What Is a WMS?

A warehouse management system (WMS) is software that manages and optimizes warehouse operations from receiving inventory items to storage, picking, packing, and shipping. A WMS provides visibility into inventory levels and coordinates and automates warehouse activities. Organizations use warehouse management systems to help with operational efficiency, minimizing errors, and scaling fulfillment.

A warehouse management system gives organizations visibility of the entire end-to-end warehousing process. With real-time insights, companies can optimize every single stage of warehousing to make the flow of goods as efficient as possible.

Receiving and putaway

Whenever goods arrive at the warehouse, the WMS logs all incoming products. The system compares shipments that arrive against purchase orders to ensure all products have arrived successfully and as per their expected specifications. By detecting the radio frequency identification (RFID) tags on each product, a WMS can automatically begin to log new arrivals into the system. Alternatively, employees can scan item barcodes manually.

Based on the currently available storage locations and any product requirements, the system will either recommend the optimal location for workers to take the goods or use automatic conveyor belts to deliver the goods.

Inventory tracking

The WMS offers real-time visibility into the location and quantity of each product, using RFID tags or barcodes to automate logging and item tracking. Every time an item is moved or leaves the facility, the detecting or scanning of these tags ensures you know where it is at all times. Changes in stock can also automatically trigger reorders of certain items or procurement planning.

Order fulfillment

When a company receives an order, the WMS processes it and delivers that information to in-warehouse pickers. Depending on the total number of items and their locations, the system might generate an optimal picking path for workers to take based on the shortest journey. The workers will select the items and deliver them to the packaging area. The WMS automates as much of this process as possible, making sure that any orders leaving the facility are up to packaging and shipping standards.

Shipping and dispatch

Once an item or a bundle of products is ready to leave the facility, the WMS prints out shipping labels and any required packaging slips. If the shipment intends to travel internationally, it will also include customs documentation as a part of this process. Most of the time, companies integrate their systems with a logistics partner, helping to automate product pick-ups and tracking through the delivery process.

There are several technical components that allow warehouse management systems to function correctly.

Real-time inventory visibility

Inventory management is one of the main responsibilities of WMS. By collecting information on incoming, stored, and outgoing products, it maintains complete visibility over an organization’s entire inventory. This information is held in a real-time database, letting companies easily check on stock levels and adapt their ordering as needed.

Barcode and RFID scanning

RFID scanning is the optimal method for WMS platforms to log items and facilitate inventory tracking. If some items don’t have an RFID tag, employees can manually scan their barcode to enter them into the WMS software and ensure they show up in real-time inventory tracking. Where possible, the RFID approach is more effective, as it automates the process, reducing the likelihood of manual entry errors.

Automated picking and packing

There are several different strategies for picking depending on the warehouse space, how businesses manage inventory, and employee availability.

Zone picking gives ownership of picking in an area to a certain selection of employees. Batch picking designs an optimal route and then has an employee pick up multiple orders in one trip. Finally, wave picking schedules pick-ups in waves, grouping them by priority or shipping cutoff times to minimize downstream delays.

Warehouse layout optimization

A warehouse management system uses sorting algorithms to organize items into the place that makes the most sense to store them. For example, any high-demand items in the supply chain might be in an accessible location, letting employees in inventory management rapidly access these products. Internal warehouse organization also helps with better labor management, as employees travel less distance to collect the items they need to finish an order.

Integration capabilities

WMS systems also need to integrate with other technologies that businesses use across their entire supply chain. For example, a direct connection between WMS systems and e-commerce platforms allows new orders to instantly update in the warehouse management platform, beginning the process of picking and packaging immediately. Businesses should also connect warehouse management platforms to transportation management systems and a larger enterprise resource planning (ERP) system.

Reporting and analytics

As a single source of truth for a company’s overall warehouse operations, WMS systems also need to present data in an easy-to-understand way. Typically, they offer performance dashboards, labor productivity metrics, and detailed statistics about inventory control and management within these reporting dashboards.

There are several different deployment models for warehouse management systems, each of which functions best for different use cases.

Standalone WMS

A standalone WMS is a dedicated solution that doesn’t directly connect to any other enterprise systems. These are more technically specialized software solutions that offer functionality for inventory control, picking, packaging, shipping, and logistics tracking. While you can connect them, they don’t natively bundle with other supply chain software.

Integrated WMS

An integrated WMS is deployed as part of a wider ERP or supply chain management suite. While they may not be as functionally flexible as standalone WMS options, they do provide a high degree of control and visibility for teams that need a centralized approach.

Cloud-based WMS

Cloud-based WMSs are highly scalable, on-demand SaaS applications that businesses can deploy and access from anywhere. By drawing resources from the cloud, scalably-designed cloud-based WMS can readily manage seasonal spikes or changes in demand. If organizations want to reduce overhead management, a cloud option is a cost-effective choice.

Supply chain modules

WMS software may also be a singular module in a wider supply chain management solution. These solutions provide end-to-end visibility over the supply chain, including procurement, manufacturing, warehousing, transportation, and even last-mile delivery. These are best for businesses that want complete visibility and alignment across the entire supply chain.

There are several advantages that businesses using a warehouse can achieve from using WMS solutions.

Inventory accuracy

Real-time inventory tracking allows businesses to know when they need to procure more products, when certain items are running low, and gives long-term data about purchase frequency.

Faster order processing

Having a WMS system that automatically logs new orders and initiates the picking and packing process helps to ensure orders are processed as quickly as possible.

Cost reduction

Optimizing warehouses with a WMS helps to save costs on every process across labor management, storage efficiency, and error reduction.

Better space utilization

Warehouses that plan storage with a WMS can improve their storage density, getting more products into the same amount of space without negatively impacting item throughput.

Enhanced traceability

A WMS is a central solution for visibility, providing item tracking numbers, detailed product information such as expiration dates, and product recall management. The improved traceability helps with meeting compliance regulations and with internal quality control measures.

Data-driven decision-making

Understanding the trends of product purchases, workforce habits, and internal metrics, such as time from order to shipment, all come through WMS visibility. Collecting data from these systems allows you to identify bottlenecks in your business and find opportunities to improve.

Scalability

Using a WMS allows businesses to better understand their internal processes, being able to scale with the knowledge that every item, seasonal variance, and purchase order is tracked and monitored. The organization, visibility, and process management that a WMS offers make it much easier for companies to meet growing demand.

Customer satisfaction

When a company has a well-managed warehouse that’s run by a WMS, it can cut down the total amount of time it takes to process and ship packages. For customers, that means faster arrival of their packages, leading to higher satisfaction.

Here are the main considerations for your business when implementing a WMS into your warehouses.

Business requirements

By outlining the main challenges and pain points that your business is currently facing with warehouse management, the best-fit deployment model will emerge. For example, if you’re having difficulties managing specific product types or accommodating special handling needs, then a more granular, standalone system may make more sense.

Integration with existing systems

When choosing a warehouse management system, you want to make sure that it can integrate into your existing technology stack. Mapping out available connectors from your ERP, e-commerce platforms, transportation software, and accounting systems will help make sure you can implement the WMS without any rearchitecting.

Scalability requirements

Determine whether your WMS can scale to handle the demand your business experiences in seasonal peaks. Forecast whether adding new fulfillment locations or unexpected booms in demand will cause any problems or whether your system can handle the increased traffic.

User training needs

Warehouse staff will have to regularly interact with your WMS, meaning that training is key. Consider how difficult the software is to understand and whether which training options staff will need during the onboarding period and after rollout.

Total cost of ownership

In costing, implementing any software solution goes beyond the cost of the software package itself. Calculate how much the software, required hardware, implementation manual hours, training sessions, and ongoing support and licensing are likely to cost you. The most cost-effective package upfront might end up costing more when adding in these other fees.

Vendor support and updates

The vendor you partner with for your warehouse management software should continually work on the product by providing new features, patching vulnerabilities, and offering customer support when needed. Look for a software solution vendor that can partner with your business for a stable, long-term solution.

AWS offers solutions to help build, deploy, and scale warehouse management systems in the cloud:

• Amazon DynamoDB is a serverless, fully managed, distributed NoSQL database that instantly scales to fit your applications' needs with zero infrastructure management, zero downtime maintenance, and zero maintenance windows.

• Amazon Elastic Compute Cloud (Amazon EC2) offers the broadest and deepest compute platform, with over 1000 instances and a choice of the latest processor, storage, networking, operating system, and purchase model to help you best match the needs of your workload.

• Amazon Relational Database Service (Amazon RDS) is an easy-to-manage relational database service optimized for total cost of ownership. It is simple to set up, operate, and scale with demand. RDS automates undifferentiated database management tasks, such as provisioning, configuring, backing up, and patching.

• Amazon Simple Storage Service (Amazon S3) is an object storage service offering industry-leading scalability, data availability, security, and performance.

• AWS IoT Core allows you to connect, manage, and scale your device fleets easily and reliably without provisioning or managing servers.

Get started with WMS solutions on AWS by creating a free account today.