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What is a WMS (Warehouse Management System)?

Updated: Oct 27, 2023

PHG company logo with Supply Chain Icons overlayed on an image of a warehouse aisle

A warehouse management system (WMS) is a combination of software and processes that helps you to manage and optimise day-to-day warehouse operations. WMS software helps to ensure that your inventory is received, stored, picked, packed, shipped and replenished in the most efficient way possible.

What is a WMS designed to do?

A WMS is designed to help digitalise warehouse functions for increased efficiency. However, the functions of a warehouse management system will vary depending on the specific needs of your business.

Some of the most common features of a WMS include:

#1 - Inventory management

A WMS equips your business to track inventory levels, stock locations and movements in real-time. The benefit of a WMS is complete inventory visibility, which helps to prevent stock outs by sending alerts when your stock levels reach a certain threshold.

#2 - Order Management

With a WMS you can streamline your order fulfilment by automating the receiving and processing of orders. Warehouse management systems can prioritise orders based on their urgency, allocate stock to orders and track the progress of each order. The benefit is fewer errors and faster order fulfilment times, which will delight your customers.

#3 - Shipping management

Managing your shipping process is made easier with a WMS because you can automate label printing. Plus, you can track shipments and provide real-time status updates to customers.

Some of the benefits of WMS shipping management include load consolidation, which helps to reduce shipping costs and cross docking, which gives you the ability to turn incoming goods into outgoing goods. This saves you time and reduces costs, especially when you're running low on stock or have orders that coincide with resupplies.

#4 - Warehouse layout planning

Organising your warehouse is the key to high-level efficiency. A WMS can help to optimise your warehouse space by providing insights into the location and movement of your inventory. It can recommend optimal storage locations based on the frequency of product movements and warehouse layout.

Let's say you have a product that's flying off the shelves, but it's stored in a place where warehouse operatives have to walk miles to pick the item. It makes sense to store popular products closer to your packing station for quicker picking and processing. A WMS can help you identify the perfect spot to store your most popular products.

#5 - Reporting and analytics

Data and information is the currency of the modern warehouse. A WMS gives you the business intelligence you need to further enhance your warehouse operations. You can automatically generate reports based on your key performance indicators like inventory turnover, order fulfilment times, shipping accuracy and more.

The benefit is data that helps warehouse managers to make more informed decisions about warehouse operations.

These are just some of the functions a WMS can perform. One of the main benefits of a warehouse management system is that they are versatile. They can be customised to meet the specific needs of your business.

How does a WMS work?

PHG Branded image showing two workers wearing PPE reviewing data on a mobile tablet in a warehouse.

A warehouse management system works by integrating with your other existing systems like:

  • Inventory management software

  • Order management systems

  • Shipping software

The WMS receives data from these systems and uses it to optimise your warehouse operations.

Here's how it works in practice:

Step #1: When a new shipment of inventory arrives at your warehouse, it is scanned into the WMS, and the inventory levels are updated in real-time. The WMS assigns a location in the warehouse for the inventory based on the warehouse layout and the product's movement frequency.

Step #2: When an order is received, the WMS checks the inventory levels and allocates stock to the order. It then generates a pick list, which lists the items to be picked from the warehouse shelves. The pick list is optimised to minimise the time and distance required to pick the items.

Step #3: Once the items are picked, they are scanned out of the warehouse, and the inventory levels are updated in real-time. The WMS then generates shipping labels and tracking numbers and sends them to the shipping software.

Step #4: The shipping software communicates with your carriers to schedule the shipment and provides real-time tracking information to the customer.

Are there different types of WMS?

PHG branded slide, showing an aisle in a warehouse, also contains a mobile tablet with generic reporting image.

Some WMS solutions are designed for specific industries such as retail, healthcare, or manufacturing. Others are designed for specific types of warehouses such as distribution centres or fulfilment centres.

While a WMS can be customised or industry specific, there are several types that you can choose from.

#1 - Standalone WMS

A standalone WMS is a software system that is designed to work independently of your other systems. It is typically installed on-premises and operates as a standalone application. This type of WMS is ideal for small to mid-sized businesses that have a single warehouse or distribution centre. A standalone WMS is cost-effective and easy to implement, but it may not provide the same level of integration and scalability as other types of WMS.

#2 - Enterprise WMS

An enterprise WMS is ideal for larger businesses with multiple warehouses or distribution centres. It is typically cloud-based and provides centralised management and control over inventory, orders, and shipments. Enterprise WMS solutions provide scalability, flexibility, and integration capabilities that a standalone WMS may lack. Plus, it can provide real-time visibility into warehouse operations across multiple locations.

#3 - Integrated WMS

An integrated WMS is a software system that is designed to integrate with other business systems such as Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) software.

This type of WMS provides seamless integration with other business systems, eliminating the need for manual data entry and reducing the risk of errors. An integrated WMS provides real-time data synchronisation and automated data transfer between systems, improving accuracy and efficiency.

#4 - Cloud WMS

A cloud WMS is a software system that is hosted on a cloud server and accessed through the Internet. This type of WMS provides your business with the flexibility to access a warehouse management system from anywhere, at any time. It is ideal if you have multiple locations or remote workers.

A cloud WMS provides scalability, flexibility, and lower upfront costs compared to an on-premises WMS. However, it may require a stable internet connection, and there may be concerns around data security.

How do you choose the right WMS?

Choosing the right type of warehouse management system for your business depends on the size of your warehouse or distribution centre, the number of locations, integration needs, and scalability requirements.

Each type of WMS has its own set of features, benefits, and limitations. You should carefully evaluate your organisation's needs to select the WMS that best fits your requirements.

Make your WMS implementation a success

Selecting and implementing a WMS can be daunting without support. Prime Horizon Group is an official Blue Yonder WMS implementation specialist. With consultants based in the UK, Europe and APAC, we can support you through the entire WMS implementation project cycle and beyond.

With 24-hour support, testing services, project management and WMS training, we provide everything you need to make your WMS implementation a success. Call +44 (0)330 043 6407 or email to start your WMS implementation journey, today.

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