As of March 2018, a typical warehouse with 100 non-supervisory employees costs more than $3.7 million in labor expenses. As costly as they are, warehouses and distribution centers are a necessary part of the supply chain. But that doesn’t mean actions can’t be taken to minimize warehouse expenses and maximize efficiency. Many warehouses accomplish this by using an advanced Warehouse Management System.
What is a Warehouse Management System?
A Warehouse Management System, also known as a WMS, is software created to control, manage, and optimize operations in a warehouse. It guides operations through inventory receiving and put-away, optimizing picking processes and the shipment of orders, and provides insight into real-time inventory and storage levels.
In addition to helping with day-to-day activities, warehouse management systems provide data and insight for big picture planning. It allows a management team to project sales volume and profit as well as change the landscape of their warehouse to maximize picking efficiency based on individual SKU shipment volumes.
Depending on a company’s business model, warehouse management systems come with different functionality. What a brick-and-mortar retailer needs in a WMS isn’t what a solely online retailer needs and vice versa.
What can a Warehouse Management System do?
Warehouse Management Systems will help a company with everything from when a product first arrives in a warehouse to after it leaves the door. A few big areas where a WMS adds value are in:
- Inventory Tracking – Provides insight into SKU stock levels, SKU locations (in warehouse, in transit, and on route to a store), and SKU replenishment based on projected volume.
- Receiving and Put-Away – Scans each new box received with inventory quantities. Often uses pick-to-light or pick-to-voice technology that uses light or sounds to guide workers to the correct location in the warehouse.
- Picking and Packing – Generates pick lists for receivers to retrieve inventory in the most efficient route. Often uses zone picking, wave picking and/or batch picking.
- Shipping – Sends automated order tracking information to customers.
- Warehouse Design – Provides data to optimize warehouse layout and bin slotting that maximizes storage space. Often can account for seasonal inventory.
- Labor Management – Allows warehouse managers to monitor employees’ performance via key performance indicators.
- Yard and Dock Management – Assists truck drivers in finding the right loading docks. Depending on the software, it can also allow for cross-docking functionality, which allows for unloading goods from an inbound vehicle directly onto an outbound vehicle.
- Reporting – Includes reporting such as accuracy reports, total orders fulfilled by the hour reports and on-time order shipment reports.
What to look for in a Warehouse Management System?
When selecting a Warehouse Management System, keep the following three questions in mind: does it connect to the company’s store, is it compatible with the warehouse equipment, and will it positively impact the warehouse operations?
Does the Warehouse Management System Connect to the Company’s Store?
In a world of next-day shipping, streamlined integrations are key. Feeding a sales channel into a warehouse management system allows the system to generate pick lists that combine orders where the inventory is in the same row or area. It also ensures that orders placed first or that requested expedited shipping are prioritized.
Is the Warehouse Management System Compatible with the Warehouse Equipment?
A Warehouse Management System relies on the other warehouse floor technology to receive accurate data. Make sure any scanners, scales, printers and labels, and other equipment or hardware used are compatible with the Warehouse Management System. Or factor in additional purchases that’ll have to be made.
Will this Warehouse Management System Positively Impact the Warehouse Operations?
At the end of the day, if a Warehouse Management System cannot drive time or cost savings, it is not worth the investment. Look for examples of how the software improved accuracy rates, order processing speed, or any other metric with a dollar value associated with it.
How a 3PL Gives Smaller Companies Access to Advanced WMS systems
High-end, quality technology often has a high-end price. Just like how a Third-Party Logistics Provider (3PL) can pass on freight discounts that a smaller company otherwise wouldn’t have, a 3PL can pass on the benefits of a quality WMS without passing on the price. 3PLs ship a large aggregate of packages for a multitude of brands. 3PLs both need a high quality WMS system due to that complexity, but can also afford one due to the volume. Now, a small/mid-size brand that couldn’t afford a tier 1 warehouse management system on their own can share in the benefits of an advanced warehouse management system without taking on the brunt of the costs.
Take stock of what a particular business model needs in a Warehouse Management System. Make sure it is integrated with the company store, compatible with the warehouse equipment and able to drive time or cost savings. If what a retailer needs is not compatible with their budget, outsourcing to a 3PL will give them access to a top tier WMS without passing on the price.
LEARN MORE: As a business grows, inventory turns quicker, and logistics becomes more complex with new product lines and expanded locations. A 3PL can help streamline an operation to ensure the brand is meeting customers’ expectations. Top companies and eCommerce retailers rely on The Jay Group’s experience, customer focus, and enterprise level technology solutions to deliver the best possible experience to their customers. Request a free consultation today.