What is Warehouse Management System (WMS)?

Warehouse Management System (WMS) meaning

WMS stands for a 'warehouse management system' — a software application for real-time administering and optimizing warehouse operations from the time goods or materials enter a warehouse until the moment they are shipped to another location for the next stage in the fulfillment process.

What does a warehouse management system do?

In simple terms, warehousing means receiving goods from a manufacturer and storing them at at the company's warehouse, distribution center or a third-party logistics (3PL) provider before they are shipped to another location for further fulfillment and delivery.

In a more complex reality, warehouse management includes such tasks as inventory control, efficient warehouse space utilization, labor management, dock and yard management, order management, reporting functionality and much more.

Modern WMS systems support companies with all of that — and more.

Warehouse or distribution center? Both terms are interchangeable, but they don't exactly mean the same thing. Warehouses are storage hubs, while distribution centers are both storage and fulfillment locations.

Why do you need a warehousing management system?

For logistics-intensive businesses — retail in particular — WMS solutions are critical for operational efficiency and reduced costs. Initially, especially in case of small- and -medium-size businesses (SME), it's possible to run warehouse operations manually without advanced WMS systems in place.

However, large enterprises that operate multiple warehouses in multiple locations — within an increasingly complex market of modern logistics and consumer deliveries — simply cannot do without warehouse management solutions if they want to streamline their supply chain operations at profitable levels.

Warehouse management solutions are often integrated with related systems like e-commerce platforms, Enterprise Resource Planning (ERP), Transportation Management Systems (TMS), all of which share the same goal — automating and optimizing logistics processes from receiving and putaway to storage, picking, packing, shipping and end-consumer delivery.

Warehouse processes are complex and expensive — unless you've got a modern WMS software to expedite you supply chain management.

Key benefits of using a warehouse management system software

Forward-looking retailers are implementing the latest warehouse management solutions to stay competitive in the market with high logistical costs and growing consumers expectations.

Here's why.

Better inventory management and traceability

WMS software ensures inventory accuracy and efficiency at every stage of the warehousing process — receiving, storing, sorting, shipping and tracking.

Lower operating expenses

The price of warehouse errors and bottlenecks is way too high. Warehouse management systems ensure easy product traceability, the best storage space allocation, better workflow organization and labor management, reduced floor and truck traffic, all of which makes your company’s warehousing more productive and cost-efficient.

Optimized supply chain

Warehouse management systems optimize your internal inbound and outbound logistics by eliminating unnecessary or non-productive activity. Shorter order fulfillment times, cost savings and advanced reporting can then extend to your logistical partners and broader supply chain.

Customer satisfaction

For retailers, consumer satisfaction and repeat purchases are of top priority. Customer interaction with your brand cannot end when they hit the buy button and wait for the order to arrive. Warehouse operations obviously impact order fulfillment and delivery times.

Scalability as your retails business grows

Without a WMS solution in place, your warehouse and inventory management will become even more complicated as your business expands.

Changing customer buying patterns add further complexity to supply chain operations for retailers.

What are the types of warehouse management systems?

Warehouse management software software comes in several main types and implementation methods, the choice of which naturally depends on the size and nature of business.

Warehousing management solutions, similarly to ERP and TMS, began as on-premise systems deployed on the organization's servers. This has changed with time.

Today, cloud-based WMS solutions, enabled by software-as-service (SaaS) providers, are known as the best warehouse management systems without the need of having a dedicated team for their maintenance. They can function either as standalone solutions (Ongoing WMS) or modules in larger ERP systems (Oracle NetSuite).

What warehouse management system is best for your company?

Choosing the right WMS for your company for the first time can be tricky. Or perhaps you’re already using a warehouse management system, it might be high time to have another look at it.

What value does it add? Does it increase your chances of better inventory tracking, error minimization and optimal warehouse efficiency? You may want to pay specific attention to the system features, compatibility with your existing software infrastructure and smart automation capacity.

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