Learn More About Warehouse Management Software
What is Warehouse Management Software?
Warehouse management software (WMS) is primarily used to provide visibility into an organization’s inventory. Users should think of it as a way to monitor, track, and optimize the efficiency of how inventory is stocked, managed, and shipped. WMS provides these inventory management features primarily by being linked to barcode tracking features. Typically, businesses label items with barcodes which provides them full visibility into that particular item. This technology is then linked to the WMS. This is extremely beneficial to businesses because when the item is scanned, it provides visibility into the number of stock left, an item’s location in the warehouse, as well as the shipment status of the item. In this sense, the barcode is the key factor that allows warehouse management systems to be as effective as they are.
In addition to monitoring and optimizing warehouse inventory, WMS can also manage supply chain operations from the manufacturer to the warehouse. This provides more visibility into when shipments are arriving and how to effectively stock those shipments in the most efficient way possible.
What Types of Warehouse Management Software Exist?
ERP-integrated WMS
Sometimes warehouse management systems can be packaged into an enterprise resource planning (ERP) system. Although it might not have as much functionality as a standalone product, it will definitely provide a wide scope of other business processes. If it’s important to have one system that aligns the warehouse management system with human resources, supply chain management, and manufacturing, then buyers might want to opt for a product that is included in an ERP system.
Standalone WMS
Standalone warehouse management systems are sold as a specialized product that doesn’t offer any further supply chain functionality. It will focus specifically on inventory management and warehouse operations. This would be an ideal choice for a company that isn’t looking for software that expands beyond the scope of warehouse management.
What are the Common Features of Warehouse Management Software?
The following are some of the core features typically found in a WMS:
Inventory control: Inventory control features allow warehouse managers to monitor inventory levels in real time. This lets managers monitor if their inventory is overstocked or understocked, which can indicate if the business is wasting money on certain products that are not being bought.
Warehouse layout: Warehouse layout allows users to identify products by weight or size so businesses can stock items in locations that make movement more efficient around the warehouse. If sales data indicates that a particular product is flying off the shelves, the warehouse managers can ensure that the product is stocked at an optimal location for the quickest shipping times.
Fulfillment monitoring: Fulfillment monitoring features allow users to track, manage, and analyze the fulfillment times of their products. By synching RFID tags that are on each product, users can track and locate each item to see if they reached their final destination on time.
Labor management: Labor management tools allow warehouse managers to monitor worker performance within the software. The software can help indicate if workers are performing above or below standards.
Warehouse modeling: Warehouse modeling allows users to simulate a warehouse workflow change and provide report card metrics on efficiency. This is a great way to test changes before they’re even implemented. Within the feature, warehouse modeling will even proactively recommend optimizations so warehouse managers know how to shift workflows in order to maximize efficiency.
Other Features: Accounting Integrations, Customer Portals, eCommerce, Procurement, Stock History Reporting, Visualization, Worker Performance
What are the Benefits of Warehouse Management Software?
WMS can dramatically improve the efficiency of tracking and monitoring inventory as it moves through the warehouse. As a result of better tracking and inventory planning, users will make processes such as receiving, picking, and storing products quicker and more accurate. These improved processes will result in more shipments going out on time and customers receiving their orders more quickly.
Meet customer demands: Shipping time is extremely important to the average online shopper. With massive e-commerce sites setting the bar with shipping in two days or less, other online e-commerce stores must offer the same to stay competitive. Maximizing the efficiency of the inventory with a warehouse management system will allow the company to send more shipments out on time and meet growing customer demands.
Save money: Warehouse management systems help businesses with processes such as demand forecasting. By monitoring how much inventory is left of a certain product, businesses can determine if they need to slow down or increase the production of that product. Using historical data to develop an estimate of expected customer demand will ultimately save the company money.
Better labor management: WMS can drastically improve the onboarding process for new workers, as well as the efficiency of veteran warehouse workers. Some labor management features typically found in a WMS included worker performance management, labor forecasting, KPI management, and schedule optimization. There are features that allow businesses to set goals for their workers which will provide them with specific metrics to reach. This can be great for compensating workers based on performance. Conversely, there are also great schedule optimization features that provide daily schedules and tasks to warehouse workers. This allows them to always stay on track and not idle in the warehouse.
Who Uses Warehouse Management Software?
Warehouse manager: WMS allows warehouse managers to facilitate daily task planning, staff management, new hire onboarding, and other organizational features that make it simpler to manage the efficiency of their team.
Distribution center manager: Distribution center managers are responsible for inventory, shipping, and the receiving of stock. WMS helps distribution center managers with insight into inventory stock levels, and the whereabouts of incoming and outgoing shipments.
What are the Alternatives to Warehouse Management Software?
Here is a list of warehouse management alternatives that can replace this type of software, either partially or completely:
Inventory control software: For buyers looking to only manage inbound inventory and current stock, then inventory control software is a good option. Inventory control software focuses mainly on the tracking of products, raw materials as well as demand forecasting. It is more concerned with current inventory and how it can be used to meet customer demand. However, WMS is suitable for buyers who want a product that is more encompassing of all aspects of running a warehouse including labor management and outbound logistics.
ERP systems: ERP systems are complete, integrated systems that manage all aspects of a production-based or distribution business, aligning financial management, human resources, supply chain management, and manufacturing or distribution with the core function of accounting. ERP systems generally have their own warehouse management capabilities, but they are typically limited in functionality. If the buyer needs a more complete system for managing other aspects of the business then an ERP might be the way to go.
Software Related to Warehouse Management Software
Related solutions that can be used together with WMS include:
ERP systems: Integrating WMS with an ERP system is key to maximizing its potential. Integration between these two systems will allow managers to see all data that relates to manufacturing, supply chain, and shipping all in one place. This will ultimately lead to more visibility of how the business processes are connected.
Accounting software: Integrating WMS with accounting software will allow users to accurately present inventory in financial reports. Important documents such as tax returns can then accurately reflect inventory value. If the stated assets from the warehouse don’t match up with bookkeeping, then the company can get audited. The best way to maintain the financial integrity of the warehouse is by integrating the warehouse management system with accounting software.
E-commerce platforms: Integrating the warehouse management system with the e-commerce platform is critical for keeping track of inventory. Without integrating these two solutions, managers must manually track orders on their e-commerce platform and then adjust the stock in a spreadsheet. Conversely, when these two are integrated, every sale that is made online will automatically be reflected in the WMS. The result is more visibility and accuracy, which will translate to less inventory errors.
Challenges with Warehouse Management Software
Implementation: The biggest challenge with WMS is implementation. The reason for this is because there is no standardization across how to utilize a warehouse management system. While an online e-commerce business may manage inventory one way, a car dealership or process manufacturing company may manage it in a completely different way. These businesses will have different processes in distribution, retail compliance requirements, and shipping. This requires businesses to tailor the WMS to their needs.
Integration challenges: Another challenge with implementing a WMS can be with integrating the software across the entire supply chain. Depending on the level of connection, some businesses may want to integrate their warehouse management system alongside supply chain visibility software or supply chain planning software. This can prove challenging for any business.
Which Companies Should Buy Warehouse Management Software?
E-commerce businesses: A WMS allows e-commerce businesses to link their online store purchases directly to their inventory. This way if a customer makes a purchase, it is automatically reflected in their stock count. This allows e-commerce businesses to accurately determine stock level and signifies if they need to restock.
Manufacturing companies: Manufacturing operations often include a hybrid of premade goods and newly created goods to make a final product. This makes managing inventory for manufacturers a little more difficult since oftentimes certain parts are dependent on other parts in order to combine and make a finished product. As such, it’s critical that manufacturers have a good read on inventory levels to ensure that production can run smoothly.
Food and beverage businesses: A WMS is a necessity for food and beverage companies as these companies need to make sure their inventory is always kept fresh. These products must be delivered and shipped on time to ensure they don’t spoil on the way to the customer. This can include grocery stores, as well as wholesale food distributors.
How to Buy Warehouse Management Software
Requirements Gathering (RFI/RFP) for Warehouse Management Software:
Requirements gathering for a WMS is absolutely critical to ensure that the business is implementing a product that meets all of their needs. While some WMS will have a full-fledged feature list with features such as labor management and performance management, these solutions are generally more expensive. For buyers who want the basic functionality of a warehouse management system, only core features such as inventory management, receiving, picking, and shipping are essential. These solutions may be less expensive and cover all requirements, rather than a solution that covers all the bells and whistles.
Compare Warehouse Management Software Products
Create a long list
Long lists are created by eliminating software options that do not provide critical functionality. To make a long list for a WMS, a buyer should look at the following functionalities and deem which products provide the necessary functionality
- Put-away
- Receiving
- Yard and appointment setting
- Asset management
- Inventory management
- Quality control
- Picking
- Packing
- Shipping
- Performance management
- Integrated WMS slotting
- Alerts
- Audits
- Labor management
Create a short list
Once a buyer has narrowed down their list from the following functionality above, it’s then important to get even more specific requirements. For example, if a company is in the food and beverage industry, they should make sure that there is functionality for coldchain which might require unique WMS capabilities. If a company is in the manufacturing industry, they might want to make sure the software integrates with their ERP.
Conduct demos
Demos are one of the most important stages in the buying journey. This allows a buyer to sit through an actual product demo and see if the product matches all of the necessary requirements. To make sure the demo runs smoothly, ensure that the vendor has all of the requirements beforehand so they can showcase their features properly.
Selection of Warehouse Management Software
Choose a selection team
It’s important to have input from the people who will actually use this software before making such a hefty software purchase. As such, it’s important to create a selection team of three to eight people for purchasing a WMS. First, businesses should get input from the IT team that deals with the technology behind inventory control transactions and current scanning technology in the warehouse. They can ensure that the WMS can integrate with this technology. Second, they should consult warehouse managers to ensure that the software has the requirements they seek such as labor management and onboarding. Lastly, it’s important to have any other relevant team leaders in the selection team; these are the team members who are responsible for inventory movements and inventory control.
Negotiation
When it comes down to the negotiation stage buyers must consider implementation and training costs. Once a buyer ensures that all other requirements are met, the last stage is ensuring that workers will be properly trained on the new software. This should be included in the price of the software, especially if it’s a recurring revenue cost.
Final decision
After the negotiation stage is conducted, the final decision requires buy-in from everyone on the selection team. It’s important to get everyone on the same page to ensure that all requirements are met and the final decision is supported by everyone involved.
What Does Warehouse Management Software Cost?
WMS generally falls into two different pricing models: this is either a perpetual license or a subscription model. Below are the key differences between the two:
On-premises solutions: A perpetual license is often a one-time payment for an on-premises solution. This type of solution is becoming less common across most software vendors as subscription models are taking over, however for some businesses an on-premises solution may make sense.
On-premises solutions generally do not require an internet connection. Additionally, users with an on-premises solution control all of the data within. This includes confidential employee information and other sensitive data. Another important advantage may include more product customization. If a WMS is a one-time purchase a buyer generally ensures that the product is set up to meet their needs and can be tailored as such. This is generally less common among cloud products.
Software as a service (SaaS) and cloud solutions: Cloud products often operate under a SaaS model and are run over the internet (in the cloud). These are generally sold as a subscription and require a recurring payment, most often as monthly or yearly payments.
One of the big advantages of cloud systems is that they generally provide more ongoing technological innovation. Once the product is sold, the buyer reaps the benefits of constant improvements from the vendor. This allows buyers to stay up to date with new features that may be shaping the market. Another advantage is less of a massive upfront investment. This allows buyers to test out a product without paying a hefty sum upfront.
Return on Investment (ROI)
Below is the breakdown of the estimated time to ROI according to our review data on G2 as of November 30th, 2020:
- 31% of buyers see an ROI in 6 months or less
- 23% of buyers see an ROI in 7-12 months
- 21% of buyers see an ROI in 13-24 months
- 25% of all other buyers see an ROI from 24 months onwards
Implementation of Warehouse Management Software
How is Warehouse Management Software Implemented?
Implementation for WMS can differ depending on the level of customization needed.
Who is Responsible for Warehouse Management Software Implementation?
Generally speaking, there will be a few teams involved in the implementation process. These teams include an internal implementation team, a team of warehouse executives, and lastly the vendor who sold the product. When going through the implementation process, it is important to have the vendor on hand as they are the ones who can answer any questions that may require their expertise.
What Does the Implementation Process Look Like for Warehouse Management Software?
The implementation process for WMS often includes months of customization, training, and testing to finally get everyone on the team used to the software. According to our G2 review data as of November 30th, 2020, here is a breakdown of how long it may take:
- 28% of buyers see a go live time in less than 1 month
- 27% of buyers see a go live time of 1-3 months
- 11% of buyers see a go live time of 3-6 months
- 16% of buyers see a go live time of 6-12 months
- The rest of the buyers see a go live time anywhere after 1 year
