Table of contents:
What is a Warehouse Management System (WMS)?
4 Key Types of Warehouse Management Systems
How to Select a Warehouse Management System for Your Business
Warehouse management systems are an indispensable element in ensuring efficient storage and movement of goods. Currently, the market takes a variety of approaches to warehouse operations management, each of which has its own characteristic features and advantages.
This article delves into four main types of warehouse management systems, highlighting their advantages and how they can improve warehouse productivity, accuracy, and overall efficiency for modern enterprises. We will also look at warehouse management system examples currently available.
What is a Warehouse Management System (WMS)?
Let’s first define what a WMS is. We can do this using an analogy. Imagine an orchestra with many musicians playing different instruments. Someone plays the flute, someone plays the violin, someone plays the trumpet. For all these instruments to play harmoniously, a conductor is needed. He or she sets the tempo and rhythm with a baton and physical movements, guiding each musician and helping them play in harmony to produce a single, unique composition.
A warehouse management system might be compared to that conductor:
- Just as a conductor oversees the musicians, a WMS oversees all the moving parts within a warehouse. It coordinates activities like inventory management, order fulfillment, picking and packing, and shipping.
- The conductor ensures that each musician plays their part, contributing to the overall harmony. Similarly, a WMS ensures that each warehouse worker performs their tasks efficiently, contributing to a smooth and streamlined operation.
- A conductor reads the sheet music, interpreting it and guiding the orchestra. A WMS “reads” data about inventory, orders, and locations, using it to direct activities and optimize processes.
- The conductor keeps the tempo and rhythm, ensuring the music flows seamlessly. A WMS maintains the flow of goods in and out of the warehouse, preventing bottlenecks and delays.
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Benefits of Using a WMS
HQSoftware has a track record of successfully implementing WMS projects for various companies from different parts of the world.
Based on our many years of experience, we can confirm that a warehouse management system is a critical element of modern entrepreneurship that ensures efficient storage, monitoring and management of inventory of goods. Looking at how WMS is used in more detail, we note a number of benefits.
Inventory control and management
A WMS can give you a much clearer picture of your inventory and help you manage it more effectively. For example, a successful food retailer understands the importance of product quality on the shelves, which means they are interested in tracking the freshness of goods, in terms of health and safety as well as efficient product lifecycle management. A WMS provides the company with comprehensive information about inventory and offers ready-made shipment plans, taking into account the shelf life of goods and the chosen sales strategy.
Let’s imagine that a batch of low-quality goods needs to be recalled. Using a modern warehouse management system, the company can efficiently identify and locate where the potentially hazardous products have been shipped.
Optimized warehouse space utilization
By efficiently managing shipping and picking processes, a WMS can ensure that available storage space is used as efficiently as possible. It can suggest optimal storage locations based on factors such as product characteristics, demand patterns and storage constraints.
For example, the WMS may recommend storing fast-moving goods closer to the shipping area and bulky or oversized goods in less accessible locations. This allows for the most efficient use of available space.
Enhanced order fulfillment speed and accuracy
A well-designed WMS can accelerate order fulfillment times and ensure accurate order processing. This can lead to faster delivery times, fewer shipping errors, and improved customer satisfaction.
For example, in a clothing distribution center, a WMS can guide pickers to the exact location of required items such as shirts, pants and socks, based on real-time inventory data. This eliminates the need for manual searches, reduces the risk of incorrect picking and allows orders to be processed faster.
Reduced labor costs and errors
By automating manual processes and providing managed workflows, a WMS can minimize the need for manual intervention and reduce the risk of human error. This can lead to lower labor costs, improved accuracy and fewer damaged or returned products.
To significantly reduce the likelihood of errors caused by manual data entry or human oversight, a well-designed WMS should have features such as barcode scanning, voice-activated picking, and automated shipping and replenishment processes.
Customer service and tracking
The warehouse is an integral part in the chain of interaction between seller and buyer. When the ordered goods are shipped to the buyer, it is essential to provide quality customer service. A WMS is a tool that allows you to establish clear interactions and ensure error-free and fast assembly of orders, quick shipment from the warehouse, and efficient transfer to the courier service.
4 Key Types of Warehouse Management Systems
There are many warehouse management systems available, and they fall into four main types. Choosing the right WMS for your business is a crucial first step in selecting the appropriate provider. This process is not easy, as each type has its own advantages and disadvantages. If you don’t know where to start, let’s briefly analyze each option.
1. Standalone warehouse management system
A standalone warehouse management system is a localized solution installed on a company’s own hardware and software infrastructure and running on its network. Typically, such systems are third-party packages that require integration with other business management software, such as ERP systems. They offer basic functions such as warehouse operations and inventory management.
Due to the simplicity and compactness of this system, standalone systems are a popular choice for some organizations with few employees or with a small number of workstations handling small batches or flows. They are generally the most affordable warehouse management system suited to a small or medium-sized business.
Advantages of standalone WMS:
- Autonomy: Standalone WMS solutions provide greater control over warehouse operations. This allows businesses to tailor the system to their specific needs and workflows, optimizing efficiency without depending on the functionality of other applications.
- Support and maintenance from the WMS provider: Standalone WMS solutions usually come with a dedicated support and maintenance services provider that ensures timely updates, technical assistance, and bug fixes if they suddenly occur.
- Process optimization: The system automatically optimizes the distribution of goods in the warehouse, manages inventory, and plans loading and unloading routes to help reduce costs and increase productivity.
- Integration with other systems: Despite its autonomy, this type of WMS can integrate with other systems such as ERP (Enterprise Resource Planning) or TMS (Transportation Management System) for a deeper and more coherent automation of logistics processes.
Disadvantages of standalone WMS:
- Higher Total Cost of Ownership (TCO): While a standalone system may be cheaper upfront, it can cost more in the long run due to extra fees for integration, maintenance, and updates.
- Limited scope: A standalone WMS is primarily focused on warehouse operations and may lack features for broader supply chain management. This can be a limitation for businesses that need end-to-end visibility and control.
- Vendor dependence: Relying on a standalone WMS from a single vendor can be risky if the vendor goes out of business or stops supporting the product.
- Potential compatibility issues with existing systems: Standalone WMS solutions can pose challenges when integrating with existing enterprise systems (ERP, TMS, CRM). Complex customization may be required to ensure smooth data flow between systems. This can lead to implementation delays or data inconsistencies.
Manhattan Associates WMS can be deployed as a standalone supply chain management system. Although Manhattan Associates offers a broader set of supply chain management solutions, their WMS product can function independently.
Manhattan Associates WMS provides all the basic functions required for warehouse operations, including inventory control, order fulfillment, labor management, and warehouse automation.
Although standalone, Manhattan Associates WMS can connect to a variety of business systems such as ERP, TMS and e-commerce platforms.
2. WMS module in supply chain management system
A WMS as a supply chain module is a set of functions and tools aimed at effectively managing the entire supply chain, from the moment raw materials or finished goods arrive at the warehouse to the delivery of goods to end consumers. It is like a super organizer for your entire business.
The supply chain module is the ideal solution for businesses with complex supply chains. This supply chain management system integrates with other supply chain management software, providing businesses with a comprehensive solution for managing warehouse operations within a broader supply chain context.
Advantages of a supply chain WMS module:
- Enhanced integration with other supply chain modules: Being part of a comprehensive supply chain management system, the WMS module can seamlessly integrate with other modules such as transportation management, order management, and procurement.
- Cost-effective solution: For companies that have already invested in a supply chain management system, adding the WMS module can be a cost-effective way to enhance warehouse operations without the need to implement a separate standalone system.
- Improved warehouse visibility: With a supply chain management system, businesses can gain a holistic view of their operations, including warehouse activities, transportation, and logistics.
- Optimized warehouse processes: The WMS module streamlines picking, packing, and overall warehouse workflows, resulting in increased efficiency and cost reduction.
Disadvantages of a supply chain WMS module:
- Higher upfront investment: Compared to a standalone WMS, the initial cost of a supply chain WMS module can be higher due to its broader functionality and integration needs.
- Possible system overlap: If you already have separate systems for tasks such as order management or inventory control, a supply chain WMS can duplicate these functions, leading to redundancy.
- Increased maintenance cost: Maintaining and updating a complex supply chain system requires dedicated IT resources. This can lead to higher costs compared to a simpler standalone WMS.
- Requires skilled labor to operate: With additional functionalities, a supply chain WMS might require more training for warehouse staff to become proficient in using the system effectively.
SAP ERP Warehouse Management (SAP WM) is an example of a supply chain module WMS provider. As a module of the broader SAP S/4HANA ERP suite, SAP WM has exceptional integration capabilities. It easily connects with other SAP components such as finance, inventory management, sales, and production planning. This simplifies the exchange of data between all functions in real time.
Although SAP WM is a module, it offers a complete set of functions designed for warehouse operations:
- Inventory control and management
- Inbound and outbound order fulfillment
- Warehouse automation integration
- Labor management
- Reporting and analytics
Another important advantage of SAP WM is scalability. This means that it can adapt to enterprises of different sizes and complexity.
3. Cloud-based WMS
A cloud-based WMS is a platform whereby all warehouse management data is stored in the cloud. This data can be accessed at any time from anywhere with an internet connection. Cloud-based WMS systems are often available as ready-made SaaS solutions.
A cloud WMS is ideal for all types of businesses, large and small, and offers the same benefits as a traditional WMS while providing a lower cost of deployment.
According to a 2020 Gartner report, 57% of companies had implemented or were planning to implement cloud-based WMS solutions. This trend is driven by the advantages of cloud technology, such as scalability and cost-effectiveness.
Advantages of cloud-based WMS:
- Versatility: Cloud WMS is suitable for different types of warehouses, from small warehouses to large distribution centers.
- Mobility: Cloud-based systems provide access to data and warehouse management from any internet-connected device. This makes it easy to monitor warehouse operations and make decisions on the go.
- Cost reduction: As there is no need for physical hardware and constant software updates, this reduces operational costs.
- High level of security: Cloud WMSs provide advanced data protection mechanisms to ensure that critical information is kept safe and privacy requirements are met.
Disadvantages of a cloud-based WMS:
- Internet dependence: Unlike standalone systems, a cloud-based WMS requires a stable internet connection to function. This means any internet disruptions at the provider’s end can lead to downtime in your warehouse operations.
- Data security concerns: Because the vendor hosts the WMS in their data centers, some companies may feel they have less control over data security. However, reputable cloud providers typically invest no small amount of money to maintain robust security measures. Therefore, it is important to carefully evaluate a vendor’s security practices before choosing a cloud WMS.
- Limited сustomization: Cloud-based WMS solutions often cater to a wider audience, so they might offer less flexibility for customization compared to on-premise systems.
- Subscription costs: Cloud-based WMSs typically involve an ongoing subscription fee. This can be a disadvantage for companies looking for a one-time purchase option.
As an example, let’s take a look at Oracle Fusion Cloud WMS. It is a cloud-based platform designed with scalability in mind. This means that businesses of any size, from small warehouses to large distribution centers, can use it.
Oracle Fusion Cloud WMS has a wide range of features to meet different warehouse needs:
- Inventory management
- Inbound and outbound order fulfillment
- Warehouse automation integration
- Labor management
- Warehouse optimization tools
Oracle Fusion Cloud WMS uses real-time data and analytics. From this information, a complete picture of warehouse operations can be built. This allows businesses to identify areas for improvement and make data-driven decisions to optimize warehouse processes.
4. WMS module within an ERP system
This is a comprehensive solution that covers many aspects of a business, including financial management, production management, human resources and, of course, warehouse management.
Advantages of WMS as an ERP module:
- Data integration: An ERP system allows you to collect and store information about warehouse operations, goods, orders and other aspects of warehouse management in one single database. This reduces the risk of errors and makes it easier to access up-to-date information.
- Process automation: The ERP module automates many routine operations such as product accounting, inventory control, and order generation. This saves time and resources.
- Scalability: WMS modules within an ERP system can easily scale to meet business growth. This allows companies to adapt to changing needs and expand their operations.
- Better control: ERP provides more control over all aspects of warehouse management, which helps to reduce losses and strengthen the security of goods.
Disadvantages of WMS as an ERP module:
- Integration issues: Integrating a WMS module with other ERP functions can be a complex process that requires additional effort. If not carefully managed, it can result in isolated data or inconsistencies.
- Higher cost: On the one hand, it is cost-effective to have everything in one system. But on the other hand, implementing and maintaining a full ERP with a WMS module can be expensive, especially for smaller businesses.
- Limited functionality: An ERP system may offer a more generic inventory management module compared to a specialized WMS. This may mean that it lacks advanced features such as optimized picking strategies or warehouse layout analysis.
As an example, we can take a look at Microsoft Dynamics 365 Supply Chain Management. It includes a warehouse management module as part of a comprehensive ERP system. This WMS module provides a wide range of functions:
- Provides accurate and efficient inventory management.
- Supports advanced automation technologies to optimize operations.
- Facilitates warehouse tasks using mobile devices.
- Provides analytics and insights to optimize warehouse processes.
- Seamlessly connects with other Dynamics 365 modules to create a unified supply chain solution.
How to Select a Warehouse Management System for Your Business
There are several factors to consider when choosing a WMS. These obviously include things like the size of your business, the industry you operate in and your plans for future growth. Other factors include the complexity of your operation, the level of customization you want, your budget, and your existing IT infrastructure.
However, it is also important to realize that even simple WMS systems can be useful. Especially since large systems are often much more complex, and therefore cost more and require more training, you should carefully consider which functionalities are really important, such as easy integration with ERP systems (ideally an ERP already contains a WMS), as well as functionality such as real-time inventory management, inventory lists and pick lists. Other functionalities are always company-specific.
How HQSoftware Can Help With WMS Integration
Whether your business wants to develop a new WMS or optimize an existing one by integrating it with other systems, HQSoftware is here to help. We offer expert WMS integration services to keep your warehouse running smoothly and working harmoniously with the rest of your supply chain.
One of the key advantages of partnering with HQSoftware is our ability to connect your WMS with all required third-party systems and your existing solutions. By using advanced technologies such as Artificial Intelligence and Machine Learning, we can enable predictable demand and labor forecasting, as well as advanced analytics, providing you with valuable insights to optimize your operations.
A WMS is not a one-size-fits-all solution because businesses may have specific requirements that are not covered by off-the-shelf solutions. We at HQSoftware understand this and offer custom WMS development services tailored to your unique needs. Whether you are looking for a centralized management system for distributed warehouses or have concerns about data security, the HQSoftware team can design and develop a WMS that meets your needs.
HQSoftware provides the following services:
- WMS consulting: We assist in selecting the best technology options and developing a comprehensive project roadmap.
- End-to-end WMS development: Our experts can handle the full development cycle of the WMS system.
- System modernization: We can assist with system modernization if your current WMS software no longer satisfies your requirements.
- Migration to cloud: We use cloud-based solutions for scalable, real-time warehouse management systems.
Conclusion
Over more than 20 years, the HQSoftware team has successfully completed more than 450 projects for clients in various fields, including warehouse management systems. Our WMS solutions have enabled our clients to increase warehouse productivity, improve navigation, and reduce storage and logistics costs.
We suggest that you consider custom warehouse management system software for your business in the following cases:
- You are not satisfied with existing ready-made solutions due to limited functionality.
- You have specific requirements that are not covered by any off-the-shelf solutions.
- You need a single, centralized management system because your warehouses are located in multiple locations.
We offer a wide range of WMS solutions that can be customized to meet the specific needs of your business. Contact us today and we will unlock the full potential of your warehouse management system.
HQSoftware Founder
Having founded the company in 2001, uses his broad knowledge to drive the company forward. Ready to share his wisdom on software development and technology insights
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