What is Warehouse Management Software?

As soon as a warehouse grows to the point where keeping track of things on paper (and other manual operations) starts to interfere with productivity, it’s time to explore Warehouse Management Software or WMS (also referred to as a Warehouse Management System). 

What is Warehouse Management Software? Put simply, it is an application that allows a warehouse to maximize speed and accuracy in fulfilling orders. It accomplishes this by helping warehouse managers make the most of their resources, stay better organized, and predict and anticipate needs. Good warehouse management software also tracks the movement of goods within the warehouse, generating data and producing reports that can be used for business decisions.

So, from a strategic perspective, warehouse management software is the secret to planning, executing, and managing activities throughout the warehouse in the most efficient way possible. With it, you can do more, and do it faster and with more accuracy. It gives companies the edge so they can get and retain more customers.

WMS is such a powerful tool because it can accomplish so many different tasks in essentially any part of a warehouse’s process...

Increasing Productivity with WMS

As a business grows, there is often a tipping point where it takes on so many orders that it has trouble keeping up. The business must find ways to fulfill the demand for their product or risk losing customers. Warehouse management software shows warehouse managers how to optimize available resources, allowing them to get more product out the door. 

Planning

One way it does this is by deciding how best to arrange the warehouse space. WMS can help managers avoid mistakes in their setup so that products, people, and machines flow through the warehouse without bottlenecks and collisions. (Read more about this in our series Warehouse 101 on optimizing the layout of a small, medium, or large warehouse.) 

Organizing

WMS can also calculate and provide a detailed layout of how things should be stored based on measurements of storage shelves and product size. Optimizing the space this way can make room for the maximum amount of materials. More stock on the shelves means less time waiting for orders to arrive from vendors. And WMS can set up automatic ordering when the stock does get low.

Picking and Staffing

Once materials are organized in the most optimal way, warehouse management software can map out the best picking method and the most logical and efficient pick paths. Daily reports can be generated that outline exactly what pickers will do that day, and how. Not only does this get things picked, packed, and shipped more efficiently, it also allows managers to schedule and assign their workforce accordingly. The software can use predictive analytics to anticipate busy and slow days and seasonal cycles, as well as whether they will need more pickers, packers, or unpackers on any given day.

Tracking and Directing

Day-to-day operations with WMS revolve around automating where possible. The software can coordinate barcoding and scanners to track inventory in real-time. It can simultaneously weigh and measure a box, print a shipping label, and alert the shipping department and carrier that it’s ready.

Monitoring

WMS is most powerful when it is fully integrated, meaning all of these pieces of the process, in different locations throughout the warehouse, are talking to each other. It keeps managers informed of exactly what is happening so they can catch errors, anticipate what will happen next, adjust procedures, and keep all parts of the operation humming along at peak productivity. 

Reducing Errors with WMS

Mistakes are inevitable, but frequent errors are a big problem and will cost a business not only money but repeat customers. Sending out the wrong product, or items that are damaged or don’t work, will result in returned merchandise. Warehouses need to decide how they will handle returns and, more importantly, avoid them in the first place. 

There are WMS solutions to track returns, refund or send replacement items, and reshelve or dispose of the returned items. On the prevention front, WMS and automated systems can take much of the human error out of the warehouse so fewer items are sent back. 

As discussed above, having an organized warehouse where everything is put away in the right place helps right off the bat. And choosing the most efficient way to pick and pack things can cut down on mistakes too. But WMS goes even further. 

Barcode scanners allow for more accurate picking and quality control, ensuring that customers get exactly what they ordered. Barcode data can incorporate expiration dates and work with FIFO or LIFO inventory plans. If an ordered product is out of stock or obsolete, WMS may find a reasonable substitution to replace it. Or it can make sure that all of the necessary accessories are packed along with a product. 

Making sure that shipping data is integrated with accounting will ensure that the product goes to the correct address and that the customer is billed properly. And this works in reverse too—if the accounting department is notified of an address change, the information is shared throughout the system.

When errors do happen—and they will—WMS can pinpoint the source and find solutions to the problem. Without it, managers are forced to figure out for themselves if an error was in labeling, shelving, picking, or packing, or somewhere else in the process. 

Better Inventory Visibility with WMS

Manual inventory tracking is problematic even for a very small warehouse. The process is prone to errors and hard, if not impossible, to do without halting operations. Warehouse management software automates the process, capturing and recording each movement a piece of inventory makes. Best of all, the numbers can be available company-wide in real-time. 

This is a boon for several different departments:

• Customer service reps (or the customers themselves) can track the status and location of any item in the warehouse.  
• The salesforce knows exactly how much of each SKU is in stock at any given moment.
• The purchasing department has better information about what needs to be ordered and when (and can be alerted using automated inventory alerts).
• Accounting has a better handle on anticipating accounts receivable and accounts payable.
• Data in the form of metrics and KPIs is available for management to analyze, allowing for better responsiveness to changes and proactive planning.

Reducing Effort and Expense with WMS

The introduction of automation that WMS brings to a warehouse saves an incredible amount of time, trouble, and money. Integration saves even more steps, as data needs to be entered only once, rather than multiple times in different departments. 

There is sometimes a misconception that automation of any kind will take jobs away from humans. This is not true. While some duties may shift once WMS is implemented, there is still a need for a capable workforce. And don’t forget the main purpose of WMS: To increase productivity and ultimately take on more orders and customers. This growth will lead to additional, not fewer, jobs.

Software + Hardware + People

In answering “What is warehouse management software,” we can’t ignore the hardware and people that make the entire warehouse management system work. WMS consists of multiple pieces of equipment, all linked together by software, and operated by employees. This might include RFID and barcode printers and readers, stationary and mobile computer terminals, automated material handlers like conveyors, dimensional weight machines, and more. 

We’ve all seen delivery men drop off a package and scan the barcode with a cell phone or other barcode reader. This is a perfect example of pieces of a warehouse management system working together. The driver is using hardware (the cell phone) to send information to the company that the item has been successfully delivered. Back in the warehouse, that data is recorded in the company database. Someone there is most likely analyzing details such as how many packages the driver delivered that day and how much time elapsed from the time the order was placed until delivery. The delivery may automatically trigger a customer satisfaction survey or addition to a mailing list.

When all of these different components are automated and integrated with one another, the business is positioned to plan, execute, and manage activities that help them do a better job.   

Choosing the Best Warehouse Management Software

There are multiple WMS products that warehouses may choose from. Some are standalone systems that offer basic tools to make a warehouse more efficient. Others are fully integrated systems that connect to other companies in the warehouse’s supply chain. The most sophisticated are Enterprise Resource Planning (ERP) software that connects every function of the company from the warehouse floor to accounting to compliance to project management.

The decision about what type of WMS will work best hinges on the company’s current needs, their future goals for growth, and of course their budget. Cost is important, but as with any major investment, it must be weighed against the product’s usefulness going forward. Replacing a WMS because it can’t adapt to increased sales will be costly not only in dollars but also in time and productivity.

Once a system is chosen, warehouse managers must be strategic about its implementation. Onboarding a WMS takes planning and time to be done properly, especially because no one has the luxury of stopping operations to do it.