What is a WMS?

On-Premise vs. Cloud-Based Warehouse Management System

On-premise warehouse management system refers to software that is hosted and maintained on-site using the warehouse’s own servers. The warehouse’s IT department and resources are responsible for managing both the software and hardware required to run their business.

On-premise solutions used to be the industry standard for their customizability to accommodate a warehouse’s specific workflows. However, they lack scalability and force users into the “buy, upgrade, maintain” software cycle with software updates that come at a cost. In addition, when using on-premise WMS solutions, IT departments must download and manage updates, making implementation complicated, bugs and errors hard to manage, inefficient to maintain, and costly to upgrade.

Cloud-based warehouse management system software is hosted online in the cloud, often with no downloads needed. Instead, the warehouse accesses the software online, so users can securely log in to the system on any connected device, not just at on-premise terminals that have the WMS software installed. Additionally, cloud-based WMS software providers publish updates automatically, drastically decreasing downtime spent implementing upgrades, and build the software to standard specifications for broad warehousing needs to help align warehouse workflows to best practices.

WMS Integrations

For those fulfilling ecommerce operations, especially with an omnichannel fulfillment strategy in which the warehouse handles transactions across a wide range of sales channels with a unified approach, cloud-based WMS software is great for integrations with shopping cart platforms, marketplaces, and application programming interfaces (API). Such systems can also communicate with other customers, vendors, and suppliers through technologies like Electronic Data Interchange (EDI), UCC-128 label printing, and receiving against advanced shipping notice (ASN).

Top warehouse management systems are also able to integrate with a wide range of internal and external software systems including Enterprise Resource Planning (ERP) Systems, Supply Chain Management Systems, Order Management Systems (OMS), Transportation Management Systems (TMS), Barcode Scanning Systems, accounting programs, and ecommerce platforms.

Automated Warehouse Processes

The key objective of a WMS is digital automation. Digital automation refers to eliminating manual processes with software and/or hardware to reduce human error, inconsistencies, and slow speeds of handling repetitive tasks. With digital automation, a WMS creates best practice workflows and processes that are repeatable across customers, which is particularly valuable to third-party logistics warehouses who serve multiple customers.

For example, a WMS automates billing by capturing all billable activities in the warehouse including recurring storage, shipping, and handling fees as well as other charges. At the end of the billing period, the WMS gathers all charges into invoices that the user can then export to integrated accounting software like Quickbooks.

Other processes that a WMS can automate are inventory management with directed putaway and cycle counting, auditing, and tracking of goods within the warehouse; receiving against an advanced shipping notification (ASN); shipping and order management; and picking and packing with mobile barcode scanning.

Picking and packing with integrated mobile barcode scanning technology is a major benefit of WMS software. With mobile barcode scanning, the user can scan each item’s barcode at pick and pack in real-time to ensure they have the correct item and quantity. This is especially useful in workflows with serial numbers, which previously incurred a lot of human error when the user would have to manually check long serial numbers of incoming and outgoing items. Additionally, mobile barcode scanning is useful in inventory management during cycle counting and monitoring not just the quantity of a particular item but also the quality of items (i.e., if they are damaged or expired).

Warehouse Management System vs. Order Management System

What’s the difference between a WMS and an OMS? Warehouse Management Systems and Order Management Systems are similar software solutions used by warehouses, but the two have different functionalities. Whereas a WMS offers a comprehensive software platform that captures, records, and analyzes data on all day-to-day functions performed by a warehouse, an OMS monitors the coming and going of all inventory throughout the supply chain for its entire lifecycle, including in the warehouse, and orders related to it. An OMS often includes routing and inventory allocation functionality based on sales channel.

Because of this, OMS is not a replacement for a WMS, which does much more than track inventory and orders, but an OMS can complement a WMS in a warehouse’s technology stack. OMS is also a good solution for private warehouses that do not have multi-client operations or for customers of third-party logistics warehouses that want to visibility of their own inventory across multiple sales channels and warehouses.

How Does a WMS Work?

A warehouse management system works by incorporating all the steps your company must take to quickly and efficiently move products from your warehouse into the hands of your customers or the consumer. Generally speaking, these steps include labor management, pick efficiency, real-time inventory tracking, shipping and order fulfillment, and forecasting and reporting, all of which are crucial components of the warehouse management process.

Labor Management

An intuitive warehouse management system allows business owners to track applicable data about each warehouse employee, including which orders they’re handling and/or which products they’re picking at any given time. This feature not only helps companies closely monitor and optimize employee performance, but it also offers notable gains in productivity and quality — which ultimately results in enhanced workflows and improved profit margins, as well as avoiding warehouse management challenges.

Pick Efficiency

Picking is one of the core functions of any warehouse. Reliable WMS software will actually create pick lists so goods can be retrieved in the most efficient way (whether that’s zone picking, wave picking, or batch picking). With each new order, the picker receives a packing slip of the items and their storage locations within the warehouse; a WMS can determine the best sequence to pick these inventory items to increase both fulfillment speed and accuracy.

Real-Time Inventory Tracking

Inventory tracking is the process of monitoring stock levels so you know which SKUs you have on hand and the exact locations where they’re stored, or if they’re in transit from a manufacturer. A modern WMS divides warehouses into numerous bins and compartments to help companies access real-time inventory data on specific product allocation. If your company manages multiple warehouses, the WMS should also provide a holistic view across all your facilities. For companies participating in a fourth-party logistics (4PL) network with other 3PLs, more advanced WMS platforms may also offer Network Management.

Shipping and Order Fulfillment

Shipping and order fulfillment are at the forefront of any comprehensive warehouse solution. Most warehouse management systems offer integrations with shipping label providers to facilitate the creation of shipping labels. Based on the delivery options your brand offers, shipping carriers like DHL, USPS, FedEx, and UPS will pick up orders from your warehouse and ship packages to their next destination. Once the order ships, your WMS will automatically send ecommerce order tracking information back to your store so customers can follow along with their shipments for themselves.

Forecasting and Reporting

The top warehouse management systems offer detailed reports on the inventory and operations data from your warehouse. These reports may highlight your accuracy in fulfilling orders (i.e., mispicks or mispacks), the number of orders fulfilled each hour, the rate of orders shipped out on time, and more. In addition, there are also reports that relate to operational aspects like inventory forecasting and labor management (or staffing needs). These reports provide valuable insights and warehouse management tips for optimizing your operations.

What are the 4 Types of Warehouse Management Systems

Warehouse management plays a critical role in daily warehouse operations. Right now, there are primarily four types of warehouse management systems to choose from: standalone WMS system, supply chain management modules, and enterprise resource planning. The trick is to understand the differences between each of these options so you can select the one that’s best suited for your company.

1. Standalone WMS System

A standalone WMS system is often embraced for its warehouse management features and not to run other back office functions. That’s because as far as warehouse management systems go, the standalone option is really the most basic; in fact, it’s often included within a greater inventory management system, since it can be easily applied to other industries beyond warehouse management. For that reason, standalone software has become an ideal choice for small and midsize businesses or similar companies who value streamlined and cost-effective software solutions.

A warehouse cannot function without these two things, thus making standalone systems great for those who just need to improve those facets of their supply chain. When a business decides to utilize a standalone WMS, they benefit from the simplicity of it, and can quickly begin using it without waiting for full integration. Many warehouses begin by managing many things manually, and via spreadsheets, so a standalone can provide a major uplift to those existing systems. Some of the things a business can manage using a standalone system include:

• Picking
• Packing
• Shipping
• Receiving
• Returns
• FIFO or LIFO data management
• Cycle counts
• Barcode scanning
• Inventory tracking

Businesses should keep in mind, that some limited functionality warehouse management systems may not integrate well with some OMS or ERPs. If they are looking toward the future and see themselves growing exponentially and expect to need more technology down the road, they may want to invest in a more robust and comprehensive WMS software, which can help address potential warehouse management issues.

2. Supply Chain Management Module

Supply chain management (SCM) software has a fairly broad scope — it helps retailers manage everything from business relationships to warehouse processes to risk assessment. It focuses on automating tasks like inventory management and product life cycles. If you decide on software with supply chain management (SCM) features, note that it will require you to invest in supply chain planning applications that include warehousing components. This trajectory is not uncommon, seeing as it allows some brands businesses to explore the many benefits of SCM, but may require significant management and cost. 

3. Enterprise Resource Planning (ERP) Module

Enterprise resource planning (ERP) is a multifaceted solution that merges the features and functionality of a number of platforms into one cohesive package. In simple terms, ERPs contain most of the core software applications that make business processes run smoothly — think supply chain planning, customer relationship management (CRM), accounting, and so on. ERP is a good option for companies looking to upgrade their software to support significant complexity and scale, and also presents a chance for enterprises to run much of their system from a single system. 

It’s important to remember, however, that while integrated ERP systems have a range of warehouse management features, it’s not a core function of such platforms. With that in mind, make sure you find an ERP that offers the specific warehouse integrations you need (a tough challenge indeed!).

4. Cloud-Based Platform

For fast integration and added convenience, a cloud-based WMS platform is going to be the best option. Cloud technology in the warehouse brings a load of benefits such as increased security, less IT maintenance, and a lower cost. Because cloud-based WMS systems run on a server and system outside of their organization, the integration and management of the WMS become much easier and cheaper.

On-premise warehouse management systems require far more work when it comes to implementing the platform within existing technology and supply chain steps. Businesses would also save money on having an outside IT team manage their systems, rather than in-house or bringing in an outside team.

Other critical features of a cloud-based platform include:

• User-friendly
• More scalable
• Increased security
• Highly flexible
• Data and disaster recovery
• Competitive
• Consolidation

Cloud-based platforms will often be chosen and used by third-party logistics, as they require significant visibility into warehouse operations and must stay up to date on the most recent technology to stay competitive. The cloud can help tie together all aspects of their business in one easy-to-use format. So, if you are a 3PL Warehouse Manager, look into these types of WMS.

Who Needs a WMS?

Both private and 3PL warehouses use Warehouse Management Systems to digitize and automate their warehouse operations. A WMS is useful for all order fulfillment types including pallet in/pallet out, B2B, B2C, ecommerce business, and omnichannel, as the software allows warehouse users to manage inventory and transactions from a variety of receiving and sales channels. Furthermore, WMS systems can handle the needs of warehouses serving multiple industries and verticals including but not limited to retail, apparel, bulk goods, raw materials, cold storage, nutraceuticals & pharmaceuticals, wine & spirits, and hazardous materials.

Private warehouses will sometimes opt for an inventory management system (IMS) instead of a WMS because they only want to track inventory, but this software is extremely limited compared to WMS software and would not suit more complicated operations. Because of the versatility, adaptability, and customizability of WMS software, any warehousing operation – whether public or private – can benefit from using a WMS to record data on all the happenings within their warehouse. Both comprehensive and robust, WMS software is the best solution for warehouses to manage order volume demands and keep track of all transactions performed by the warehouse.

Warehouse Management Systems for Brands

Ecommerce operations require robust systems to handle the complexities of modern fulfillment. Here’s why warehouse management software is indispensable: 

Automation and Efficiency: Automation features within a WMS prevent stockouts by notifying you about inventory issues in advance. With automatic inventory tracking at the stock location level, updates to your inventory management software occur swiftly, ensuring that sales channels reflect accurate stock levels.

Streamline Equipment Usage to Reduce Overhead: A sophisticated WMS can help you optimize the use of your warehouse space and equipment, allowing for improved picking processes and reduced wear on equipment, resulting in significant savings.

Improve Inventory Data Accuracy: By reducing human error through barcode or RFID technology, a WMS ensures greater inventory accuracy, thereby limiting stockouts and write-offs, and reducing time spent on replenishment and inventory reconciliation. This is especially important in maintaining warehouse management best practices.

Better Demand Planning: A WMS, with its advanced demand planning capabilities, allows you to merge data on incoming and outgoing products to better forecast inventory needs, ensuring uninterrupted order flow and fulfillment.

Reliable Security for Warehouse Operations: A WMS assigns individual, auditable user accounts to employees, enhancing accountability and providing a clear audit trail that links specific transactions to specific individuals, thus securing warehouse operations.

Timely Shipments for Better Customer Satisfaction: Lean operations supported by a WMS and organized warehouse stations ensure that shipments are processed quickly, leading to consistently satisfied customers and repeated business.

Warehouse Management Systems for 3PLS

Third-party logistics providers (3PLs) play a vital role in the supply chain, and robust 3PL warehouse management software is pivotal for their success. Here's how a WMS can address the specific needs of 3PLs:

Tailored Solutions for Diverse Client Needs: A WMS offers adaptable modules and workflows that can be customized to meet the varied requirements of each client a 3PL serves, ensuring precise and efficient management of goods across different sectors.

Optimizing Storage and Movements for Efficiency: Advanced WMS features such as directed putaway and real-time inventory control enable 3PLs to optimize warehouse space and dynamically manage inventory, leading to enhanced efficiency and cost savings.

Seamless Integration with Clients' Systems: The ability of a WMS to integrate seamlessly with clients' existing shopping carts and marketplaces, OMS, and purchase order management is crucial for maintaining real-time visibility and coordination throughout the supply chain.

Enhanced Reporting and Performance Metrics: 3PLs benefit from WMS solutions that offer comprehensive, real-time reporting and performance metrics, empowering them to make informed decisions and proactively manage warehouse operations. 

Scalability for Growing Operations: A scalable WMS can support 3PLs as they expand, accommodating increased order volumes and additional services without sacrificing performance. 

Compliance and Accuracy in Order Fulfillment: A WMS assists 3PLs in achieving high levels of accuracy and adherence to regulations, which is essential for client satisfaction and minimizing liability.

Cost-Effective Management of Labor Resources: The labor management optimization features of a WMS help 3PLs to minimize labor costs while maximizing workforce productivity, directly influencing their profitability. 

Advanced Billing and Revenue Management: With features for integrated billing, a WMS enables 3PLs to track and bill accurately for the services they provide, simplifying revenue management and reducing billing disputes.

5 Features to Look for in a Warehouse Management System

If you’ll be implementing a WMS for the first time, you might feel a little unsure of where to start with vetting potential software partners. The truth is, there are five main criteria to be on the lookout for: omnichannel warehouse visibility, scalability over time, cloud-based connectivity, good customer service, and the ability to integrate with your existing ecommerce platforms.

1. Omnichannel Warehouse Visibility

An omnichannel warehouse is one that fulfills outgoing orders for all customers, regardless of which outlet they used to make their purchase. Having an omnichannel warehouse ushers in improved workflows between all your selling channels, allowing for better efficiency and control of costs. A warehouse management system helps companies get the most of their omnichannel facility, opening up for real-time visibility around your warehousing operations and KPIs.

2. Scalability Over Time

The best warehouse management systems will scale with your company’s growth and adapt to meet future requirements — because otherwise, it’s not a long-term solution. To determine the flexibility of a system, consider whether it works with a majority of ERPs, whether it integrates with flexible hardware (like label printers and scanners), and if it’s achieved proven success with warehouses and distributors of all sizes (which is really just another example of adaptability). 

3. Cloud-Based

By adopting a cloud-based warehouse management system, you can make sure your sales channels, inventory reports, and financials are continually updated with every shipment, delivery, and warehouse transfer. This not only streamlines operations but also sets the foundation for potential future tech upgrades for warehouse management. And that goes without mentioning the ease in merging with external systems, like the programs your suppliers and distributors leverage. Plus, cloud-based connectivity guarantees relevant insights that’ll help you make informed, data-driven decisions. 

4. Good Customer Service

It’s important not to underestimate the value of good customer service when selecting a WMS. Software support is pivotal when it comes to which platform you partner with, because questions are bound to arise within implementation or continued use — and you’ll want to know how or where to contact someone when they do. That’s the reason you should opt for a WMS with a trusted reputation and a dependable process for addressing issues with their service.

5. Integrates with Existing Platforms

As you search for your ideal warehouse management system, look for one that integrates with the existing platforms you’re already relying on, such as inventory management software to track sales and product movement across multiple channels and/or online marketplaces. These integrations are necessary for making sure your operations run as smoothly as possible, and that you never miss a sales opportunity or fall behind on your order fulfillment processes.