Functional Requirements for a Warehouse Management System

Top 10 Functions Any WMS Should Have

To effectively manage the complex operations of a modern warehouse, a WMS must have a wide range of functionality. These warehouse management system features are aimed at optimizing workflows and enabling businesses to achieve higher levels of productivity. The following ten core features are critical for any WMS to deliver the expected benefits and operational efficiencies in the warehouse.

1. Inventory management

Accurate inventory management is the foundation of efficient warehouse operations. A WMS should have real-time tracking of all of a company’s inventory in stock or in transit. This feature is very important, as it allows businesses to have a clear picture of what items they have in stock, where they are stored and how much inventory is available at any given time.

It should be noted that a WMS has to be able to support various inventory tracking methods such as lot and serial number tracking. This is especially important for industries dealing with perishable goods, pharmaceuticals or food products. For example, in a food distribution warehouse, the WMS can track individual product lots and their respective expiration dates, ensuring that older stock is selected and shipped first.

2. Order management

A WMS should automate the order processing procedure, reducing the likelihood of errors and speeding up the shipment of goods to customers. This allows businesses to manage inventory more efficiently and maintain optimal stock levels. With automation, employees can focus on more complex tasks such as analyzing data and improving processes. 

Implementing such a system also helps improve customer service as delivery times are reduced and delays are minimized. In addition, order automation helps the company adapt to changes in demand and respond quickly to market trends.

3. Receiving and put-away

The receiving and put-away processes are critical first steps in the inventory management process. Therefore, a robust warehouse management system should automate and optimize them. How does this happen? 

For receiving, the WMS should facilitate the smooth intake of incoming goods:

1. Generate and manage Advance Shipment Notices (ASN) to prepare for inbound shipments.
2. Verify received shipments against purchase orders to ensure accuracy.
3. Support barcode or RFID scanning for fast and error-free data entry.
4. Automatically update inventory levels as items are received.
5. Note any discrepancies or damaged goods for immediate action.

Once the goods have been received, the shipping process begins. Here the WMS should:

1. Suggest optimal shipping locations based on warehouse layout.
2. Take into account factors such as product characteristics, storage requirements and picking efficiency.
3. Generate shipment jobs for warehouse employees with clear instructions.
4. Update inventory records in real time as goods are stored.
5. Optimize travel routes to minimize worker movement and increase efficiency.

4. Picking and packing

For on-time order fulfillment, efficient picking and packing processes are critical. A well-designed WMS should support different picking strategies and provide real-time guidance to warehouse personnel to reduce travel time and consequently increase productivity.

For picking, the WMS must: 

1. Support various picking strategies such as batch picking, zone picking, wave picking and cluster picking.
2. Generate optimized picking lists based on order priority, item location and picker performance.
3. Provide real-time recommendations to pickers via mobile devices or voice-activated picking systems.
4. Update inventory in real-time as items are picked.
5. Maintain quality control during the picking process.

For packaging, the WMS must:

1. Suggest suitable packaging materials based on product characteristics and shipping requirements.
2. Automatically generate packing lists and shipping labels.
3. Integrate with sizing systems to optimize box selection and reduce shipping costs.
4. Simplify picking and assembly operations for orders of multiple items.
5. Maintain quality control and verify the order before shipping.
6. Update order status in real-time as items are packed and ready for shipment.

5. Real-time data and reporting

Real-time visibility into warehouse operations is critical for informed decision-making. A reliable and efficient WMS should provide comprehensive reporting and analytics capabilities. Based on this data, stakeholders can track key performance indicators, identify problem areas and optimize processes accordingly.

Key features of real-time data and reporting in WMS include:

• Customizable dashboards that display critical metrics at a glance.
• Real-time tracking of inventory levels and goods movement.
• Order status updates and monitoring of order fulfillment rates.
• Equipment utilization data and maintenance scheduling.
• Tracking incoming and outgoing shipments.
• Analysis of historical data for trending and forecasting.
• Automated report generation and distribution to stakeholders.

6. Barcode and RFID scanning

An effective WMS should support barcode scanning and Radio Frequency Identification (RFID) functionality. This provides real-time information on the movement and location of goods. As a result, human error is significantly reduced, inventory accuracy is improved and overall operational efficiency is increased. 

The GS1 US supply chain standards organization conducted a survey of commodity manufacturers and retailers. It showed that among those who are aware of Radio Frequency Identification, the technology is being actively adopted and growing. According to the survey, an average of 40% of new products launched by manufacturers in this group have ultra-high frequency (UHF) RFID tags.

Other research shows that the global RFID market in the supply chain is expected to grow at a CAGR of 11.8% from 2021 to 2026, reaching $14.1 billion. This trend suggests that more companies are recognizing the value of RFID to improve supply chain efficiency.

7. Labor management

A good warehouse management system should provide tools that help managers assign tasks to employees, balance their workload, and monitor efficiency. These features allow warehouse managers to make smart decisions about staffing levels and how best to utilize their resources. 

A WMS can track how much time it takes workers to complete various tasks, helping to set fair productivity goals. It can also suggest ways to improve work distribution so that no one is overloaded while others are idle. 

Imagine a typical and quite common situation in a warehouse: orders are piling up in the packing area. This can be due to irrational resource allocation, order overload or picking errors. How can a well-designed WMS solve this situation? 

It notices the order pile-up, automatically notifies the manager and offers to reassign a few workers from a less-busy receiving area to help with packing. The manager approves this change with one click, and workers receive updated task lists on their mobile devices. What’s the result? By the end of the shift, the packing backlog is eliminated. 

8. Integration with other systems

A robust WMS should integrate seamlessly with other business systems. This integration promotes the smooth flow of information between different departments and processes. Key systems with which a WMS should integrate include:

Enterprise Resource Planning (ERP) systems: Integration with ERP allows for synchronization of inventory data, financial information, and order details. This promotes better decision-making, lower costs and increased customer satisfaction through coordinated workflows.

Transportation Management Systems (TMS): Integration with TMS helps to choose the best carrier company for each job, figure out the most efficient routes for trucks, and save money on shipping costs.

Customer Relationship Management (CRM) systems: This integration lets your customer service team see exactly what’s going on with orders and inventory in real time. This means they can answer customer questions and solve problems much faster.

Yard Management Systems (YMS): In big warehouses, connecting a WMS to a YMS helps manage the trucks coming in and out. This allows for smoother dock scheduling and reduces truck waiting times.

Labor Management Systems (LMS): Connecting your WMS to an LMS gives you a clearer picture of how productive your employees are. This helps you figure out the best way to assign them tasks throughout the warehouse, making things run more smoothly.

Automated Material Handling Equipment (MHE): WMS integration with conveyors, sorters, and automated storage and retrieval systems (AS/RS) ensures coordinated and efficient movement of goods within the warehouse.

Document Management Systems (DMS): This integration helps store, retrieve and manage documents related to warehouse operations. It improves regulatory compliance and information availability.

Barcode scanning and tracking software: Integration with barcode systems ensures real-time tracking of inventory, reduces errors, and enhances the accuracy of stock management​.

9. Warehouse layout and slotting optimization

A good warehouse management system helps you develop a functional warehouse layout and determine where to place all your goods. It takes into account things like frequency of sales (fast-selling items are placed in the foreground), size and weight of goods, and whether it makes sense to store some items together (e.g. scarves and gloves).

The system can also keep track of what’s selling and suggest moving things around, depending on the season or what’s popular right now.

10. Security and compliance

Data security and regulatory compliance are critical to warehouse operations. A good WMS should provide robust security measures to protect sensitive information and help businesses comply with industry regulations.

Key security and compliance features in a WMS include:

• User authentication: The system should require usernames and strong passwords to log in.
• Role-based access control: Different employees should only be able to access the parts of the system they need for their jobs.
• Audit trails: The WMS should keep detailed records of who did what in the system and when.
• Data encryption: To avoid information leakage, important information should be encrypted to prevent unauthorized people from reading it.
• Regular backups: The system should automatically save data to prevent loss in case of problems.
• Compliance support: The WMS should help businesses comply with industry regulations such as food safety requirements, dangerous-materials regulations, and product tracking standards.
• System updates and patches: The warehouse management software should be regularly updated to fix security issues.