Why your business must use a warehouse management system

Sudeep Srivastava June 6, 2022
Why your business must use a warehouse management system

A warehouse management system (WMS) is a type of software that organizations widely use to administer and control warehouse operations from the time goods or materials enter the warehouse until they move out. In basic terms, a WMS helps in the optimization of all your warehouse operations. 

A WMS system is extremely important because it tracks all the materials in your warehouse and also creates systems to streamline how workers pick products and pack orders. It allows you to track merchandise entering the warehouse, being packed onto shelves and into various locations, and when it leaves the warehouse for order fulfillment. 

A WMS also provides visibility into an organization’s inventory at any time and location, whether in a facility or in transit.

Today, in this article, we will dive deep into the benefits of warehouse management systems for your organization. Later on, we will discuss the types of WMS for gaining efficiency in the warehouse. 

So, without any further ado, let’s get started!

Why use warehouse management systems for your business?

A warehouse management system can help speed up your order fulfillment and keep track of what is selling well. You can also track raw materials when they come in and make sure they are in the right place for stocking and manufacturing. 

Further, let us discuss in detail, the key warehouse management system benefits and why it matters for your business.

Why use warehouse management systems for your business?

Offers real-time inventory data

A warehouse management system’s data gives the inventory information to workers whenever they need it. A WMS system can read serial codes and keep track of each item from the time it enters the warehouse. This, in turn, speeds up the outbound delivery process. 

A warehouse management system can also reduce the workload of businesses. For instance, Magid Glove & Safety uses a warehouse management system to maintain an accurate inventory of its products. 

The WMS’ real-time cycle counting allows the company to skip a physical inventory each year and provides the data on how much product is in each location. 

Reduces operating expenses

One of the major warehouse and inventory management system benefits is that it reduces operating expenses to a great extent. It helps determine the most effective use of both space and labor, resulting in reduced waste. A WMS system enables organizations to ascertain where to keep certain products, materials, and equipment to optimize the flow of the warehouse. 

Some advanced warehouse systems have floor simulators, enabling users to create potential floor plans within the system. These simulators allow them to place shelves, pallets, and other equipment in the warehouse as required.

A warehouse management system also provides better inventory visibility. This reduces businesses’ just-in-time inventory and helps save money because they don’t need to store the items. A WMS can also reduce waste by implementing a first-in, first-out rule so the oldest perishables go out first.

For instance, Nature’s Best, one of the leading brands in health and natural food distribution, integrated a warehouse management system to optimize their business operations. This new system reduced labor costs by over 30% and more than doubled productivity.

Accurate billing management

Warehouse management solutions come with in-built or third-party integrated billing management tools to provide this functionality. This functionality lets you use activity-based billing to track all the supplier-related activities and generate the proper fees accordingly.

Additionally, a warehouse management software may also process credit card payments and connect to major e-Commerce platforms.

[Also Read: Payment Gateway Integration: The Process and What Nexts]

Improves demand forecasts

With the help of a warehouse management system, a company can get insight into future demand. As a WMS provides better inventory visibility, a company’s demand forecasts can become more accurate.

In addition, a WMS can collect data on current outbound and inbound movement of materials and historic trends for a forecast. When a warehouse has accurate information on demand forecast, warehouse staff can maintain optimal inventory levels.

For instance, the automotive maker Renault has installed a warehouse management system in its production warehouse in Seville (Spain). With WMS in place, the company runs all in-house processes and operations without a hitch and gets real-time inventory information, which results in accurate demand forecasting. 

Enables continuous improvements

Warehouse management systems enable continuous improvements within an organization. Warehouse management software vendors introduce new features frequently to reflect current industry best practices. This allows organizations to stay on top of the latest developments and enables them to continually improve their processes based on these innovations.

And, if the warehouse management system is cloud-based, it can update instantly, which can help reduce the need for large, expensive IT teams. But businesses with an on-premise system may or may not receive regular updates from their vendors, depending on the terms of their contract. This is why many organizations are now moving to the cloud

Offers faster product delivery

There’s no denying the fact that today’s users like and expect to get fast product delivery. And for this to happen, warehouse distribution must also be quick. Integrating a warehouse management system speeds up the shipping process. This means your customers get their products delivered faster and are likely to return to your online site or application. 

With such management systems, the processing is much quicker. This is because pickers know where to locate the item. A WMS system uses an automated process to find, track, and ship goods quicker. It also saves time because all the information is no longer updated manually or with a slow system. 

For example, Decathlon uses a warehouse management system to prep and ship out 3,000 orders a day for online users and around 55,000 items for all their physical shopfronts in the UK. 

Enhances security

Most warehouse management systems require employees to make use of individual user accounts when entering transactions. This will create an audit trail that connects specific workers to specific transactions, reducing the risk of theft and improving accountability. It also enables employers to identify new training opportunities and other ways to improve employee practices.

In addition, user-based access levels prevent unauthorized access to certain information and reports. This only allows each user to see as much information as is required for their work. This way, you don’t have to worry much about company secrets and losing your competitive advantage.

[Also Read: Enterprise Data Warehouse: How it Benefits Your Business?]

Increases transparency

One major benefit that warehousing and inventory management solutions provide is transparency. They make processes like shipping, order fulfillment, and tracking completely transparent to all the workers.

With such transparency, the employees are able to access the real-time data and serve their customers with precise and accurate information.

Optimizes supply chain

One of the major functions of a warehouse management system is to help optimize a warehouse’s internal operation, which then extends to a broader supply chain. A WMS streamlines the entire warehouse process, including inbound receipts and outbound deliveries, thereby reducing costs and improving operational efficiencies.

Warehouse staff achieves accurate and faster shipments by eliminating or reducing unnecessary or non-productive activities. These savings in cost and time coupled with improved processes can then be passed along to internal and external partners, allowing them to improve their own business operations. 

With improved inbound receiving, the delivery time is also reduced. This, in turn, enables delivery partners to better leverage their equipment and resources and shippers to manage inventory levels. 

Such high inventory visibility and optimization of the supply chain also result in improved relationships with suppliers as well as customers. While the supplier enjoys reduced wait at docks and loading bays,  customers enjoy reduced delivery lead times, fewer order inaccuracies, and improved order fulfillment. With such systems in place, the reputation of your business among customers and suppliers also improves. 

Improves employee morale

A warehouse management system can enhance employee satisfaction and experience. 

A WMS can automate repetitive, manual tasks within the warehouse, which can improve employee morale. Automation has the potential to make employees more content because they can use their time more efficiently, which reduces over time.

While a WMS solution can’t solve all the problems within your workforce, it can do a lot to ease the frustrations of both laborers and the management. A more organized and stress-free work environment might give your employees that extra moment to think twice before using questionable equipment or attempting an improper lift. 

This all results in a safer, more enthusiastic, and satisfied workforce, further enhancing the overall success of your business.

Get service assistance

Now that we have seen the key benefits of warehouse management for businesses and how it can take your organization to the next level, it’s time to dive into the types of warehouse management systems that you can opt for to streamline your warehouse operations. 

Types of warehouse management systems

There are mainly four types of warehouse management systems that are implemented by businesses to enhance operational efficiency and streamline their warehouse operations. Many of the features in these systems are similar but the delivery style is what differentiates them. 

In order to choose the right management system for your business needs, it’s crucial to first understand the different types. So, let’s dive into each of them in detail. 

Types of warehouse management systems

Standalone warehouse management system

Standalone systems are the most basic and used only for their warehouse management features. These systems are sold without any extra supply chain functions and instead only include the best and most important features of WMS modules, such as inventory management and warehouse operations. 

Standalone warehouse management systems work particularly well for smaller companies that don’t necessarily have full-blown manufacturing – for example, a third-party logistics provider.

Supply chain modules

A warehouse management system is considered a subcategory of supply chain management (SCM). SCM software has a broad scope – it helps users manage everything from business processes to vendor relationships and risk assessment. It focuses on automating tasks like product cycles, inventory management, and material sourcing.

While the supply chain management warehouse platform supports holistic management of the whole supply chain, standalone solutions cover warehousing and inventory management features only. If you’re going to opt for this system, it’s vital to minimize overlaps within your current software. 

For example, if you already use inventory management, warehouse management, and fleet management software solutions, you could combine them all into a single supply chain management warehouse platform. Another way to avoid overlap is to select an SCM software that can easily be integrated with other business software like ERP or payroll software. 

Integrated ERP systems

Enterprise Resource Planning (ERP) Module is considered one of the best options for businesses looking to improve warehouse operations. It is an excellent choice for 3PL businesses that are looking to organize their supply chain, accounting, HR, and even customer relationship platforms. 

ERP is a specialized system that offers robust supply chain execution and scalability. These systems can offer warehouse management features, but they are not a core function of ERP. Keep this in mind when planning to buy ERP software. 

ERP can replace a host of other software applications and centralize your operations into a single interface. If you’re currently dissatisfied with software solutions you utilize or want to consolidate them into a single system, then ERP may be the best option for you.

[Also Read: Your Guide to Estimating the ERP Software Development Cost]

Cloud-based WMS

For added convenience and faster integration, a cloud-based platform is undoubtedly the best option. Cloud technology brings a load of benefits to warehouses such as less IT maintenance, increased security, and a lower cost.

As cloud-based systems run on a server and system outside the organization, the management, and integration of the WMS become much easier and more affordable.

As a cloud-based WMS is hosted on a separate or private server, it leads to higher data security protocols. This is particularly essential for businesses that manage high-value inventory or businesses that simply want more security in their WMS.

This type of system can maximize business productivity irrespective of volume, operational size, or complexity. 

Cloud computing also provides automatic software updates without extra expense, contributing to lower costs and providing technological competitiveness. 

Here are a few key advantages of using cloud-based WMS:

Faster implementation: A cloud-based WMS takes weeks to implement and not months or years like on-premise systems. This is because the configuration, hosting, and implementation are taken care of by a cloud-based WMS vendor.

Ease of use: This type of system is less complex for the end-user – your employees. Warehouse operations can be more efficient when the WMS solution is easy to operate and accessible for its everyday users.

Continuous improvement: With cloud WMS, users get regular and routine updates as part of a continuous improvement model. This ensures you always benefit from the new features and frequent updates. Also, you are not required to work with developers to help you update your system.

Talk to our experts

So, these are the four main types of warehouse management systems that you can choose to optimize your warehouse operations and improve your overall efficiency. In the next section, we will discuss a few criteria to choose the best warehouse management system for your business. 

Choosing the right warehouse management system

Choosing the right WMS will depend on what you want to achieve in the long run. The right WMS can help your organization achieve greater productivity and fulfill orders more accurately, resulting in lower costs. Here are some key criteria to selecting the right WMS for your business:

Budget/ROI

Review the gains you will receive from a warehouse management system to help you determine your budget. You should receive your return on the investment in the form of:

  • Reduced costs from efficiency gains and better inventory management
  • Improved processes
  • Better customer service, resulting in increased customer retention and revenue
  • Better space utilization
  • Increased visibility and traceability 

Functionality

Look for systems that will perform the functions most important to your organization. Some of the functionalities you’ll want are:

  • Improved labor, equipment, and space utilization
  • Better insights into operations
  • Greater picking, packing, and dispatch accuracy
  • Real-time inventory movement tracking
  • Up-to-date technology that includes RFID, serialization, barcoding, mobility, etc.

Vendors

Shortlist vendors and solutions that will best suit your needs and budget. Consider the following:

  • Do they have expertise in your industry?
  • Is their WMS an add-on or fully integrated with their ERP solution?
  • Are they responsive and helpful?
  • Is customization needed in WMS?
  • What is their training process?

Make an analysis of the software from different vendors, and tabulate all their features to support all your business requirements, besides cost, software licensing, training cost, support cost, and maintenance.

A good approach to identifying the best WMS is to view a demo of the software and understand the various features that it supports.

Conclusion

With the right WMS, you can take your warehouse operations to a higher level of efficiency, speed, and order accuracy. This will ultimately help improve your company’s competitiveness and increase customer satisfaction while keeping operating costs down.

In case you are looking to implement a warehouse management system into your business, you can contact a reliable software development company like Appinventiv. The highly-experienced team of professionals will help you implement the automated warehouse management software for your business and take care of all your needs. So, get in touch. We will be delighted to help you. 

FAQs

Q. What is a warehouse management system?

A. It is a type of software that organizations widely use to administer warehouse operations from the time goods or materials enter the warehouse until they move out. 

Q. What are the main functions of a warehouse management system?

A. The main functions of a warehouse management system include tracking merchandise, entering the warehouse, providing visibility into inventory levels, and speeding up order fulfillment.

Q. Why is warehouse management important for business firms?

A. Warehouse management is important for business firms because it offers several advantages such as enhanced productivity, increased customer satisfaction, and accurate demand forecasting.

THE AUTHOR
Sudeep Srivastava
Co-Founder and Director
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