Nowadays, even though there is a bunch of small changes you can implement to

optimize the work of your warehouse that would be of value in the long run,
warehouse management is normally carried out with the help of the warehouse
management system (WMS).

Part of the logistics management system we discussed before, WMS is the software
designed to manage, control, and optimize all the processes in a warehouse -- from
receiving and storing goods to billing and creating reports. In this article, we
talk about the main challenges faced by the supervisors of warehouses, solutions
offered by different WMS, and some of today’s top providers in this industry.

The key warehouse processes

To better understand the issues of warehouse management, let’s take a brief look at
its main processes. The six fundamental warehouse processes include receiving,
putaway and storage, picking, packing, shipping, and returns.

Main warehouse processes

Main warehouse processes

Receiving involves control over the delivery to your warehouse of the correct
quantity of the desired product - of the right quality at the right time. This
process can in turn be broken into smaller ones:

placing a purchase order,

preparing space in the warehouse,
unloading (manual or automated),
verification,
filling in the database, etc.
At this stage automated dimensioners that capture cargo measurements can be helpful
as are dock schedulers to ensure that an adequate number of workers are on hand.

Putaway is delivering goods to the optimal place in the warehouse. Here the correct
identification of each SKU (stock keeping unit) and getting it to the most relevant
spot is important. Storage conditions also matter to ensure the safety of goods and
employees. Slotting and space management techniques as well as overall warehouse
design are critical to streamlining these operations and using space most
effectively.

Picking is the process of collecting goods from the storage place according to the
customer’s order. It is thought of as the costliest, most time-consuming, and most
error-prone. Here, mobile scanning devices and voice systems can save tons of time
and reduce errors significantly. It’s also worth considering adopting one of the
picking methodologies, such as cluster picking, zone picking, wave picking, etc.

Packing is putting the ordered items together, checking their quality, and getting
the product ready for shipment. At this point, it’s important to have all the
necessary data on the order and also the type/amount of packing material required
for each order. Automatic wrappers can also reduce time spent and packing material
used.

Shipping or dispatching is sending goods to the customer and making sure they are
delivered safely and on time. Here, again, proper scheduling, labor management, and
tracking systems are key to satisfying customer demands.

Returns is something most companies wish would never happen, but unfortunately,
they are also a part of the game, especially for eCommerce. About 5 to 10 percent
of in-store purchases are returned, but that rises to 15 to 40 percent for online
purchases, according to David Sobie, cofounder and CEO of Happy Returns. Obviously,
managing returns and refunds is a hassle and requires special attention. Returned
units have to be properly identified, sorted, and dealt with, whether it is by
putting them back on the shelf, sent to repair, discarded, returned to the
manufacturer, etc.

Now that we've described the key processes that happen at the warehouse, let's talk
about how warehouse management software works and how it matches these processes.

What is a warehouse management system?

Traditional order management systems (OMS) or enterprise resource planning (ERP)
systems have basic warehousing functionality, but many companies soon find that
they have outgrown their capabilities. So, the main advantage of the WMS is that it
covers other aspects of the supply chain besides inventory and order management -
such as labor management, financial management, reporting, and more.

Obviously, every business is unique and will have different software requirements.
Let’s take a look at the main modules most WMS platforms have and the most common
problems they help to deal with.

Relation of warehouse processes and WMS modules

Relation of warehouse processes and WMS modules

Inventory management
Creating purchase orders. WMS stores all your suppliers’ information in one place
and syncs it to actual inventory levels making it easy to manage procurements. The
product can also be added to the order by simply scanning the barcode. The orders
are then emailed to the supplier right from the system.

Receiving and Putaway. Scanning devices integrated with WMS optimize receipt and
direct workers to the best location to shelve the product. WMS may also suggest
multiple strategies for slotting and best usage of the storage space depending on
the type and characteristics of goods you deal with. For example, fast-selling
products have to be put in the most accessible areas; fragile, in those areas where
potential for damage will be minimized; perishables, according to their storage
requirements and expiration date; and so on. Location recommendations are also
connected to the forecasting module and are based on trends and product demand.

An example of warehouse layout designAn example of warehouse layout design

Storage and tracking. Location control is the core of warehousing, especially if

you work with completely different types of goods or have to handle stock for
multiple clients. Being able to track the exact location of every single SKU
prevents pilferage and helps optimize further order processing. If you still have
trouble locating goods in your warehouse or deal with high-value items, consider
adding a real-time locating system (RTLS) to your WMS to enhance the tracking
accuracy. Also, storage conditions are vital for some product categories like
perishable food - WMS keeps track of expiration dates and shelf life and
prioritizes products accordingly.

Stock level control. WMS helps monitor the amount of product in multiple
warehouses, notifying users if the level is too low and needs replenishing.
Automatic reordering can be set up as well to prevent total stock depletion and
overselling. Cycle counting is another great tool for inventory control and is
offered by most WMSs.

Order management
Processing customers’ orders is the key function of any sales-oriented business.
Accuracy and speed are crucial to achieving customer satisfaction. There are many
ways how implementing WMSs can help improve efficiency and reduce errors on every
stage of this complex process.

Receiving/creating sales orders. If you work with various eCommerce platforms like
Magento or Shopify and marketplaces like Amazon or eBay, integrating them with your
WMS will allow you to manage all the orders from different channels in one system.
Also, since most of the WMS are cloud-based, orders can be created on the go right
from the mobile device, i.e., at trade shows or sales meetings.

Picking. Picking lists can be a pain to create. WMS will let you sort and print
lists conveniently, e.i., by bin location, order date, SKU, etc. Mobile devices or
voice systems can then guide workers to the exact place where the product is
stored. If multiple items have to be picked, the optimal route together with the
necessary equipment will be suggested to reduce travel time. Barcode or RFID
scanners ensure the accuracy of getting the right items. Today, big players like
Amazon or Alibaba also use robots in their warehouses and implement other AI
technologies.

using-mobile-scanning-devices

Using mobile scanning devices

Packing. The type and amount of packaging are calculated automatically for every
order and optimal packing procedure is suggested (e.i., gift wrapping). The
shipping labels for UPS, FedEx, and USPS (as well as price tags, logos, BOLs, and
other necessary paperwork) can be printed directly from the system so there is no
need to manually enter addresses or retype tracking numbers. Quality control is
also simplified as employees have the exact information and standards for every
item.

Shipping. Rate calculation and real-time parcel tracking are available in most
WMSs. If multiple orders are shipped to the same address, they can be merged to
reduce shipping costs. Features of cross-docking and drop shipping are also offered
by some providers.

Returns. WMS can help streamline this unpleasant process by automating every step:
creating the return, recording the reason, updating stock, issuing full or partial
refunds, and generating reports.

Invoicing. Invoices are created and sent automatically, including individual

discounts and payment options for every customer. Normally multiple formats are
supported, whether it is email, CSV, or EDI.

Overall, organizing your orders in one central system provides full visibility of
the complete history for every order - payment information, shipping status, staff
involved, total time spent, etc. Moreover, giving your customers access to view and
manage their own orders increases their engagement and trust and encourages future
cooperation.

Labor management
When the company is still small and you just have a handful of employees, managing
is easy. Scheduling, payrolls, and performance control can be done manually and
don’t take long. However, it becomes more complicated as the company grows and the
staff becomes more numerous. Most WMSs offer some kind of a labor management module
that can be handy for:

Scheduling. For example, sometimes more people are needed at the docks to unload
the incoming shipping quickly and not let the product overstock dock areas, and at
other times a big order needs to be collected and packed promptly. Seasonal peaks
and valleys also strongly affect labor demand and allocation. Automated schedulers
help plan and forecast the exact number of people needed by day, zone, and job type
according to your procurement and shipping schedule.

Increasing performance. Tracking KPIs (i.e., the number of items picked, number of
orders packed, travel time, etc.) keeps managers informed, rewards stronger workers
and identifies those not meeting their requirements or needing additional training.
Moreover, workers’ engagement increases due to visibility and access to operational
results and peer comparisons.

wms labor management a

Manhattan WMS employee engagement progress screen, source

Safety control. Unfortunately, since theft is a common problem, installing cameras

and sensors and implementing video surveillance has become a widespread solution.
Integrating a security system with your WMS helps monitor what exactly is happening
in the warehouse by tracking staff location, identifying license plates of the
incoming trucks, limiting access to certain areas, etc.

Overall cost estimation. Breakdown by process, employee, shift, supervisor,

department, or customer provides full cost visibility and points out which
customers are unprofitable to work with.

Financial management and reporting

Monitoring business performance and sales trends across locations, customers, and
products is mandatory for making informed, data-driven decisions about future
actions and developments. WMS offers numerous opportunities to track and generate
reports concerning every side of your business:

Customizable metrics let you assess all the data and know your most profitable
customer, top-selling product, best-performing sales channel, most efficient
worker, peak sales season, etc.
Automatic balance sheet accounts for revenue, taxes, and the cost of products sold
based on real-time data saves time and minimizes miscalculations. Many WMSs support
multi-currency pricing, different tax systems, and landed cost management, which is
crucial if you operate in multiple locations.
Integration with accounting platforms like QuickBooks or Xero is also a common
feature to have all accounting in one place.