What is Warehouse Management System (WMS)? A Detailed Guide for eCommerce Sellers
The world is now moving towards digital platforms at a supersonic speed. You can find almost everything on the Internet today. This is remarkably changing customer behaviour. Right from ordering foods to getting their favourite camera, individuals prefer online platforms like never before. Moreover, the payment process, shipment tracking, and even returning the product, everything is possible from anywhere, anytime.
The overall paradigm shift in the supply chain has put the wholesalers, third-party logistics – 3PL companies, and logistics companies under tremendous challenge. As per the Statista report, in 2021, the number of online buyers crossed the 2.14 billion mark globally. In terms of value, in 2021, the retail eCommerce sales were 4.9 trillion U.S. dollars worldwide, and it is forecasted to touch 7.4 trillion dollars by 2025. There is no doubt that the situation will become more challenging in the future. Therefore, there is a need for an efficient, user-friendly, and fast Warehouse Management System.
Managing a giant warehouse 24 x 7 is not an easy task. Additionally, it is like a nightmare without an efficient tool when you need to order many Stock Keeping Units (SKUs). WMS is a great tool to manage the entire activities of a warehouse. The WMS handles everything effortlessly from inventory management, replenishment, receiving, put-away, pick, packing, shipping, and tracking of the logistics system. It helps you improve productivity and profit through advanced software and technologies. Barcode systems, RFID labelling, hi-tech automated robots for pallet movement, ERP systems, transport management systems, logistics software, augmented and virtual reality wearables, etc. are some of the hi-tech features of WMS.
This article will walk you through the basic understanding of the warehouse management system (WMS), its features, how and where it fits with the supply chain, and different WMS systems. We will also discuss the benefits of Warehouse Management Software and the future of WMS.
- What is a Warehouse Management System (WMS)?
- What are the Features of a Warehouse Management System?
- Where Does a Warehouse Management System Fit into the Supply Chain?
- What are the Types of Warehouse Management Systems?
- What are the Benefits of Warehouse Management Systems?
- What is the Future of Warehouse Management Systems?
- Conclusion: Does your eCommerce business need a Warehouse Management System (WMS)?
- Warehouse Management System FAQs
What is a Warehouse Management System (WMS)?
A warehouse management system is a software solution that provides transparency and visibility to the entire warehouse operations. WMS is efficient enough to manage inventories, order fulfillment, inbound-outbound deliveries of any single warehouse or multi-location warehouse cluster. It is highly efficient in manufacturing setup and retail industries as it can track every movement of materials.
An effective WMS can optimise your warehouse resources and allow you to maximise space utilisation. Moreover, with a suitable investment in the equipment, warehouse management software benefits the organisation by remarkably saving the material movement time. This, in turn, increases the efficiency of the warehouse.
WMS reduces human efforts tremendously by tracking the entire material movement on a real-time basis. These software solutions are so efficient that they can trace the exact time of order placement, the pick-pack time, the person involved, and where the product has been transported by which vehicle.
WareIQ, an eCommerce fulfillment company, empowers online brands with a superior-tech platform to compete with Amazon like service levels by bringing their average delivery timelines from 5-10 days to 1-2 days.
What are the Features of a Warehouse Management System?
An efficient WMS offers many features to its clients, and the final goal is to simplify the business process while improving overall efficiency. While planning for a software solution for your warehouse, you must consider what feature tools are required. Here are some essential features of a sound WM system.
· Warehouse designing: The efficacy of a warehouse operation is maximum when it is appropriately designed, depending on the material flow, loading-unloading dock locations, number of materials to be handled, and many more parameters. WMS provides excellent design solutions to optimise the operations. It takes care of every minute detail of inventory management like storage location, pallet allocation, minimum travel path calculation, and many more.
· Tracking of inventory: Modern WMS can track every movement and reflect the fulfillment status on a real-time basis. Advanced technologies like AR wearable gadgets, RFID systems, and barcoding ensure that every material has its area and vice versa. Moreover, we can get a clear picture of the invoicing data, packing size, space availability, etc.
· Receiving and storing: This includes receiving materials from suppliers, checking with the purchase order, and leaving materials at the correct location without any error. Additionally, the inventory is updated on a real-time basis.
· Pick, pack, ship: The intelligent WMS analyses several parameters and provides solutions for the best way of picking the material from the shelf, packing procedure, and shipping information. This smart software can generate packing lists, invoices, and bills of lading with a single click and can send advance shipping notifications to the clients.
· Workforce management: Hi-tech WMS helps the warehouse manager to run the show efficiently. It provides visibility on the resources and indicates human resources availability. Additionally, you can monitor their performances and set KPIs (Key Performance Indicators) for performance evaluation.
· Reporting: Reporting is a critical part of a warehouse. It comprises abundant information starting from the receipt, invoices, inbound and outbound deliveries, inventory status, and more. An innovative WMS can generate customised reports in real time.
· Yard and dock management: It assists the dock supervisor in getting a fair idea about available docks and reduces waiting time for the trucks. Moreover, it helps in managing cross-docking and other inbound-outbound deliveries.
Where Does a Warehouse Management System Fit into the Supply Chain?
A warehouse is the central part of any supply chain. It plays a significant role in running a smooth supply chain by receiving goods, storing them without any damage, timely issuing raw materials and components to the production shop floor, and delivering the correct finished products to the right person at the right time and quantity.
For example, suppose the warehouse cannot provide the suitable material or component to the production line on time. In that case, it will hamper the overall production and SCM process, cause a delay in deliveries, and ultimately hinder customer satisfaction. This is a simple example of how warehouse management can impact the supply chain.
The modern supply chain operates on visibility and transparency. The warehouse is responsible for providing the correct information on the inventory front, order fulfillment, invoicing, etc. The more efficiently the warehouse works, the more the organisation can fulfill the customer’s requirements.
The warehouse profoundly impacts supply chain management’s revenue and business strategies. It plays a significant role in improving the SCM performance by
- Efficient storage
- Strategic location
- Inventory accountability
- Fulfillment of orders and distribution
- Economic benefits
- Value-adding operations
What are the Types of Warehouse Management Systems?
Basically, we can categorise the warehouse management system into three major types:
This is the traditional warehouse management system that most organisations use. It is deployed on the company’s premises and uses its hardware system. According to their business complexities, every organisation can do a high level of customisation on this standalone WMS. Though it is a costly option, you can have tighter control over the system. After the system development and implementation, it is the asset of the company, and they need to bear the cost of maintenance, expansion, and updates. Another drawback of this traditional system is the complexity of integration with other latest next-gen technologies.
With the introduction of cloud technology, the latest WMS has adopted this platform to provide seamless solutions. You can enjoy the benefit of horizontal implementation at a faster pace. This, in turn, reduces the implementation cost. This system has the next level of advantages. There is no need to use your own hardware and IT resources for implementation and maintenance. The auto-update facility keeps you away from the headache of regular hassle. This system can be scaled up with your business expansion without investing much. Moreover, as it operates through the Cloud, your data is safe from any internal disaster.
SCM and ERP-based WMS
There are many software solutions that provide an entire system to the organisations for every function. For example, Enterprise Resource Planning software like SAP and Oracle offers a package solution that includes all the functions as modules. They have a finance module, production planning, material management module, inventory management module, and warehouse management module. The beauty of these solutions is, that they are integrated, and all data is linked to each module. Therefore, such systems are capable of providing a holistic picture to the management and offer end-to-end transparency of the supply chain.
What are the Benefits of Warehouse Management Systems?
There are several benefits of having a robust WMS in place. This helps the organisations improve their efficiency in every facet in the long run. We have listed some crucial advantages of a sound warehouse management system.
- Improved operational efficiency: The WMS is connected to many new advanced technologies, which helps streamline the processes and reduce errors significantly. Warehouse management software checks every step to avoid mistakes from the inbound receipt to the outbound deliveries. Moreover, with the help of automated tools, the warehouse team can handle larger volumes with less effort and paperwork. By eliminating the non-value adding activities (NVAs) and duplication of work, WMS enhances the overall efficiency of the warehouse operations.
- Better inventory management: Inventory blocks a tremendous amount of money in terms of materials but is essential to manage unplanned situations. An efficient warehouse management system indicates the correct inventory level and defines the min-max levels of items. Based on their usage and number of picks from the warehouse, WMS indicates the frequent, medium, and rarely used items, which helps in correct material ordering. Moreover, the advanced warehouse management software can identify the excess and obsolete inventories and trigger you to take necessary actions. Holistically, to manage a healthy inventory, you need a robust WMS.
- Improve labour management: You need not worry about labour management if you have intelligent WM software in place. To enhance the productivity of the resources, it can define workloads for the staff and optimise the in-warehouse movement path. It can even indicate the labour requirement and create a schedule for them. Safety is today’s topmost priority, and advanced WMS reveals the possible hazards within the space, ensuring the safety of man and machine.
- Reduce cost: Modern store management software is smart enough to calculate and advise optimum space utilisation ideas for warehousing. It also determines the minimum travel path of the materials to reach the assembly line or loading point. Suppose you adopt the high-tech WMS during the initial warehouse design stage; its advanced simulation will help you to create optimised floor plans. Moreover, it highlights the perfect pallet locations, shelves, and equipment areas to run the warehouse with the highest efficiency, which, in turn, saves you a lot of money.
- Waste reduction: Modern software is backed up by solid data. WMS automatically identifies and applies the First-in-First-out (FIFO), Last-in-First-out (LIFO), or Highest-in-First-out (HIFO) policy on the goods based on the strategy. In the case of perishable or shelf-life items, this smart system informs you well in advance about the items approaching their end. It triggers you to pick those items first or prompts you for a sales push to avoid wastage.
- Boost customer satisfaction: Today’s businesses are driven by customers, and boosting their experience and engagement is crucial for success. A top-notch warehouse management software can help to boost your customer delight by improved order fulfillment, quicker deliveries, and fewer inaccuracies. If your WMS is integrated with any CRM software that provides a status update to the customer, it will improve your customer loyalty and brand reputation.
- Enhance supplier relationship: Suppliers are the pillars of any business. You need a close, transparent and real-time information sharing system with your suppliers to have a robust supply chain process. Your WMS can be integrated into the supplier’s system, bridging the gap and establishing a two-way information flow. It makes the process more flexible, and your suppliers enjoy a healthy business relationship.
The WMS also benefits as the technology takes the entire industry towards the cloud infrastructure. Advanced cloud-based warehouse management software solutions provide some fantastic benefits as listed below.
- Fast implementation: Considering the traditional systems, cloud-based WMS is faster to implement. Where the conventional system takes months to implement, the advanced cloud-based platforms can be implemented within weeks, depending on the complexities. Quicker implementation provides minimum interruption to the running business and improves ROI and profit for fast-paced organisations.
- Fewer upgrade hassles: The beauty of cloud management includes the updates and modifications that occur on the cloud system itself. The vendor takes responsibility for making necessary modifications and changes in the cloud server. There is no need to update the system at regular intervals. It saves time and hassle for the customers. Moreover, it avoids costly customisations like the in-house software. It ensures that you always work on the latest version.
- Lower upfront cost: Cloud-based WMS is significant in terms of initial and running cost savings. This architecture neither requires any hardware or software installation nor any IT administrator to manage it. Additionally, the auto-updates, installation of the latest version, and modifications help you save tremendous time and money. There is no need to allocate additional resources to manage.
- Scalability and flexibility: As your business grows, you need to expand the IT systems and WMS. Cloud-based structures are remarkable in terms of scalability. The WMS can be scaled up quickly and can handle more complex supply chain situations. Furthermore, the flexibility of such a system provides a huge advantage to organisations in managing difficult situations.
- Seamless integration: You may be using different software solutions like ERP systems, software for your accounting process, and likewise for your business. The advanced WMS cloud versions are easy to integrate with your other business software, and you can get an integrated IT solution for your needs.
What is the Future of Warehouse Management Systems?
With the increasing demand in eCommerce and other industries, there is no doubt that businesses need to deliver the products in the shortest time period. The best possible way to handle such a situation is to manage your warehouse efficiently. WMS is going to solve the major issues of organisations by providing advanced solutions, and the future of this technology looks bright.
According to a study, in 2021, the worldwide valuation of the WMS market was USD 3.7 billion, and it is forecasted to touch the mark of USD 8.9 billion by 2030. This shows a significant CAGR growth of 11.1% from 2022 to 2030.
But how will the warehousing system reshape itself in these next couple of years? Let us see in detail.
Introduction of Robots
To manage the mammoth materials inbound and outbound flow, it is evident that warehouse management systems need automation. The introduction of robots in managing warehouse operations is a must. This revolution has already started, and many companies are offering best-in-class robotic solutions in this area.
These robots can move materials to designated places, load and unload materials from vehicles, accurately pick-pack and ship, etc. Cobots, which are collaborative robots, work with humans to enhance productivity. Articulated robot arms and automated guided vehicles reduce human errors significantly and provide a safer environment for the warehouse staff.
Drones for WMS
Organisations are now keener to implement drones in their warehouse management. Drones are primarily used in different events, corporate activities, and defence purposes. However, their high efficiency, speed, and uninterrupted flow can significantly improve the movement of the materials in the warehouses. Many organisations are experimenting with deliveries with drones. It will not be a surprise to see drones lifting materials from storage racks and issuing them to the shop floor or unloading raw materials from the vehicles.
Using Smart Gadgets in WMS
Renaissance in technology from industry 1.0 to industry 4.0 showed us drastic changes in every facet. We saw the shift of store management from pen and paper to computerised systems and laptops. It is the era of intelligent and handy devices. In the Internet-everywhere environment, WMS can be accessed from anywhere, and you only need a smart device and Internet connectivity. The advanced WMS can operate on any device and operating system. You can scan barcodes and RFID, access the warehouse management system, track inventory, invoice shipping notifications, etc. This makes the system handy, increases productivity, and optimises the man force.
Augmented Reality Wearables
The popularity of using AR gadgets in warehouse management increases daily. These are innovative gadgets packed with ultra-modern features like scanning, WMS access, auto-counting, etc. These devices can help you identify the exact item code of the component and backtrack the order number, WBS element, and even the customer order number. They remove the dependency on human memory, and thus, will reach the maximum accuracy level in the future.
Smart Automated Vehicles and Forklifts
Auto-guided vehicles are the best gift of technology to the warehouse management system. Due to its high buying and maintenance costs, you cannot find these in most organisations. However, the future smart warehouses will be managed by these machines. Software programming enables these machines to operate automatically without any assistance. This will help organisations to reduce operational costs and increase efficiency drastically.
On-Demand Warehousing Solution
This is another prospect that will be a popular option in the future. It will offer flexibility to the organisations to manage pick situations demands. The additional capacity of the rented warehouse on an as-on-when-required basis will help small businesses spend less on costs.
Big Data and Machine Learning
Big data and ML are not new terms but the latest introduction to the warehouse management system. For large organisations, it is vital to analyse all the data points related to warehousing and populate them with decision-making templates. Warehouses store a massive amount of data; therefore, in the future, using Machine Learning and Big data analytics will be essential.
Conclusion: Does your eCommerce business need a Warehouse Management System (WMS)?
Currently, the business processes are getting highly complex. There are several factors like same-day or next-day delivery, changes in customer demand and expectations, challenges in the lead time, higher competition in the market, etc. To mitigate the ever-changing requirements and stay ahead of your competitors, you need to operate your warehouse efficiently. A warehouse management system can do it for you.
If you are planning to set up your warehouse system or thinking of expanding your eCommerce business, it is the correct time to introduce an intelligent and next-gen WMS. It is an investment to increase productivity and take your warehouse operations to the next level.
Knowing about Warehouse Management System and its necessity in today’s business environment. You must have thoughts, to access such warehouses to boost your business. You have an option of outsourcing such warehouse plus fulfillment centers run by experts without owning and spending millions on the system. WareIQ provides the fulfillment services to amplify your business which not only gives you benefits of the Warehouse Management System but a lot more.
Established in 2019, WareIQ, a Y-combinator backed startup, has rapidly grown to be the leading provider of full-stack eCommerce fulfillment services for some of the most reputed brands in India. WareIQ offers a full-stack platform for eCommerce companies to enable same-day delivery and next day delivery to customers – an Amazon Prime-like experience but accessible to everyone.
WareIQ has empowered brands to sell more, sell faster & sell everywhere due to:
- Access to WareIQ’s strong nationwide network of fulfilment centres, micro-fulfillment centers & urban dark stores near their customers
- Access to all major national & hyperlocal last-mile couriers at discounted rates for making same/next day deliveries possible
- Easy integration across multiple online platforms & marketplaces enhancing multi-channel selling
- Access to a superior centralised tech platform for eCommerce operations
- ML-based prediction engine for efficient warehouse network design & smart inventory placement
- Centralised platform for core fulfilment & shipping operations
- Post-shipping apps for delightful experience & zero to minimum supply chain leakages (Branded tracking page with smart marketing placements; Trigger-based updates & smart communication platform)
WareIQ has customised offerings for merchants experiencing different order volumes as well as having different delivery speed expectations. WareIQ is probably one of the very few fulfilment tech companies in the world that have same-day delivery service for their customers under their product “WareIQ RUSH”.
With world-class WMS functionalities, WareIQ handles the entire range of intricate operations in the eCommerce fulfilment process, ranging from Inbound Operations such as scanning and quality check, through 100% accurate Pick and Pack, to Inventory Management across all channels. WareIQ’s next day delivery and same-day delivery services are helping eCommerce businesses set new standards with respect to setting customer expectations and fulfilling them with high efficacy. At the same time, WareIQ customers realise significant cost savings and wider reach due to better negotiations with shipping partners, strategically placed warehouses, economies of scale and scope in warehousing and data-driven decision making.
WareIQ’s WMS, a centralised tech platform helps to better manage undelivered orders by reducing NDR processing time by 12 hours – a multifunctional NDR dashboard helps to track and take immediate action for undelivered orders in real-time, thereby reducing RTO by up to 10%. Automatic replenishment recommendations and easy purchase order creation capabilities on the WareIQ platform further empower eCommerce companies to leverage all possible ways of increasing their ROI.
- Pan India Fulfillment & Darkstore Network: Plug-and-play fulfillment infrastructure with no minimums, which is compliant with Amazon Seller Flex, Flipkart Assured, Myntra and other marketplaces
- Inventory & Network Planning Excellence: Best-in-class AI models for sales forecasting, product segmentation, and inventory management to reduce inventory by 40% and increase revenue by 10%.
- Vertically Integrated Fulfillment Tech Stack: Our Fulfillment Tech Solution supports integrations with 20+ top marketplaces & D2C platforms, and prominent national, regional and hyperlocal couriers, enhancing reach by covering deliveries for 27,000+ pin codes
- Supply Chain Productivity Applications: Integrate a host of supply chain productivity apps with a single-click to your existing CRMs, ERPs & accounting software to manage your logistics workflows from one command center. Use Apps like RTO Shield to get 100% RTO protection, Branded Tracking to turn your order tracking page into a profitable marketing channel, and many more.
Trusted by 300+ top Indian brands, we are helping them accelerate online sales and expedite their growth through a synergistic combination of advanced technology, robust fulfillment infrastructure & seller enablement services!WareIQ is backed by leading global investors including Y Combinator, Funders Club, Flexport, Pioneer Fund, Soma Capital, and Emles Venture Partner.