Technical Article

Considerations for Selecting a Warehouse Management System

April 01, 2021 by Muhammad Asim Niazi

Explore the different types of warehouse management systems and some things to consider before you begin using a WMS in your facility.

There are various types of warehouse management systems (WMS) that all have unique functions and applications. The advantage of having different warehouse management systems gives OEMs the flexibility of choosing from many options.

Different sectors in industrial manufacturing have varying needs depending upon the type of production, the field they serve, the scale of growth, etc. These scenarios pave the way for companies to select different tools and resources.


What are the Types of Warehouse Management Systems? 

Some of the most common types of warehouse management systems are listed below:

  • Standalone Warehouse Management System
  • Integrated ERP Warehouse Management System
  • Cloud-based Warehouse Management System

This article dives into each type of system, their distinct features, and how they are used in different organizations.


Standalone Warehouse Management System 

The standalone warehouse management system is the most common. It features some key resources for running warehouse operations. 

With this WMS, it is necessary to purchase hardware because the software only operates on the provided hardware. If a company wants new features, the added functions must be compatible with the existing hardware; otherwise, new hardware is also required.

There are several advantages to the standalone warehouse management system. Standalone is more suitable for small-scale businesses with fewer budgeting options. The standalone system is great for simple and straightforward management tasks. 


A warehouse management system interface. Image used courtesy of Infor


There are some drawbacks to this system as well. The standalone WMS does not provide all functions required by companies to manage advanced warehouse features. With this system, it can be challenging to integrate existing software. The system is not easily compatible with other software or hardware options. 


Integrated ERP Warehouse Management System 

Enterprise resource planning (ERP) is a tool for streamlining different department functions. For example, ERP can use data from manufacturing, planning, and the supply chain for tabulating reports.

An integrated ERP warehouse management systems contain all the functions related to the WMS. These tools are generalized, in addition to others such as accounting, manufacturing, and supply chain. 

The integration and synchronization with the existing format and algorithm easily align warehouse operations with its other departments.

On the other hand, the ERP WMS is not a standalone warehouse management system, making it unsuitable for advanced operations and functions such as product shipping and tracking. ERP-based WMS cannot perform real-time operations and functions and is unable to generate reports showing real-time data. 


Cloud-based Warehouse Management System

The cloud-based warehouse management system works on the Software as a Service (SaaS) principle, where the WMS is centrally installed and accessed. Installing the WMS requires permission to access WMS, network availability and, a compatible device. 


Warehouse Management done centrally by the Headquarter. Image used courtesy of SAP


A WMS is accessible on any device capable of connecting to the internet. The access is restricted and only accessible by authorized personnel through a secure ID and password. The user pays for the licensing and server hosting.

This type of WMS does not require particular hardware or software, making it feasible to use WMS on any device and at the location. In a cloud-based WMS, the supplier is responsible for any troubleshooting issues if a fault is detected. It frees the company’s IT department from any required tools and expertise. 

This type of WMS also may be easier to integrate than others. It also allows data sharing without any interface, protocols, and media. With a cloud-based WMS, updates are automatic, and the burden does not rely on the user.

A cloud-based WMS is dependent on network availability. If there is a problem with the network, total operations come to a standstill. The cloud-based WMS can also be vulnerable to a data breach. Hackers can access critical data, making it mandatory for the organization to develop security systems to prevent data breaches.


Buying Vs. Building Warehouse Management Systems

When deciding whether to build your own warehouse management system or purchase one, there are many factors to consider. It depends on the organization, size of the operation, technical expertise, problem-solving capability. 


Building a Warehouse Management System In-house

Building an in-house involves studying the requirements and procedures, setting up a team, and giving them the task of developing WMS. The team is responsible for methodology, algorithms, and interface. The in-house WMS team will likely be liable for any problems associated with the implementation, operational, or data sharing. 

Designing an in-house WMS is less expensive and doesn’t require any licensing or subscription fees. Although initial developmental costs can be higher, it is the least expensive choice in the long run. Support is readily available since support comes from the team directly involved in designing the WMS. The software procedures are also easily understandable. Engineers have complete control over all software cycles such as hosting, deployment, and security, eliminating dependability on third-party companies.

Upscaling in the software is relatively easy and practical. If organizations go for added functionality and operations, this is an easy option. Developers also have the choice to leave out any features they don’t need. However, if you buy a WMS, you may risk being stuck with additional and unnecessary features. 


Workers and engineers in a warehouse facility designing an in-house WMS


There are some drawbacks to developing an in-house WMS. In-house WMS require many software experts, having the expertise of every function or module. 

The actual timeline for completing a project can extend, as developing software often involves technical problems, causing the cost to increase and operations halted. If in-house teams fail to solve any problem, it is difficult to support the developed program. The in-house team is responsible for its security and data backup.


Purchasing a Warehouse Management System

When buying a WMS from a third party, the company must analyze different options available, compare with its requirements, and decides which best suits them.

For purchasing a system, there is no need to develop an in-house expert team to maintain and manage WMS, as the WMS comes with developer support for purchasing a system. In case of any problem, the supplier is responsible for solving it. The user is also free from hosting and maintenance-related issues.

For companies looking to buy, there are many solutions available to choose from. The suppliers are constantly spending time on improvements and advancements. The supplier of the WMS is responsible for the security elements as well. With their advanced features and expertise, they can better secure the system from data hacking and breach. The supplier also provides the data backup service when data losses occur or scheduling updates are necessary.

There may be a few things to consider before purchasing a WMS. Third-party WMS applications may have integration problems with the systems previously installed because some developers avoid connectivity and data sharing with the applications by other developers.

If the user decides on any additional feature or application, the user is dependent on the supplier for its implementation and operation.

Overall there are many different types of warehouse management systems to choose from. Companies must carefully consider what kind of WMS they’ll need during the selection process. All industrial and logistical operations will require different needs when it comes to selecting a warehouse management system.