A WMS, or warehouse

management system,
is software that helps
companies manage
and control daily
warehouse
operations, from the
moment goods and
materials enter a
distribution or
fulfillment center until
the moment they
leave. WMS software
systems are a key
component of supply
chain management
and offer real-time
visibility into a
company’s entire
inventory, in
warehouses and in
transit. In addition to
inventory
management, a WMS
offers tools for
picking and packing
processes, resource
utilization, analytics,
and more.

WMS meaning: a
warehouse management
system is software that
helps
companies manage and
control daily warehouse
operations, from the
moment goods and
materials enter a
distribution or fulfillment
center until the moment
they leave.
Now more than ever, wholesalers, third-
party logistics (3PL) providers, and
shippers are under pressure to fulfill and
deliver omnichannel orders at the speed of
Amazon. E-commerce sales have also
surged. In 2019 alone, Statista reports that
U.S. online retail sales amounted to
US$343.15 billion – and they’re projected
to reach almost $476.5 billion by 2024.
While online sales and expectations for
fast shipping are growing, the labor pool is
shrinking. And until the COVID-19
pandemic took hold in mid-March of 2020,
a low national unemployment rate made it
difficult to find warehouse workers.
Although the number of available workers
is temporarily higher, post-COVID-19
warehouse labor will likely be scarce once
again. These forces all create the need for
faster, more efficient warehouse
management and logistics processes.

A good WMS system can help by

streamlining every facet of warehouse
management – from receiving, put-away,
and pick, pack, and shipping processes to
inventory tracking and replenishment. And
it organizes all of these activities from a
single interface. Warehouse management
systems also integrate with other tools,
including basics like bar code scanning
and RFID labeling, more advanced
robotics and augmented reality
(AR) wearables, and other mission-critical
solutions, such as transportation
management systems (TMS), ERP,
and logistics software.

Five benefits
of a
warehouse
management
system
A robust, digital warehouse management
system is essential for any business with
on-hand inventory – and can help save
money and gain new efficiencies in many
areas. The top five benefits of a WMS
system are:

1. Improved operational efficiency:

WMS systems automate and
streamline warehouse processes
from inbound receipts to outbound
deliveries – for improved efficiency,
 smoother operations, and the ability
to handle higher volumes. They
reduce errors in picking and
shipping goods and eliminate
duplicate and unnecessary work. A
WMS also shares data with ERP
and transportation management
systems, giving you a holistic
outlook that extends beyond your
warehouse and helps expedite the
movement of goods.
2. Reduced waste and costs: If you
have date-restricted or perishable
stock, WMS software can identify
which items need to be picked first,
or which might need a sales push,
to minimize waste. It can also help
you determine the most effective
use of warehouse space, from
inventory placement to optimal
travel paths. Some systems offer
advanced simulations to create
floor plans and place pallets,
shelves, and equipment in the best
locations to run at peak efficiency
and save time and money.
3. Real-
time inventory visibility: Using
barcoding, RFID tagging, sensors,
or other location tracking methods,
a WMS system gives you real-time
insight into your inventory as it
moves into your warehouse, around
it, and on to the next location. With
this visibility, you can create more
accurate demand forecasts, run a
just-in-time inventory strategy, and
improve traceability – which is
especially important in the event of
a recall.
4. Improved labor management: A
WMS can help you forecast labor
needs, create schedules, optimize
travel time within a warehouse, and
assign the right task to the right
employee based on skill level,
proximity, and other factors. A good
WMS system can also assist in
 boosting employee morale by
creating a more relaxed, organized,
and safe environment where
workers feel their time is valued
and being used wisely.
5. Better customer and supplier
relationships: With a WMS,
customers enjoy improved order
fulfillment, faster deliveries, and
fewer inaccuracies – which
increases their satisfaction and
loyalty and improves your brand
reputation. Suppliers can also
experience reduced wait times at
loading bays and docks, for
improved relations.

What does a
WMS system
do?
Any activities flowing into and out of the
warehouse, and those that ripple out to
the extended supply chain, can be
improved with a good WMS – from
receiving and storage to picking, packing,
and shipping. The core features of a
warehouse management system support
these activities in the following ways.

Receiving and put-

away process

A WMS can help companies receive,

process, and put away items in the most
efficient way based on business rules and
warehouse flow. Before warehouse
management systems, a pen and paper
were used to receive items and reconcile
them against purchase orders and
physical receipts – and some smaller
warehouses still use that approach today.
In fact, in a 2018 Peerless Research
survey, 87% of respondents said they
were handling materials manually during
the receiving process.

A WMS system supports using RFID

technology and integration with billing and
other software so that items can
be automatically received, validated, and
reconciled against digital purchase
orders with the scan of a barcode,
and with labels printed for easier storage
and retrieval.

Inventory
management

Warehouse management
software provides real-time visibility into
an organization’s inventory across any
location, including items in transit and in
stores. It provides tracking information
using automatic identification and data
capture (AIDC) technology such as
barcodes or RFID. And many systems
support cycle counting and demand
forecasting using advanced analytics and
insights into product and vendor
performance. With these insights,
companies can adjust inventory levels on
the fly to ensure there’s just enough stock
to satisfy customer demand, whether in-
store or online.

Accurate inventory tracking and other

practices are key to improving order rates
– meaning orders that arrive complete, on
time, undamaged, and with an accurate
invoice. They can also
help allocate inventory according to
custom workflows and picking logic so that
inventory can be moved faster, both into
and out of the warehouse.

Order
picking, packing, and
fulfilment

The most commonly cited place for

packing and fulfillment activities is in the
warehouse, according to a Logistics
Magazine survey.
And ResearchGate estimates that the
costs related to order picking make up
55% of the total cost of warehousing.

WMS systems can help lower these costs

by guiding the most efficient way to store,
retrieve, and pack products. They also
support picking technologies that
streamline the process, such as radio
frequency (RF) with and without scanning
verification, pick-to-light and pick-to-voice
technology, robotics, and algorithms that
can help optimize picking paths.

Some warehouse management solutions

make it easier to fulfill orders using
techniques such as single order picking,
batch picking, zone picking, cross-
docking, wave picking, “put” to order, put-
wall systems, and more – all helping to
streamline order fulfillment.

Shipping
Many warehouse systems integrate with
transportation management and logistics
software that allows for myriad ways to
expedite the fulfillment process –
generating bills of lading, packing lists,
and invoices for shipments automatically,
for example, as well as sending out
automatic shipment notifications.

With real-time tracking features,

companies can keep tabs on whether
packages arrive on time and to the correct
destination.

It pays to get this right. Best-in-class

warehouse operations get the vast
majority of shipments off the dock and in
transit to the destination on time.

Labor management

Getting insights into labor-related costs

and productivity can help warehouses run
leaner, more efficient operations. A WMS
can provide real-time visibility into
warehouse workers, labor costs, response
times, productivity gaps, trends to plan,
and more – so companies can react
accordingly.

Besides providing key insights, many

systems also support task interleaving
based on factors such as priority or
proximity to help minimize workers’ overall
travel time as well as “deadheading” or
wasted time. They can also help with
planning and scheduling, either directly or
through integration with other systems.
Yard and
dock management

Features for yard and dock management

can help truck drivers find the right loading
docks quickly. Support for cross-docking,
where goods arriving into the warehouse
are immediately placed into outgoing
shipments without interim storage, is ideal
for fresh grocery products. The software
helps with this by checking receiving
scans against current sales orders, then
notifying the receiver if the goods should
be placed in a cross-docking location.

Warehouse metrics
and analytics

Real-time data can be automatically

collected through a WMS instead of
relying on manual data collection
methods, eliminating keying errors and
drastically speeding up the process. This
data can also be integrated with analytics
to track important metrics, such as on-time
shipping, inventory accuracy, distribution
costs, order or line fill rate, order cycle
time, and more. The system can then
create visual reports that can be easily
shared to stakeholders and be used
to make adjustments.

Warehouse
management
systems in
action
Warehouse management systems and
tools are used in almost every industry,
though they are most commonly relied
upon by larger distributors, e-commerce
fulfillment centers, and third-party logistics
(3PL) providers – often with multiple
warehouses. Pharmaceutical, healthcare,
and cold storage companies are also
common users. Frequently, WMS
solutions are integrated with transport and
logistics systems to improve transparency,
efficiency, and savings.

See how these companies used a

warehouse management system and
modern technologies to maximize
efficiency:

• Freudenberg unified high-volume

operations and sharpened
inventory accuracy.
• Potato
producer Aviko migrated three
warehouses to new technology to
support future growth.
• Bridgestone (video below) stays
atop their business operations with
end-to-end digital warehouse
management

Discover how Bridgestone now knows

how well their warehouse is operating and
can make needed improvements quickly.

Types of
warehouse
 management
systems
There are three main types of WMS
software: standalone (on-premise and
often a homegrown legacy system), cloud-
based, and applications built into ERP
or supply chain
management platforms (either on-premise
or hosted in the cloud). Each type of WMS
has advantages and drawbacks, and the
best type will differ from business
to business:

• Standalone WMS: These systems

are usually deployed on the
company’s own premises using
their own hardware. They can
generally support greater
customization (though these can be
costly) and the organization can
maintain tighter control over their
data and software. Although the
initial cost of the system is
substantially higher than other
options, once a company owns it,
they own it. At the same time,
updates, maintenance, and the
costs associated with them are the
responsibility of the
organization. As the WMS ages, it
becomes increasingly difficult to
integrate with other platforms and
to implement new technologies.
• Cloud WMS: Cloud-based WMS
systems can be rapidly deployed
with lower up-front costs. Delivered
as software-as-a-service (SaaS),
they provide more flexibility to
support seasonal and other
changing market conditions – and
they are easier to scale as
companies grow. Through regular
updates, warehouse management
in the cloud offers a quicker path to
 innovation. And someone else
takes on the burden of maintaining
and updating the system. SaaS
vendors also invest a lot of money
and expertise into security
measures and provide disaster
recovery capabilities. Cloud
warehouse management systems
can also be more easily integrated
with other solutions.

• Integrated ERP and SCM-based

WMS: Some warehouse
management systems are built as
modules or applications that
integrate with ERP and supply
chain platforms. The advantage of
these is that they are able to play
better with other solutions in
overlapping areas, such as
accounting and business
intelligence. They provide a holistic
view across the business and
logistics chain to allow for end-to-
end transparency and for
warehousing and logistics
processes to be orchestrated and
executed together. Ultimately these
capabilities can be used to optimize
operations and provide fast, agile
fulfillment experiences.

Smart
warehousing
technology
To meet changing customer buying
patterns, channels, and expectations – and
to keep pace with evolving markets and new
disruptions – companies need smart
warehousing technologies,
from AI and machine learning to
autonomous robots.
Warehouse
automation

Automation technologies are having a

significant impact on warehouses and
distribution centers. Warehousing workflows
and processes that can be streamlined
through automation include data collection,
barcoding, scanning, picking and packing,
shipping, and inventory tracking. This
automation makes it possible to operate
much more efficiently and scale to changing
demand. It also cuts down on human errors
such as keying in the wrong shipping
address or SKU.

Voice-
picking technology

Voice picking, also known as voice-directed

warehousing and pick-by-
voice, allows operators to carry
out tasks and communicate when they’ve
been completed without having to use paper
or their hands and eyes. Operators use a
voice-picking device, usually
a voice headset or a voice-dedicated
terminal, to receive spoken instructions from
the WMS system about where and when to
pick incoming orders. Workers can use
everyday language to send real-time
updates to the warehousing system,
including when batches are completed.

Mobile devices

Frontline warehouse workers depend on

mobile devices to do their jobs more
efficiently. In the 2020 Warehouse DC
Equipment survey, 73% of participants were
using smartphones and tablets, 55% bar
code scanners, and 18% GPS technology
(with 28% planning to deploy GPS in the
next 12 months). A WMS that can
support integration with these technologies
is critical.

AI and internet of
things (IoT) in
warehouse
management

Artificial intelligence and the IoT are being

increasingly folded into warehouse
operations. They promise to help
businesses respond dynamically to rapidly
changing warehousing conditions instead of
having to follow pre-defined rules. IoT
sensors provide the data and AI can analyze
it and make advanced predictions that
weren’t previously possible. The two
technologies work hand-in-hand to help
companies shift to a demand-driven
warehousing model.

IoT data flows into the WMS from myriad

locations, including from material handling
equipment such as conveyors, smartphones
and handheld devices, passive radio
beacons, RFID, and more. AI systems take
this data and transform it into usable
insights, such as trends, predictive models,
and other algorithms that help businesses
make important decisions based on current
conditions. These technologies can be put
to work to help manage routing and labor
movement, batch orders, slot inventory
dynamically, and much more.

Warehouse robots

Robots that operate in warehouses rely on

AI and machine learning to make decisions
based on input from their surroundings. And
by using a combination of video, audial,
thermal, and haptic sensors, robots can
measure ambient temperature and even
perceive touch. If integration is supported,
WMS software directs their activities.

There are a variety of robots used in

distribution centers and warehouses today
that can augment some workforce tasks and
automate others.

Automated guided vehicles (AGVs), for

example, use a track or magnetic stripe to
transport inventory around the warehouse,
while autonomous mobile robots (AMRs)
rely on onboard sensors, computers, and
maps to navigate the warehouse and
reroute when needed. AMRs can identify
information on packages to assist with
sorting and inventory checks. Aerial drones
are fitted with optical sensors and use deep
learning technologies to scan items in high
and dangerous places quickly and upload
the latest counts to the WMS system,
provided that system can support the
integration. And automated storage and
retrieval systems (AS/RS) can store and
retrieve items aided by software that directs
their operations. These can take the form of
shuttles, cranes, or even climbing robots.

There are a wealth of advantages to using

robots in the warehouse, the most obvious
being increased speed of operations. But
worker safety and morale can also improve
as dangerous and mundane jobs are
replaced with more strategic tasks.

Augmented and
virtual reality apps

Augmented reality (AR) technology involves

using a camera to capture a real
environment, such as an aisle in a
warehouse, and then overlays instructions
or information on that environment – on a
mobile device. AR smart glasses, for
example, allow operators to carry out tasks
without using their hands. These apps can
map out routes, show where bins are
located, and more. Virtual reality (VR)
technologies are also being used for
everything from training lift truck
operators to making delivery routes safer.

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