
Reduced Costs
Using WMS helps you reduce costs by optimizing storage, retrieval, and packing processes.
Optimizing storage. A WMS uses advanced algorithms to determine the best locations for storing items, maximizing warehouse space and reducing wasted areas. By organizing inventory in a way that minimizes unused space, businesses can avoid the costs associated with renting additional storage facilities. It also reduces the time staff spends on their tasks and the number of employees needed to handle the same workload. This ensures peak efficiency and reduced labor costs.
Retrieval process. WMS lowers costs by streamlining the picking process, guiding workers along optimized paths for faster item location and reduced labor time, in turn reducing labor costs. It minimizes picking errors and boosts order accuracy, cutting costs tied to returns and unhappy customers. WMS software also helps manage perishable inventory by picking items with the shortest shelf life first. This ensures that products are used before they expire, boosting sales and reducing waste. This way businesses can avoid losses from spoiled goods.
Packing processes. A WMS can provide detailed packing instructions, ensuring that items are packed correctly. This reduces the likelihood of damaged goods and returns, saving costs associated with re-shipping and handling. Additionally, by automating packing instructions and integrating with transport systems, WMS optimizes package sizing and carrier selection, leading to significant savings on materials and shipping.
A survey by Logistics Management found that warehouses are the most common location for packing and fulfillment activities, with ResearchGate estimating that order picking costs make up 55% of total warehousing expenses. [?]
Improved Inventory Accuracy and Visibility
A WMS enhances inventory accuracy by providing real-time tracking and precise data on the location, quantity, and status of all items within the warehouse. This reduces the likelihood of errors caused by manual data entry, misplaced items, or outdated records. With accurate inventory data, businesses can minimize stock discrepancies, ensuring that inventory counts are always correct and up-to-date.
Enhanced visibility also supports better decision-making, as managers can monitor trends, forecast demand, and plan for future inventory needs more effectively.
Enhanced visibility also supports better decision-making, as managers can monitor trends, forecast demand, and plan for future inventory needs more effectively.
Faster Order Fulfillment and Delivery
The filling of goods and their delivery directly depend on how the warehouse is managed. Faster order fulfillment and delivery basically need:
Picking routes. There need to be efficient picking routes that minimize the time and effort required to gather items for orders.
Quality control. Effective management includes checks to ensure items are packed correctly and securely, reducing the chances of damage during delivery.
Carrier coordination. Efficient warehouses communicate effectively with carriers, scheduling pickups and deliveries to ensure timely arrival at the customer’s location.
A WMS helps achieve all of this with ease. The streamlined operations minimize the lag time in order processing, allowing businesses to swiftly move products from warehouse to customer, thus reducing delivery times.
Enhanced coordination between fulfillment activities and delivery systems through the help of WMS ensures the moment an order is completed, the delivery process kicks off immediately. This minimizes the transition period and ensures that customers receive their orders promptly.
Enhanced coordination between fulfillment activities and delivery systems through the help of WMS ensures the moment an order is completed, the delivery process kicks off immediately. This minimizes the transition period and ensures that customers receive their orders promptly.
Enhanced Customer Satisfaction
Using a WMS can enhance order fulfillment, speed up deliveries, and decrease inaccuracies in packing and dispatching. All these lead to higher customer satisfaction and loyalty, improving your brand reputation.
Additionally, suppliers may benefit from reduced wait times at loading bays and docks, ultimately improving relationships with them.
Additionally, suppliers may benefit from reduced wait times at loading bays and docks, ultimately improving relationships with them.
Key Features of a Modern WMS System
Here are some key WMS features that will improve your inventory workflow.
Inventory Management and Tracking
An inventory tracking system follows inventory through every stage of the supply chain, including ordering, transit, receiving, storage, and order fulfillment. It also includes processes for returns, exchanges, and warranties if necessary.
To give you an idea of how a modern WMS helps you achieve that, we’ll explain using the features of the FirstBit ERP. The FirstBit WMS software has the following abilities that helps manage and track inventory:
To give you an idea of how a modern WMS helps you achieve that, we’ll explain using the features of the FirstBit ERP. The FirstBit WMS software has the following abilities that helps manage and track inventory:
Stock count management. It tracks inventory from ordering to order fulfillment by keeping track of all the items that your warehouse currently has and placing orders accordingly to prevent overstocking.
Minimum/maximum stock levels. The function helps eliminate overstocking or out-of-stock problems by defining every item's minimum and maximum values and getting automatic alerts.
Expiry date management. Manage and sell products that come with an expiration date first to mitigate wastage and increase your profit margins.
Batch management. Be it auto spare parts, steel items, or heavy-duty machinery, it lets you manage your stock in batch and even process order batches seamlessly.
Negative stock management. Enhance the accuracy of the cost of goods sold by avoiding the issue of negative inventory by analyzing the order and shipping dates.
Label printing. If you need labels for your inventory, sets, bundles, or inbound or outbound deliveries, you can connect FirstBit software with your label printer.
Barcode management. Track products coming in and going out of your warehouse using barcode scanners and PDA devices For example, FirstBit ERP can generate 1D and QR codes for your inventory items.
Automated data collection (ADC) using handheld devices. Use handheld devices to scan barcodes and labels to capture stock data across your warehouse automatically.
Order Fulfillment and Shipping
A modern Warehouse Management System (WMS) helps with order fulfillment and shipping by offering several useful features.
First, it automates order processing, which means it handles the entire process from receiving orders to picking, packing, and shipping them, reducing the need for manual work.
The system also uses smart picking methods like batch picking (picking multiple orders at once), zone picking (picking from specific areas of the warehouse), and wave picking (picking orders in waves based on priority), which makes finding and picking items faster and more efficient.
The system integrates with shipping carriers, allowing it to create shipping labels, schedule pickups, and provide tracking information, making the shipping process smoother. It also has packing optimization, which determines the best way to pack items based on their size and weight, ensuring they are packed efficiently and safely. Order accuracy is verified through barcode scanning to make sure the right items are picked and packed.
Finally, the system uses dynamic slotting to place frequently ordered items in easily accessible locations, and it generates detailed reports and analytics to help improve the order fulfillment and shipping processes continuously.
Warehouse Layout and Space Optimization
Warehouse layout refers to how the space within a facility is arranged to optimize production and distribution flow. A good WMS should help optimize warehouse layout and space efficiency.
FirstBit ERP, for example, offers comprehensive tools to improve warehouse layout. It includes automated slotting, which organizes items based on size, weight, and frequency of use, ensuring that frequently accessed items are easily reachable. This makes the best use of available space and improves efficiency.
It also supports dynamic bin location management, allowing you to create a detailed and hierarchical structure of storage locations within the warehouse. This system ensures that all items are stored in the most optimal locations, making it easier to locate and retrieve them quickly.
FirstBit ERP, for example, offers comprehensive tools to improve warehouse layout. It includes automated slotting, which organizes items based on size, weight, and frequency of use, ensuring that frequently accessed items are easily reachable. This makes the best use of available space and improves efficiency.
It also supports dynamic bin location management, allowing you to create a detailed and hierarchical structure of storage locations within the warehouse. This system ensures that all items are stored in the most optimal locations, making it easier to locate and retrieve them quickly.
Labor Management and Productivity
Labor productivity is one of the key performance indicators for warehouse operations. It measures worker efficiency and resource utilization. One of the most effective methods to boost labor productivity is using your WMS data, which offers valuable insights into processes, workflows, and performance.