The supply chain management software market is divided into several branches by types of industries, products and regions it serves for. It is segmented into consumer goods, healthcare and pharmaceuticals, retail, manufacturing, food and beverages, transportation and logistics, and others.
Logistics is a wide branch of the supply chain where each operation plays an important role and influences the quality of customer service. It is very closely related to transportation, warehousing, and inventory management. Under logistics we understand Inbound and Outbound logistics. The first is all about sourcing and receiving materials that are coming into a business from suppliers. The second is transporting, warehousing, packaging goods going out of a business, a manufacturer who produces and provides end-clients with certain products.
Warehouse management system definition
Warehouse management interconnects several terms as it is a chain of actions to move goods from warehouse to end customer on-time. It is closely interrelated with transportation management, intra-facility logistics which is warehouse design, equipment control, and application of technology tools. To understand what WMS is and what functions of warehouse management system are, let’s go deeper into some of the key warehouse management tasks.
- Receiving is used to mean the physical receipt of goods, during which quantity and quality of goods are identified, and the receiving reports together with compliance to order are compiled.
- Putaway – removing the material from the location of receipt (the dock), transporting the material to a storage area, and then moving it to an identified location, tracking the movement and time when the material has been placed.
- Picking is preparing an order, so pulling products from storage areas to complete a customer order.
- Packing deals with the protection of goods by packaging them and preparing a container for shipment.
- Replenishment is moving inventory from secondary storage areas into fixed storage locations.
- Shipping involves the tasks of packaging, marking, weighing, and loading goods for shipment.
From the manufacturer, raw materials travel to the enterprise warehouse, where they are documented, received, and placed. Once the product is done, it remains in the warehouse of a firm that produced it. Items may reach thousands in numbers, so they are to have a barcode or RFID tags that can be scanned. As workers receive orders from retailers, orders have to be accepted, information gathered, and indicated within WMS. Order is fulfilled when it is found among thousands of boxes and packages, then picking and packing, shipment, and recording delivery. All these operations are followed with electronic documents, barcode scanning, using a desktop to update inventory status in the warehouse, etc.
What does WMS mean? Nowadays warehouse management systems perform not only basic functions of organizing and managing operations above but accomplish a lot of more functions that help business executives conduct processes transparently and effectively. Also, WMS is often needed to establish better security and privacy in supply chain management as they deal with filling documents and data share and storage.
WMS software is critical to manage and conduct operations automatically from one place where workers can easily track product movements and be aware of what’s in the stock and what’s out, know customer details, etc. So, the core functions of a warehouse management system lie in three directions:
- Planning and managing inventory space
- Tracking and allocating inventory
- Planning and monitoring product moves
- Managing and scheduling receipt and putaway activities
Inventory management is a beneficial function and the principal with which the first WMS started. It helps to organize operations effectively and have accurate information when and which products were received, shipped, packed, picked, and delivered.
Controlling the execution of operations:
- Allocating personnel to areas and managing labour
- Tasks tracking and assignment and providing a necessary toolkit to monitor and track the state of receiving, picking, packing, putting away, reallocating
- Scheduling of operations
- Yard management
Analytics and reporting:
- Analytics on the amount of stored products, in stock/ out of stock information
- Accurate reporting of receipt and delivered goods
- Tracking equipment
- Reporting on order status
Within technology development, warehouse management has gained new functions to help organizations track their products, status of orders, equipment – firstly, to reach higher speed in delivery goods and operations and secondly, reach better customer satisfaction and be competitive on the market.
Warehouse management system benefits
Warehouse management software has seen a lot of advancements since the application of AI, Internet of Things and robotics, new integrations, and automatized processes. The key benefit WMS offers to warehouse managers and technicians nowadays are:
- Integration with TMS
Transportation and warehouse management systems often remain separate due to the different functions they perform. However, there are several reasons to integrate both into cutting-edge solutions. Transportation management system benefits are valuable and they certainly can scale up existing WMS solutions:
- effective and on-time route planning
- tracking and reduction of costs spent on fuel and equipment
- improving fleet and freight management
- increased efficiency of supply chain
Benefits of transportation management system double effectiveness of delivery of goods, tracking delivery in real-time, avoiding shortages of transport means, predict risks in transporting goods and thus, warn other departments of possible delays or barriers.
- Warehouse automation
The first warehouse management systems of the late 1990s and early 2000s were designed to keep track of stocks and there was a lot of paperwork to do. With technology, warehouse automation has gone through a myriad of transformations. Nowadays we have extended Warehouse Management – a modern automated warehouse management system. Defined by Wikipedia it is an Extended Warehouse Management product is an integrated software platform for flexible, automated support for processing goods movements and for managing inventory in the warehouse.
Manual paperwork, the last century history, is now substituted with electronic data interchange (EDI). Information on goods and vendors is now backed-up and can be easily accessed in real-time, altered, and edited. It ensures safety in documents and protects against mistakes. Warehouse management systems also automatically generate Advanced Shipping Notice which is a special document about the delivery of goods that includes physical characteristics about shipment, package, details about transportation, carriers, and dates.
- Warehouse analytics
The system can calculate and define an accurate strategy when and which products are the first to be received and which one is to be sold. Accurate forecasts allow sales to increase and avoid loss of money basing inventory on current sales and trends. The objective of smart WMS is to reduce the risk of a shortage of goods that are in demand.
Then, WMS helps track FIFO, a method which stands for first-in, first-out order that is a principle to distribute firstly the oldest items in the stock and LIFO method, which is last-in, a first-out strategy that says that the most recent products to come are the first to leave. WMS also has a function to integrate data with ERP that contributes to acknowledging and updating inventory data and distributing it across enterprise departments to make better decisions on sales.
- Voice analytics technology
NLP and AI are now used to record personnel verbal speech and transform it into instructions, send delivery confirmation and automate much manual work of warehouse personnel. Though these advances only begin to appear on the WMS software development market, they offer excellent hands and eyes -free technologies that boost working capacity per unit time.
- Streamlining order management
Updated information on orders, vendors, customers, and returns, order processing records is a must-have in warehouse management. Data on orders should be transferred smoothly and transparently. For this, there is a machine to machine technology that enables the sharing of data between computers and WMS.
Big data and analytics help to define trends and replenish stocks with items, accurately predicting orders. During an emergency, the stock will be prepared to satisfy the necessary level of delivery of certain items and will fulfill all the orders customers on time. Mobile scanning devices and WMS with intuitive interfaces help a lot to accept an order, notify customers on delivery. Machine learning is also useful to define how long the processes can take, what the temperature is in the storage, what is the location of items, and how to manage warehouse space wisely.
- Transparency in inventory, delivery, and increased customer trust
Omnichannel supply chain management deals with partnerships with different channels. Workers can easily track which orders are placed, processed, shipped, and what orders are en route. There is a need to take into account every square meter and effectively manage the placement of specific goods that can be easily harmed or need to be delivered quickly. That’s why WMS should conduct Cycle Counting or Inventory Audits indicating the number of items within a warehouse. WMS also contains and receives Proof of Delivery (POD) Information by the carrier containing the name of the person who signed for the shipment, the time and date of delivery, and other shipments delivery-related information.
- Increased productivity and efficiency
The use of Advanced Warehouse management systems leads to a reduction in labour costs up to 30% as automation increases labour productivity. Modern warehouse management systems have very intuitive interfaces, automatic fill-in of information, warning and push notifications, integration with other systems. Automated processes at warehouses can improve safety at the workplace by offering a real-time view over inventory, and boosting accuracy in orders and reducing human mistakes.
Types of warehouse management systems
Generally, there are 3 key types of warehouse management systems:
- Standalone systems are mostly used by 3d party logistics, offer warehouse management functions, and are bought to conduct operations easily. Standalone systems have to be flexible and easy to use, so compatible with scanners and terminals, support different time zones, geographical areas, languages, and groups of employees. They are great for managing LTL/TL rating which is less-than-truckload shipping or less than load and means the transportation of relatively small freight.
- Integrated with ERP. If your enterprise needs advanced WMS with renewed functionality, barcode scanning integrations, possibility to reduce expenditures and make solutions suit different types of industries, then it is better to develop customizable inventory solutions. Such systems allow not only to conduct inventory audits but transmit secure and protected data into ERP databases, that increases clarity across all supply chain processes. Integrated warehouse systems are more elaborate and can also deal with Customer Relationship Management and human resources allocation to different tasks. This variant of WMS is a perfect investment for those who are aimed at scalability and want to centralize all operations and processes into one software solution.
- Supply chain management models. Such systems help to manage everything from vendor collaboration to evaluating business processes at the same time automating inventory audits, product operations, and material delivery.
Growth of needs
The COVID-19 pandemic blocks transportation and logistics, however, after the quarantine, the companies will certainly accelerate and rethink the way they organize their work. Competition for speed and customer attention will be more severe, and cross-docking transportation can increase, fulfilling direct delivery to consumers.
Automation is a WMS trend that creates a step by step guide of what a worker has to do with an order. Following directions of a system a worker can also ask to show empty locations or print license plates, so-called LP number, that is later scanned, backed-up in the system. Then, the next steps are easier for drivers of vehicles who can easily find the items via scanned numbers among rows of shelves and aisles, see necessary information and be aware of defined areas for these in the warehouse.
Materials managers can easily conduct inventory part of work in WMS. Salespeople go into the system to create an order on thousands of items, allocate them properly, and schedule processes, allowing other sales representatives to see and monitor the current state with these or those products.
RF scanning is the greatest benefit most warehouses depend on. Scanning helps to allocate items to a bin and cross-check when a single customer ordered several items. If anything goes wrong, the inventory and accounting departments receive a notification, thus billing should change or mistakes should be corrected.
All in all, warehouse management systems anticipate automated processes, application of analytics, AI to accelerate the speed of delivery, and reach maximum customer satisfaction.