Successfully managing a warehouse demands timeliness, accuracy, professionalism, and critical thinking.
Fortunately, a warehouse management system (WMS) takes the burden of manual warehouse operations off your shoulders. Instead of relying on physical counts of inventory, an automated system highlights where and how to make critical business decisions.
In this guide, we take a close look at warehouse management software, important differences between types, and provide recommendations.
What Is WMS: What Is Warehouse Management System?
A WMS is a warehouse management software program that streamlines the intake and output of all physical goods in a warehouse. It acts as an information channel between the touchpoints of your warehouse and those outside of it, including receiving, storage, shipping, returns, and expired or damaged products.
Warehouse management systems analyze warehouse data, identify inventory gaps, and highlight urgent needs with speed and efficiency. This allows you to view critical numbers at a moment’s notice, all with the goal of improving your warehouse organization and efficiency.
The WMS is connected to multiple data sources, including your accounting system, back office program, and possibly your online marketplace (if you use one). It uses the information available from those sources as well as new information you provide it to show discrepancies, reveal holding costs, and recommend areas for improvement.
There are numerous reasons all types of eCommerce businesses increasingly depend on warehouse management systems.
Types of Warehouse Management Systems
The term “warehouse management software” is often used as a catch-all for eCommerce tools and methods that produce efficient outcomes for warehouses and warehouse staff. The type of warehouse management system that best suits your needs depends on the maturity of your business and how much control you want to keep over your operations (see what is warehouse for further reading).
There are four basic types of warehouse management systems, each of which offers specific advantages based on your needs. Let’s look at the defining characteristics of each type, and how your business can leverage software for maximum productivity.
Enterprise Resource Planning (ERP) Systems
Enterprise resource planning, or ERP, systems are a form of “umbrella” software that integrate all stages of your eCommerce business. This includes all the steps from material sourcing to delivering packages to customers. Some, but not every ERP accounting system offers warehouse management software. It’s important to do your research before investing in an ERP for this reason. It can also help to understand the benefits of ERP.
Supply Chain Systems
A supply chain management system integrates all stages of operations, from importing raw materials inventory and supplier relationship management data to distribution and last mile delivery. Supply chain management (SCM) allows you to monitor and improve areas like third-party relationships, purchasing, and distribution efficiency.
SCM systems are useful for brands from a number of perspectives. If you want fuller control over your product life cycles, are expanding your operations, or desire improved granularity in reporting, this could be a great choice.
A warehouse management system is a sub-component of a supply chain management system. This is because your warehouse is only one stage of many in the eCommerce business process. A supply chain system shows you how your product and eCommerce fulfillment cycles are connected.
A cloud-based WMS is software that provides warehouse management functions from a web-based platform. This type of management system is often used by businesses that maintain high-value inventory, have a small warehouse, or want increased data security. Cloud-based WMSs are known for their simple deployment, low costs, and high degree of customizability.
Standalone Warehouse Management Systems
Standalone systems provide features and reporting for warehouse operations, but not the stages before or after warehousing. A standalone warehouse management system is the simplest form of WMS.
Standalone systems are often used as warehouse inventory management systems because they provide information warehouse workers need on a daily basis. These WMSs are also common in small- to medium-sized businesses that sell more than one SKU number.
Some standalone WMS companies provide integration options for distributors, but this isn’t a guaranteed feature. Before onboarding a standalone WMS, it’s wise to do your own research and ensure their functionalities match your business’s needs.
Want to better organize your warehouse, inventory, and individual products?
Get our FREE SKU Generator Template.
Warehouse Management System vs Inventory Management System
At first glance, it’s easy to think warehouse management and inventory management are the same thing.
In reality, warehouse management software and an inventory management system accomplish two different objectives. Warehouse inventory management software uses present and historical data to efficiently order, receive, and allocate stock. Over time, it reduces the amount of deadstock and any backorder.
A warehouse management system uses data trends to clarify where and how many units of any given stock should be placed. Quality warehouse management software offers insights on where best-selling and temperature-sensitive products can be placed, too.
To prevent confusion, you can think of your inventory management system as a building block of your warehouse management system. The inventory management side provides real-time reporting to the warehouse management side. Humans then use this data to initiate or adjust decisions that benefit the business’s profitability.
Importance of Warehouse Management System
There are multiple reasons why using a warehouse management system is so important. Recent statistics show that as much as 15 to 20% of modern warehouses still do not use a warehouse management system, which is the equivalent of leaving money on the table.
Tracking Stock and Inventory
The predominant reason for using warehouse management software is to track stock and inventory. Stock is any product that’s sold, and inventory is any product that is sold or used in production, but a WMS tracks them both. Inventory includes pipeline inventory, finished goods inventory, merchandise inventory, and any wholesale products you've purchased.
Updating your stock and inventory at the touch of a few buttons is extremely valuable. One, it reduces reliance on a manual inventory audit, which is the process of sending a human to count products on shelves. Two, you can see in real time the speed at which inventory is moving. Three, as soon as you or your team are engaged in putaway, you can move on to greater priorities.
Reducing Expired and Spoiled Products
Robust warehouse management systems won’t merely show you the products in your warehouse; they’ll show you those that have expired or will expire soon. You can use this information to optimize your purchasing decisions and avoid holding slow-moving stock.
Increasing Daily Efficiency
Due to the volume of product many warehouses store, running manual checks on product availability quickly becomes time-consuming. This is even more true if your warehouse has multiple floors.
Instead of sending staff members to physically check on low stock or soon-to-expire items, pull up this information in your WMS. The data provided here improves purchasing habits and can highlight areas to change your warehouse management process flow.
Preventing Unnecessary Expenses
Another benefit of warehouse management systems is their ability to prevent needless expenses. If your customers are ordering less or more of a given product, your purchasing trends should reflect this. Your WMS will reveal surpluses and shortages of products in your warehouse which you can make relevant decisions on.
In warehousing, profit is strongly correlated with efficient daily workflow and minimal product handling. This means workers can quickly access the products they need when they need them (see what is warehouse work for further reading). A WMS can show you best-selling products, so you can prioritize your storage space around high-frequency orders.
Role of Warehouse Management System
Warehouse management systems improve the efficiency and profitability of a warehouse. A WMS leverages the information available from your in-house tools, third-party data, and manual inputs. It then provides essential reports that can be used to streamline everything that’s happening in your warehouse.
Key Features of Warehouse Management System
You can think of key features of a warehouse management system as fitting into one of two categories: inventory management and order management.
Inventory management deals with receiving and putaway (sometimes called unloading). A strong WMS supports proper storage, labeling, and accessibility for your inventory. These features should be readily available in any warehouse management system you use.
Order management deals with picking, packing, and shipping. Returns fall under both inventory and order management, but for the sake of simplicity, we’ll include returns in order management. The order management system within your WMS simplifies the steps that follow an order confirmation.
Components of a Warehouse Management System
The full component list of a warehouse management system will depend on the company that created it. However, each warehouse management system is designed to offer support and accuracy in at least four areas: receiving, inventory, fulfillment, and shipping.
Receiving pertains to everything from scheduling delivery appointments to unloading shipments at the dock. Your warehouse management system should have a module where you can view scheduled appointments, review the type and quantity of incoming goods, verify and print warehouse labels, and create receipts.
Inventory Management Function
A WMS must offer a thorough, real-time way to track the movement of all goods in your warehouse. The inventory module in your software will show you the date, time, quantity, location, and status of every individual unit. This is similar to how hospitality software shows current reservations and how hospitality procurement software shows you the status of recent orders.
While the inventory management function of your WMS is always useful, it’s particularly valuable during seasons of high order volume. Instead of spending time manually reviewing pallets and shelves, refer to your WMS for all critical metrics.
Order Fulfillment Function
A WMS will also provide an order fulfillment module. Here, you’ll be able to view confirmed orders, demand forecasting, ongoing picking and packing, tracking information, and any errors.
From a customer-facing perspective, order fulfillment ought to be a top priority. Pay special attention to any patterns seen here, as fulfillment efficiency correlates with high profits and a low returns rate.
Distribution or Shipping Function
Aside from your product quality and pricing, you need to compete for customers through fast shipping. Customers expect speedy results year-round, so a shipping module is crucial for any warehouse management system. Referring to your WMS for the patterns it detects and making decisions accordingly keeps customers coming back. An example is a backorder, which is when an order has been placed but no current supply exists to fulfill the order.
How to Choose a Warehouse Management System
Choosing a warehouse management system should be approached with mindfulness. You want to select a WMS that meets core needs of your business, including:
- Type of product(s) sold
- Location of business
- Size of business
- Growth trends and projected profitability
- Ease of integration with supply chain and distribution
- Integration with your existing software and hardware (if applicable)
It's also wise to include your leadership team in conversations about a WMS. Your current warehouse manager may have requests that can help them perform at peak capacity.
If you don’t find a WMS that has all the features you need, don’t be afraid to ask. Sometimes companies only display a portion of their features, or they may be working on beta features. WMS businesses are also often happy to create new features that they think enough of their customers will benefit from.
Warehouse Management System Software Cost
The cost of any warehouse management system depends on a couple factors.
One, your WMS will offer either a licensing revenue model or recurring model like a subscription box business. Licensing tends to accompany on-site integrations, with subscriptions accompanying cloud-based integrations.
Licensing fees tend to be a little higher than subscription fees, because there’s more to set up and it can take longer. Exact pricing depends on the WMS you’ve selected. On average, businesses pay between $100 to $200 per user per month, with licensing models generally bearing larger costs.
Two, WMSs with greater functionality, convenience, or integrations tend to command higher prices. It is not unheard of for a WMS to charge anywhere from $300 to $600 per user per month, or $1,000 to $5,000 per facility per month. Naturally, high cost WMSs offer greater convenience, more features, and a robust user experience (UX).
Top Warehouse Management Systems
There are multiple warehouse management systems that lead the pack in terms of usability, customizability, and scalability. Each software company offers different features and price points.
Depending on the needs of your business, some companies may provide more applicable functions than others. Check out these WMSs that are praised for their flexibility, convenience, and relevance:
- Fishbowl Inventory: Focuses on supply chain management consolidation and inventory accuracy; offers multiple popular integrations
- Suitable for: Small, medium, and large businesses
- Oracle Warehouse Management: Cloud-based WMS; broad scope of features; offers support for complex fulfillment needs
- Suitable for: Small, medium, and large businesses
- Infoplus: Popular WMS with customizable templates for wide range of business types; can easily handle multiple warehouses
- Suitable for: Small, medium, and large businesses
- SAP Warehouse Management: Large-scale WMS for all warehouse operations; offers barcode scanners for inventory efficiency
- Suitable for: Medium and large businesses
- Manhattan: Mobile-first WMS that leverages advanced AI for numerous processes; aims to optimize productivity for both software and human tasks
- Suitable for: Small, medium, and large businesses
- Solochain: Designed to help businesses with multiple warehouse locations; supports labor, yard, and transportation management as well
- Suitable for: Medium and large businesses
If you’re looking for a particular feature or software compatibility, it’s useful to research further. Even more options on our warehouse management systems list include:
- Infor Supply Chain Management
- JDA WMS
- 3PL Central
- Click Reply
- NetSuite WMS
- Catalyst WMS
Frequently Asked Questions About Warehouse Management Software and Warehouse Management Systems
Settling on warehouse management software that meets the needs of your business is difficult. You need a platform that's compatible with your other systems, is easy to use--and perhaps most importantly--easy to train others on.
If you have more questions about how to find and use the right warehouse management system, we researched commonly asked questions to help you out. Check out these questions and our answers below:
What Is Warehouse Management System In SAP?
Any warehouse management system can be used to manage the various aspects of your inventory, from receiving goods to shipping them out. As a software, it is a set of instructions to help manage operations. SAP is an enterprise resource planning (ERP) software that finds several applications across multiple industries. Among its many functions is inventory management, which allows for real-time tracking of stocks, orders, and other inventory-related activities. SAP is used in a number of industries, including food and beverage, retail, energy, and aviation. Depending on the industry you’re in, the software you use can vary. For example, a warehouse management system for aviation will be different than one designed for retail.
What Warehouse Management Software Do Warehouses Use?
Depending on the industry and your business model, different warehouse management systems are used. Software for warehouses is often based on the needs of the supply chain. To illustrate, a WMS in the food and beverage industry might work with high-value goods. You’ll find that airline companies use a different WMS than do retailers. If you use Fulfillment by Amazon (FBA), you’ll see that Amazon warehouses use their own WMS.
What Is Warehouse Management System In Logistics?
A warehouse management system is a software tool designed to help logistics workers track and organize inventory. These systems are common in industries with lots of inventory, such as retail and manufacturing. Businesses that use inventory to operate and manage it either manually or with the aid of computer systems are a great fit for WMSs. A WMS can be used to track the location of an item, when it was ordered, how much should be in stock, and how many were produced. The software may be integrated with other systems, such as a shipment tracking system, to ensure stakeholders have a full view of the business.
How Do Warehouse Management Systems Work?
A WMS works with a database that stores information about your warehouse and inventory. It’s a centralized way to store and retrieve information. This lets you streamline operations, track inventory, and improve efficiency. A WMS can be used to track inventory, analyze sales data, and forecast trends. This information is crucial for making informed decisions, such as when to place an order or which products to mark down. The software uses sensors, identification numbers, and RFID tags to track inventory. This allows you to detect when items are misplaced, missing, or about to expire.
What Warehouse Management System Does Amazon Use?
Amazon has a huge logistics network, which includes hundreds of warehouses around the world. These warehouses are some of the most advanced in the world, and the company’s WMS is designed to run them efficiently. What’s most interesting is that although Amazon is secretive about their systems and processes, they published a white paper in 2017 called Amazon’s Warehouse Management System. Companies around the world can use this information as a guide to building their own systems, similar to Amazon’s. The paper describes how Amazon’s WMS works on two levels: one for “receiving” and one for “picking.” At the receiving level, Amazon uses radio frequency identification (RFID) to know when a shipment has arrived. The WMS then alerts a worker to retrieve the item, scan it into the system, and put it where it needs to be.
A Warehouse Management System (WMS) Is a Software Solution That Offers Visibility Into a Business?
Yes, this is correct. A warehouse management system is designed to provide organizations with a single, real-time view of their supply chain. It’s also designed to increase productivity and reduce costs across the board. A WMS can be used to manage customer orders, inventory, transportation schedules, payroll, and more. This software solution offers visibility into a business’ operations, helping pinpoint issues that may arise.
Does Warehouse Management Software Give the Correct Status of Stock In Your Warehouse?
Yes, a warehouse management system can display accurate stock numbers, including where you are running short of stock and where you have excess stock. This software solution can maximize your inventory reduction efforts. It can also help you to find out the customer demand for particular products.
Automating Your Way to Success
Warehouse management systems, such as SKU rationalization, can decrease redundancy, lower costs, and maximize profits. Research options to find the best fit for your business, and use it to save time and money on a regular basis.
Feeling reluctant about which WMS to go with, or what you'd use it for? Our warehouse management guide sheds light on all things warehousing.