Ultimate Guide to WMS 2024

30 Apr

Introduction to Warehouse Management Systems

What is a Warehouse Management System or WMS?

A Warehouse Management System (WMS) is a software solution designed to optimise and streamline day-to-day business operations within all types of warehouses, ecommerce fulfilment and 3PL businesses. It offers a centralised platform that manages a range of warehouse tasks, including receiving, picking, packing, shipping, and on-going inventory management.

Implementing the right type of WMS increases operational efficiency by minimising human errors and providing a real-time digital window into inventory levels, productivity, and forecasting. This helps warehouse-based businesses utilise their human resources more effectively and efficiently.

Selecting the right WMS is your first step towards elevating, enhancing and optimising your warehouse operations.

The market offers a variety of WMS systems, each with distinct advantages and limitations, making it crucial to choose one that fits your specific needs and budget.

Before you shortlist and select a WMS, consider your current and future business requirements. Some systems are ideal for smaller warehouses with simple inventories, while others are more sophisticated, designed for managing multiple inventories such as in 3PL, 4PL or fulfilment-based businesses.

This post will guide you through evaluating this complex market effectively to ensure you make the right choices for your company when selecting your first, or next WMS.

As technology advances, the capabilities of WMS solutions also evolve, making it essential to stay informed about the latest innovations and their potential benefits for your business.

In today's rapidly evolving digital business environment, selecting an effective Warehouse Management System (WMS) is crucial for optimising logistics operations and enhancing operational efficiency.

As e-commerce expands and customer expectations rise, the pressure on companies to streamline warehouse operations for faster fulfilment and reduced costs has never been higher.

Whether you are upgrading an existing WMS or implementing a WMS for the first time, the decision you make will significantly affect your company’s ability to compete, thrive and grow.

Warehouse Management Systems vary widely, each is designed to meet diverse needs based on company size, budget, and operational complexity.

This guide navigates you through the complex market landscape, ensuring you select a WMS that aligns perfectly with your business goals and current and future operational needs.

We will explore various WMS types, delve into their features and benefits, and provide a strategic framework to help you make an informed decision that will elevate your warehouse operations.

Why is a WMS important?

Successfully implementing the right WMS for your business can profoundly impact the efficiency of your company's warehouse operations.

With the rise of e-commerce and the increasing complexity of supply chain management, having a system that can swiftly and accurately process orders, manage inventory effectively, and offer logistics insights is more crucial than ever.

A correctly chosen and deployed WMS helps warehouse-based businesses:

Reduce Operating Expenses: Optimises warehouse space and improves labour efficiency, reducing costs associated with inventory storage and human resources.
Enhance Customer Satisfaction: Ensures fast and accurate order processing, leading to quicker delivery times and improved customer satisfaction and retention.
Improve Inventory Accuracy: Real-time tracking reduces the risks of overstocking and stockouts, ensuring efficient capital use and consistent demand fulfilment forecasting.
Increase Flexibility and Scalability: Modern WMS solutions are designed to adapt quickly to market changes or business growth without significant additional costs.

Core functions of a WMS

Inventory Management: Provides real-time data on inventory levels, locations, and status, enabling businesses to manage their stock more effectively. This includes managing items from the point they enter the warehouse until they are shipped, optimising space utilisation and reducing waste.

Receiving and Put-away: Efficient receiving processes are critical to ensure that goods are inspected, sorted, and stored quickly and accurately in their designated locations. A WMS automates these tasks, reducing dependencies on manual processes and minimising errors.
Order Fulfilment: WMS systems streamline picking, packing, and shipping operations, ensuring that orders are processed quickly and accurately. This can include features like batch picking, zone picking, and wave picking, all designed to enhance productivity.
Shipping: Integrates shipping and order fulfilment processes, preparing shipments, generating shipping documentation and labels, and automatically updating inventory levels.
Labour Management: Optimises the use of human resources within the warehouse, tracking worker performance, aiding in workforce planning, and helping reduce labour costs while increasing productivity.
Reporting and Analytics: Advanced analytics and customised reporting capabilities allow for better decision-making by providing insights into inventory trends, worker performance, and other operational efficiencies.

Choosing the right WMS:

When selecting a WMS, consider your business's specific needs—such as the size of your operation, the complexity of your inventory, and your future growth projections.

Also, think about integration capabilities with other systems such as ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management), the flexibility of the system to adapt to new business processes, and the level of support provided by the vendor.

In summary, a Warehouse Management System is not just a tool for managing inventory but a comprehensive solution that can drive business growth, enhance operational efficiency, and improve customer service.

As technology advances, the capabilities of WMS are expanding, making it an indispensable tool for modern warehouses and distribution centres.

Choosing the right WMS is about understanding your current operations and anticipating future needs to ensure that your investment continues to pay dividends in the years to come.

Understanding the different types of WMS

In the dynamic field of warehouse management, selecting the right Warehouse Management System (WMS) is crucial for optimising operations, enhancing efficiency, and driving business growth.

With several types of WMS available, each suited to different operational needs and business sizes, understanding these distinctions is key to making an informed choice.

This detailed exploration covers the primary types of WMS solutions, including their functionalities, suitability, and how they cater to specific business requirements.

Standalone / Entry Level WMS:

Definition and Functionality: A standalone WMS is a specialised system focused solely on warehouse management. It includes core functions like inventory management, receiving, picking, and shipping but runs independently of other business management systems like ERP or TMS. Standalone, entry-level, or “junior” WMS systems are usually for use within a single warehouse. This type of system is ideal as a first or starting WMS system for small and medium-sized enterprises (SMEs) that have basic requirements from a WMS system. Usually, these types of systems are self-service, and support from the WMS provider may be limited, but the price for setup and monthly access to the system will reflect this. Despatch Cloud and Mintsoft are examples of these types of systems.
Best for: Small to medium-sized businesses looking for a cost-effective solution to specifically enhance warehouse operations without the need for extensive system integrations.
Pros:

Lower cost compared to more integrated solutions.
Easier implementation and maintenance due to its focused nature.
Sufficient for businesses with straightforward warehousing needs.

Cons:

Limited integration with other business systems, which may require manual data transfers and lead to inefficiencies or errors.
May not scale well with business growth that requires more complex system integrations.

ERP integrated WMS:

Definition and Functionality: An ERP integrated WMS is part of a larger enterprise resource planning system. This integration allows seamless data flow between the WMS and other modules like finance, HR, purchasing, and sales, providing a comprehensive view of the enterprise operations. ERP integrated WMS systems are intended for large businesses with high volume procedures. To provide the most advanced WMS systems, they are scalable, include ultra-modern automated capabilities, and often contain a significant amount of support and consulting services. Examples include Manhattan Associates, and Blue Yonder (previously JDA Software).
Best for: Medium to large enterprises that require deep integration between their warehouse operations and other business functions.
Pros:

Eliminates data silos by integrating warehouse data with other business functions.
Streamlines operations across the organisation, leading to improved accuracy and efficiency.
Supports complex, multi-warehouse operations typical of larger businesses.

Cons:

Generally, more expensive due to the complexity and breadth of the system.
Implementation can be lengthy and complex, requiring significant resources.

Cloud-based WMS:

Definition and Functionality: Cloud-based WMS solutions are hosted on the cloud and managed by the software provider. These systems offer real-time data accessibility and are scalable to accommodate business growth. They typically feature subscription-based pricing, reducing the need for upfront capital investment. Medium-sized businesses can benefit from Cloud-based WMS solutions. They can serve companies with multiple warehouses and growing inventories. They can also be suitable to 3PL and 4PL business requirements. Examples include Deposco, Snapfulfil, and 3PL Central.
Best for: Businesses of all sizes looking for flexibility, scalability, and reduced IT overhead.
Pros:

Lower initial costs as it eliminates the need for onsite hardware and maintenance.
Easily scalable to meet growing business needs.
Enhances collaboration and accessibility with web-based interfaces that can be accessed from anywhere.

Cons:

Dependence on internet connectivity can pose risks if network issues arise.
Ongoing subscription costs can accumulate over time.

Supply-chain module integrated WMS:

Definition and Functionality: This type of WMS is part of a broader supply chain management (SCM) system that includes additional modules like transportation management, supplier relationship management, and customer relationship management.
Best for: Large enterprises that need comprehensive control over their entire supply chain from a single platform.
Pros:

Offers a holistic view of the supply chain, enhancing decision-making capabilities.
Enables better coordination between different supply chain activities, improving overall efficiency.
Often includes advanced features like demand forecasting, logistics optimisation, and extensive reporting tools.

Cons:

High complexity and cost.
The implementation process can be lengthy and requires momentous change management efforts.

Customisable WMS:

Definition and Functionality: Customisable WMS solutions offer a flexible architecture that allows businesses to tailor the software according to their specific operational needs. These systems can be adjusted over time to accommodate new business processes, regulatory requirements, or technological advancements.
Best for: Any business with unique warehousing operations that cannot be adequately supported by out-of-the-box solutions.
Pros:

High adaptability to meet specific business needs.
Can evolve with the business, adding longevity to the investment.
Potentially offers a competitive advantage by optimising unique business processes.

Cons:

Typically requires a higher investment in both time and money to develop and maintain.
May require ongoing developer involvement to ensure system remains aligned with business changes.

Choosing the right type of Warehouse Management System depends on a range of factors including the size of your business, your specific warehouse operations, integration needs, budget constraints, and future growth plans. By understanding the diverse types of WMS available and evaluating their pros and cons in relation to your business requirements, you can decide on a system that not only meets your current needs but also supports your strategic objectives in the long run.

As technology and business environments evolve, the flexibility, scalability, and integration capabilities of the WMS will play a crucial role in supporting operational efficiency and competitive advantage.

10 steps for selecting the perfect WMS

Selecting the right Warehouse Management System (WMS) is a critical decision that can significantly affect the efficiency and productivity of your business operations.

The process involves careful consideration of your current needs, future goals, and the capabilities of different WMS offerings.

Here’s a comprehensive 10-step guide to help you find the perfect WMS system for your business.

1. Assess your business needs Before diving into the procurement process, thoroughly evaluate your current warehouse operations, pain points, and areas needing improvement. Identify specific goals you wish to achieve with a WMS, such as increased inventory accuracy, improved order fulfilment rates, or enhanced reporting capabilities. Understanding your business requirements will guide you in selecting a system that aligns with your operational needs.

2. Define functional requirements List the specific functionalities your WMS must have to meet your business needs. Consider aspects like inventory tracking, real-time data access, integration with other systems (ERP, TMS, etc.), and support for picking and packing methods. Prioritise these requirements into 'must-have' and 'nice-to-have' categories to simplify the decision-making process later.

3. Set your budget Determine how much you are willing to invest in a WMS. Include not only the initial purchase price but also ongoing costs such as software updates, maintenance, and training. Setting a budget upfront will help you narrow down potential systems and avoid overspending.

4. Research potential vendors Compile a list of WMS providers who offer systems that meet your defined requirements. Look for vendors with good industry reputations, a solid track-record of reliability, and robust customer support. Read reviews, case studies, and testimonials to gauge user satisfaction and system performance.

5. Request demonstrations and proposals Contact vendors for in-depth demonstrations and detailed proposals. A live demo will give you a clearer understanding of how the WMS functions and whether its interface is user-friendly. Proposals should include comprehensive information on features, costs, implementation strategies, and support services.

6. Evaluate the technology Assess the technology stack of each WMS to ensure it is modern, scalable, and compatible with your existing hardware and software. Consider whether the system is cloud-based or on-premises, as this will affect your IT infrastructure and maintenance responsibilities.

7. Consider scalability and flexibility Choose a WMS that can grow with your business. It should be flexible enough to adapt to changing business conditions, such as an increase in product lines or expansion into new markets. The ability to easily add new features or integrate with future technologies is crucial.

8. Check integration capabilities Ensure the WMS can integrate seamlessly with your existing business systems (ERP, CRM, etc.). Effective integration reduces manual data entry, minimises errors, and offers a unified view of your operations, enhancing decision-making and operational efficiency.

9. Analyse cost vs. ROI Compare the costs against the expected return on investment (ROI) for each system. Consider how the WMS will save money through improved efficiency, reduced errors, and better inventory management. A higher-priced system may offer a better long-term value through greater functionality and lower operational costs.

10. Make the decision After thorough evaluation, choose the WMS that best meets your business requirements, fits within your budget, and promises the highest ROI. Consider involving key stakeholders in this decision to ensure the selected system meets the diverse needs of your organisation.

Selecting the perfect WMS requires a methodical approach to ensure that the system you choose enhances your operational efficiency, integrates seamlessly with your current processes, and scales as your business grows.

By following these 10 steps, you can make an informed decision that will positively impact your warehouse operations and overall business success.

Remember, the goal is to find a WMS that not only meets your current needs but also supports your future business ambitions.

WMS terminology & acronyms

Warehouse management systems (WMS) are integral to the efficient operation of warehouses and distribution centres. As with any specialised field, the world of WMS is filled with terminology and acronyms that can be confusing to newcomers and seasoned professionals alike.

Understanding these terms is crucial for anyone involved in the selection, implementation, or operation of a WMS. This section aims to demystify the most common jargon and abbreviations used in warehouse management systems.

Understanding the terminology and acronyms used in warehouse management systems is essential for understanding the scope of the systems to effectively communicate your needs and requirements to potential WMS vendors.

Whether you are dealing with daily operations or involved in the procurement of a new WMS, familiarity with these terms will help you navigate complex processes, enhance system functionalities, and ultimately contribute to smoother operations and increased productivity in your journey to select the perfect WMS.

SKU (Stock Keeping Unit): An identifier for a specific item that allows it to be tracked for inventory purposes. SKUs are crucial for maintaining accurate stock levels and for picking, packing, and shipping processes.
Picking: The process of selecting and gathering items in a warehouse to fulfil customer orders. This operation can be optimised through various picking strategies implemented within a WMS to improve efficiency and accuracy.
Packing: The step in the fulfilment process where picked items are placed into boxes or envelopes and prepared for shipment. Packing often includes the addition of packing materials, sealing the containers, and labelling them for shipping.
Put-away: The activity of placing goods in their optimal storage location upon receipt. Effective put away processes help maximise storage space, reduce handling costs, and increase picking efficiency.
Cross-docking: A logistics procedure where products received at the warehouse are directly transferred to outgoing trucks without being stored. Cross-docking requires precise timing and coordination to ensure that incoming shipments are immediately sorted and loaded for further distribution.
Replenishment: The process of moving or ordering stock from bulk storage to pick locations to ensure that picking locations are adequately stocked. Replenishment is key to preventing stock-outs and supporting productivity in the picking process.
Cycle counting: An inventory auditing procedure where a small subset of inventory, in a specific area, is counted on a specified day. Cycle counting helps maintain correct inventory data without the need for a full physical inventory stock-take or shut-down period.
Lot tracking: The method of tracking products along the distribution chain using batch numbers or lot numbers. Lot tracking helps manage expiration dates, recalls, and quality control.
ERP (Enterprise Resource Planning): Software that manages and integrates the core processes of a company, such as finance, HR, manufacturing, supply chain, services, procurement, and others. Many WMS systems are either part of an ERP system or can integrate seamlessly with them.
TMS (Transportation Management System): A platform designed to streamline the shipping process. A TMS is typically integrated with a WMS to manage the transportation of goods in and out of a warehouse.
EDI (Electronic Data Interchange): The structured transmission of data between organisations by electronic means. EDI is used in WMS to facilitate communication between different trading partners and systems.
RFID (Radio Frequency Identification): A technology that uses electromagnetic fields to automatically identify and track tags attached to objects. RFID tags are used in warehouse management for automatic item identification and data capture.
SCM (Supply Chain Management): The management of the flow of goods and services, which involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption.
API (Application Programming Interface): A set of rules and definitions that allows software programs to communicate with each other. APIs are crucial for integrating a WMS with other systems, such as ERPs, CRMs, or TMSs.
SaaS (Software as a Service): A software distribution model in which applications are hosted by a third-party provider and made available to customers over the Internet. Many modern WMS solutions are offered as SaaS, providing scalability and flexibility to businesses.
KPI (Key Performance Indicator): A measurable value that shows how effectively a company is achieving key business objectives. In WMS, common KPIs include order accuracy, inventory turnover, and warehouse capacity utilisation.
FIFO (First In, First Out): An inventory valuation method where goods are sold or used in the same chronological order as they were purchased or produced.
LIFO (Last In, First Out): An alternative inventory method where the most recently produced or purchased items are used or sold first. LIFO can be used in specific situations to manage inventory valuation.

Partnering with SHIPMAX for external expertise in selecting the perfect WMS for your business needs

Selecting the right Warehouse Management System (WMS) can be a daunting task.

Every business has unique needs and finding a system that aligns perfectly with your operational requirements and long-term goals requires a deep understanding of both the technology and its practical applications.

This is where SHIPMAX comes into play. Leveraging our expertise can significantly simplify the process of choosing an appropriate WMS for your business. Here’s why working with SHIPMAX is a strategic move that can lead to enhanced operational efficiency and sustained business growth.

In-depth industry knowledge Our consultants bring a wealth of industry knowledge that spans various sectors and technological advancements in warehouse management and supply-chain. This expertise is crucial as it allows us to understand the specific challenges and needs of your business. SHIPMAX can provide insights into the latest trends, technologies, and best practices in WMS, ensuring that you are getting the most advanced and suitable solutions that the market has to offer.

Customised solution matching Every business has unique processes, growth trajectories, and customer demands. SHIPMAX specialises in identifying and matching your specific business needs with the right WMS solutions. Through a thorough assessment of your operational processes, SHIPMAX can determine the key functionalities your WMS needs to have, ensuring a perfect fit that supports efficiency and scalability.

Risk reduction Choosing and implementing a new WMS comes with significant risks, including disruptions in current operations and potential integration issues. SHIPMAX helps mitigate these risks through meticulous planning and a strategic implementation approach. By having experienced professionals manage the selection and implementation process, you reduce the likelihood of costly mistakes and ensure a smoother transition to the new system.

Cost-effective decisions While the initial cost of a WMS can be considerable, the long-term savings and ROI are what matter most. SHIPMAX provides a comprehensive analysis of potential systems, comparing not only upfront costs but also long-term operational expenses and ROI. Our expertise ensures that you make a cost-effective decision that will provide value for years to come, avoiding systems that are overpriced or inadequate for your needs.

Enhanced implementation and training Implementing a new WMS system is not just about software installation. It involves a complete transformation in how your warehouse operates. SHIPMAX ensures that the WMS is implemented correctly and that your staff are fully trained to use the system effectively. This includes customised training sessions that are tailored to the specific features of the installed WMS and your team’s requirements, resulting in minimal downtime and enhanced adoption rates.

Ongoing support & optimisation The relationship with SHIPMAX doesn’t end with the implementation of a WMS. We offer ongoing support and continuous optimisation services to ensure that the WMS adapts to changing business needs and technological advancements. This ongoing engagement helps in maximising the system’s efficiency and ensures that your investment continues to deliver significant returns over time.

Access to advanced tools & technologies SHIPMAX partners with leading WMS providers, returns specialists, goods in-transit insurance providers, domestic and cross-border carriers, automation providers, customs specialists, freight-forwarders and many more.

This means through working with SHIPMAX you get access to state-of-the-art tools and technologies offered by the best-in-class providers across all supply-chain specialisms.

By working with SHIPMAX, you gain access to these advanced solutions that might otherwise be out of reach or not on your radar. This includes everything from AI-driven analytics tools, integration support and bespoke IoT applications that can dramatically enhance the efficiency of your warehousing and e-commerce operations.

Objective and independent advice One of the primary benefits of working with SHIPMAX is our objective, vendor-neutral approach.

Unlike vendors own sales teams who are inclined to promote their in-house solutions, SHIPMAX focuses solely on what is best for your business. This unbiased advice is crucial for making decisions that truly align with your operational needs and strategic goals.

Streamlined vendor negotiations Negotiating with vendors can be a complex process that requires a deep understanding of licensing, service agreements, and technology stacks.

SHIPMAX can take the lead in these negotiations, ensuring that you get the best possible terms and prices from the vendors, thanks to our extensive experience and industry connections.

Conclusion

Choosing the right WMS is pivotal for enhancing your warehouse operations and supporting your business’s growth.

Partnering with SHIPMAX offers a plethora of benefits, from accessing deep industry knowledge and risk reduction to receiving ongoing support and gaining from cost-effective decisions.

If you're looking to implement a new WMS or upgrade or optimise your current system, SHIPMAX provides the expertise and support necessary to make informed decisions and achieve operational excellence.

Ready to optimise your e-commerce warehouse operations and drive business growth?

Contact SHIPMAX today to discuss how we can help you select the perfect WMS for your business.

Visit our Contact Us page to fill out the contact form, and let’s start transforming your warehouse environment today.

Phil Rees