What Is a Warehouse Management System (WMS)?

What Is a Warehouse Management System (WMS)?

aerial view of a warehouse showing boxes and forklifts representing warehouse management system


So, what is a warehouse management system?

A warehouse management system (WMS) is a type of software used to manage operations in a warehouse including inventory management, picking processes, and auditing.

A WMS is an instrumental part of the supply chain, the primary goal of which is to track and control the movement and storage of product or materials within a warehouse, and process the associated inventory actions, including: receiving, adding, picking, quality control, shipping, reporting, and forecasting, with the addition of listing and channel management, should the company be involved in eCommerce.

A warehouse management system streamlines and facilitates processes and a product’s journey throughout the warehouse; for example, such systems will direct and optimize picking by utilizing real-time inventory data to determine the proper warehouse location to retrieve the product from.

More precisely, warehouse management involves the receipt, storage,and movement of goods, (normally finished goods, but kits may also be managed by a sophisticated WMS), to intermediate storage locations or to a final customer.

Note that a warehouse management system can manage multiple warehouses simultaneously; an example of such an arrangement might be a central warehouse, a regional warehouse (serviced by the central warehouse) and retail warehouses (serviced by the regional warehouses). 

Why A Warehouse Management System?

The objective of a warehouse management system is to provide a set of computer automated procedures for management and monitoring of warehouse inventory with the goal of minimizing cost and fulfillment times and streamlining warehouses processes.

Features of a WMS:

  • Receiving and Returns: The receipt of stock and returns into a warehouse facility. An efficient warehouse management system helps companies cut expenses by minimizing the amount of unnecessary parts and products in storage (not too much in stock). Similarly, a WMS assists in preventing out of stocks (aka OOS, stockouts, oversells, etc.) by maintaining accurate real-time quantities (not too little in stock). A warehouse management system’s primary purpose is to maintain the proper balance of inventory.
  • Warehouse Logistics: Modeling and managing the logical representation of the physical storage facilities (e.g. racking, etc.). For example, if certain products are often sold together or are more popular than others, those products can be grouped together or placed near the delivery area to speed up the process of picking, packing and shipping to customers.
  • Integrations: Enabling a seamless link to order processing and logistics management in order to pick, pack, and ship product out of the facility. Why is this important? If the system is managing an eCommerce company’s inventory, integration with a channel management software might be necessary in order to track sales from the seller’s various online marketplaces.
  • Reporting & Forecasting: Tracking product locations, suppliers, and storage duration allows companies to control inventory levels and maximize the use of warehouse space. This practice of analysis better prepares businesses for the demands of the market, especially during unique circumstances such as a peak season, holidays, or during daily deals. Via the reports generated by the inventory management system, much can be discerned, such as best-selling SKUs, target price range, fastest moving SKUs, SKU history, etc.

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