BACKGROUND IMAGE: iSTOCK/GETTY IMAGES
A warehouse management system can be advantageous to organizations because WMS technology is able to use standard interfaces for integration with many other company systems that support warehouses and distribution centers, although some additional tweaking is usually still required.
With companies like SAP and Oracle leading the charge, and other WMS vendors making more investments, WMS technology now comes equipped with integrations for machine-handling software that can control driverless robots and automated conveyer belts, as well as mobile and hands-free technology. This ability to extend WMS capabilities and abilities to exchange information with other warehouse and distribution center systems enables companies to better address the challenges of supply chain support for omnichannel retail and timely order fulfillment. A WMS also provides granular analytics, performance tracking, management tools and optimization tools that can assess warehouse performance and recommend best practices for optimizing warehouse workflows, manpower and space.
Here are five common scenarios that drive the need for WMS technology.
1. E-commerce and multichannel platforms require new levels of integration and reporting
For retailers using an omnichannel approach to goods management where customers can order and receive goods through brick-and-mortar or e-commerce channels, multiple warehouse locations are often needed. This is largely due to the fact that they need to be located close to high-volume retail centers, and also so they can handle order fulfillment for both types of channels. For this reason, an enterprise would need integration capability with other systems (such as an ERP system) and robust reporting features, which are paramount features of WMS software.
2. Sales growth means improving warehouse performance
WMS software is often needed when an organization experiences sales growth, since this drives inventory replenishment and order fulfillment -- both areas in which the warehouse is actively engaged and must perform well.
The goal in these cases is to get high-demand items into and out of the warehouse quickly. WMS technology is specifically designed to do this. WMS software generally comes with advanced analytics tools that enable managers to visualize warehouse space and manpower utilization scenarios so both can be optimized for best results. WMSes can also visualize and present different warehouse workflow recommendations that help with overall efficiency of warehouse operations. Just as essential, most WMSes have the ability to scale up in functionality and processing to meet periods of high sales demand.
3. The existing warehouse system is out of date
A majority of commercial WMS vendors have differentiated their inventory management from their warehouse management systems because they recognize that today's warehouses and distribution centers require enhanced granularity and visibility of inventory movement. They also see that WMS software has the ability to more effectively integrate with growing levels of automation in the warehouse and with operations closely tied to the warehouse such as inbound and outbound logistics. The advanced analytics that many WMSes contain also help managers assess warehouse workflows and recommend workflow improvements for operational efficiency.
4. The company is opening new warehouse locations
As companies expand their operations to better handle market trends such as omnichannel, they often choose to locate their warehouses and distribution centers closer to areas where a majority of their customers are concentrated. This strategy usually entails using multiple warehouses in different geographic locales instead of using one giant warehouse to meet all needs.
By using multiple warehouses that are strategically located near major clusters of customers, companies can reduce goods transport times and enable quicker order fulfillment. Of course, adding more warehouses also renders company warehousing operations more complex. WMS software is built for this complexity. It gives warehouse managers visibility of inventory and operations at each warehouse location. Whenever a company opts to add a new warehouse location, a WMS can easily accommodate this.
WMS software can also easily track, monitor and report on inventory movements between multiple warehouses and distribution centers, no matter where they are.
A look at today's modern WMS technology
5. The company begins partnering with 3PL providers
Another distinguishing feature of WMS software is that many WMSes either contain or easily integrate with third-party logistics (3PL).
This added WMS functionality in logistics enables warehouse managers and others to not only see how goods are moving within the warehouse, but to also track and monitor goods as they are being brought to the warehouse and when they are being shipped out to customers. In this way, a warehouse manager can see the end-to-end flow of a given item -- from the time it is dispatched and brought to the warehouse to the time it is actually delivered from the warehouse to the customer. This extended visibility enables both warehouse managers and corporate executives to better link warehouse performance to end results such as customer order fulfillment and satisfaction.
Some companies do their own shipping and transporting, but an increasing number also elect to outsource goods transport and shipping to 3PL providers that do these functions for them. In these cases, the 3PL provider determines the mode of shipment or transport (e.g., ship, air, rail, truck, etc.) and whether a particular item needs to be secured in a container or in other types of packaging for safe transport. The WMS plays a key role in scenarios like this, because most WMS technology has the ability to integrate easily with other logistics systems that the 3PL providers may be using, and can extend track-and-trace capabilities down to the level of an individual box or container.
In other cases, companies elect not to do any of their own warehousing, goods transport or goods shipment. Instead, they outsource all of these functions to a 3PL provider and they use that 3PL system (usually cloud-based) to keep tabs on their inventory levels, order fulfillment and logistics. In cases where a company elects to outsource all warehousing and logistics to a 3PL system that performs these functions "turnkey," the company does not need its own warehouse management system.
Test your WMS knowledge and take this quiz.
Manufacturers: Read about the benefits of using WMS technology.
Use WMS software for product personalization.