Warehouse Management System

When Do You Need A Warehouse Management System?

When Do You Need A Warehouse Management System (WMS)?

Warehouses are complex storage and distribution environments and ideally, a warehouse management system (WMS) should be in place as soon as warehouse operations start. That is rarely the case, however. Most warehouse managers begin looking for WMS when they start having problems with productivity, inventory control, and rising labor costs.

What are the downsides of a paper-based warehouse management system (WMS)?

Although warehouse operations such as receiving, put away, and picking may seem simple enough to track manually with spreadsheets at first, there are numerous downsides to using a paper-based WMS. For example, a paper-based WMS lacks accountability—it offers little to no verification that an operator has received inventory and put it away in the correct location. That leads to inaccuracies and inefficiencies. In addition, with a paper-based system, receivers and pickers working in the warehouse must stop whatever else they are doing (operating machinery, moving inventory, etc.) in order to manually update the WMS. Again, this often creates inaccuracies and inefficiencies—which ultimately lead to higher labor costs.

What are the benefits of a software-based WMS?

The biggest benefit of a software-based WMS is that it can track inventory automatically and in real-time. That means operators can work efficiently; they do not have to continually record inventory movement manually on paper spreadsheets. In addition, with a software-based WMS, inventory is accounted for accurately and effectively in real time.

What are the basic operations of a warehouse?

The basic operations of a warehouse include receiving, put away, picking, cycle counting, inventory reconciliation, storage, and shipping.

Receiving is the task of bringing items from a vendor into the warehouse for storage and ultimately, shipping. If receiving happens using a manual process, the receiver must handle the product or pallet, look through static racking to see where it will fit, and then physically place the product or pallet there. With a manual receiving process, there is little accountability about where or when the inventory is stored, and that can lead to problems with the accuracy of warehouse management.

During “put away,” the warehouse receiver verifies that all the inventory from a particular PO or vendor is stored appropriately. Again, if done manually, this process can be challenging. The receiver has to double check the stock number, description, and quantity of what was expected to arrive and record where it was stored—all by hand. Likewise, any discrepancies must be resolved by hand.

Picking is the task of selecting product to fulfill an order.

Cycle counting is a period of respite when warehouse operators compare what is currently in inventory with what is expected to be in inventory. In many warehouses, there is an inventory control department whose sole job is to ensure that the inventory in the warehouse is accurate. Usually, the more frequently warehouse operators cycle count, the more accurate the inventory is. Manual warehouse management usually yield cycle counts around 80 – 90 % accurate. With WMS, cycle counts can be as high as 99.8% accurate.

Inventory reconciliation involves comparing the inventory recorded in a WMS with an actual physical count of inventory on hand. It usually happens once a year. Maintaining a robust cycle count program in combination with an ERP that gives an accurate accounting helps warehouse managers know their true inventory at any given time. Generally, a cycle count program is scheduled once per month. Then, once per quarter, operators can extract out the inventory that is in the building and send that data to the ERP by item and quantity.

Shipping involves the distribution of picked products. When a WMS is used, it can communicate with both the ERP and the shipping module that is post pick. This is a simple integration, and every time product is shipped to a customer, the tracking number goes into the transactions that then go up to the ERP. Then, the ERP can create the customer invoice complete with the tracking number.

What kinds of problems can arise if warehouse receiving is handled manually?

When receiving is handled manually, warehouse operations are not as accurate or fast as they could be. For example, with a manual process, the receiver must record all of the inventory that comes into the warehouse. If the receiver is distracted or otherwise occupied, they may not get to this paperwork step until long after the product or pallet has been stored—and sometimes, their recollection of stock numbers, descriptions, quantities, and location can be inaccurate. These types of inaccuracies lead to inefficiencies and delays in picking and other warehouse operations.