Introduction to Warehouse Management Systems (WMS)
This article covers the definition of warehouse management systems (WMS), describing the basic functions and benefits.
Warehouses and distribution centers are two types of logistics facilities that are rapidly increasing in importance. The COVID-19 pandemic introduced drastic changes to society, especially with the stay-at-home policies. Now more than ever, people shop online for all kinds of items to meet their needs. Even perishable goods can be delivered right to the door of a home or business. Warehouses and distribution centers are essential infrastructures to the online retail industry. But long before the pandemic, the logistics side of the manufacturing industry was already undergoing rapid progress, driven primarily by warehouse management systems (WMS).
Figure 1. A modern WMS relies on advanced visuals to aid operations. Image used courtesy of Vardells
A warehouse management system (WMS) is a software application that can help an organization solve many of its logistical challenges. A WMS can handle most warehousing-related processes such as material inbound, storage, shipments, picking, quality control, inventory control, and more. The purpose of a WMS is to optimize these processes, creating streamlined workflows to aid the day-to-day operations of a warehouse or a distribution center. Because of this, a WMS is also a very important tool for supply chain management.
Functions of a WMS
The scope of warehouse management goes far beyond simple storage and can include virtually all the material handling tasks within a business. The following are the most important functions that a WMS can perform.
Figure 2. A WMS can perform a wide variety of material handling tasks. Image used courtesy of Axanta
Also known as goods receipts, inbound deliveries account for all the movements of materials entering a warehouse. For traditional warehouses, these are primarily raw materials, but for locations such as distribution centers, they can also include returned finished goods and other consumables.
A WMS inbound delivery can track incoming goods from the moment they enter the facility until they reach their destination in the warehouse. Products and materials might be brought in using different forms of transportation, such as trucks and railcars. Once the transport is stationed at a loading dock, an operator unloads the incoming material and either places it on an inbounding station or directly into a warehouse location. The WMS helps the operator by tracking all these movements and indicating the destination.
A WMS can recommend the best storage location based on a set of predefined business rules. These rules include well-known inventory management methods, such as FIFO (First In, First Out) when shelf life may be a quality factor, and LIFO (Last In, First Out) when optimizing storage space is a higher priority. There are many other determining factors such as zoning segmentations and quality status. Business rules can be flexible and configurable in the WMS for individual products or to adjust to changing production demands. The WMS can initiate consolidation orders, also known as housekeeping, important in maintaining sustainable warehouse saturation levels.
A warehouse management system automates otherwise arduous analysis required for efficient inventory control. The WMS can provide real-time information about stock levels and integrate forecasted data. Large manufacturing facilities rely on advanced inventory control tools provided by some of the best WMS software in the market to effectively plan and adjust production orders in large volumes. For many businesses, having a WMS has eliminated or at least greatly reduced the frequency of inventory audits.
Figure 3. A WMS provides real-time inventory levels. Image used courtesy of Logistics Management
A WMS is also tasked with controlling the movements of all the materials and goods leaving the warehouse, primarily shipments of finished products. Shipments are optimized by selecting the best storage locations to pick from and the most adequate retrieval strategies, while adhering to business rules.
The WMS tracks and registers all the movements until the product leaves the facility. This information is then used for invoicing and other documentation, and also for analyzing shipping performance metrics. Other materials that can leave a manufacturing facility, such as recyclables and returned dunnage, can be managed by a WMS.
Quality Control Support
While quality management is not central to a WMS, the software does provide support based on several quality control results. A WMS helps the operations to quickly put materials on hold pending quality test results. Similarly, the WMS can be used to release materials without causing delays to production. A WMS can also integrate with the quality test process by selecting materials for sample testing.
Benefits of a WMS
By automating many process functions, warehouse management systems greatly increase the productivity of warehousing facilities and distribution centers. They considerably reduce the amount of administrative work and let operations focus on execution and strategic decisions. A WMS is a vital ally of supply chain management because it increases the responsiveness and flexibility of a business.
Figure 4. Amazon fulfillment centers rely on advanced WMS to run operations. Image used courtesy of Amazon
The ability to access real-time data about production and inventories is a powerful tool that makes a company more competitive. This information can be logged in data historians that can be analyzed to obtain meaningful insights, to detect trends, and plan and forecast production. With all these advantages, it is hard to imagine any modern warehousing facility without a WMS in place.