What Is A Warehouse Management System (WMS)?

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What Is A Warehouse Management System (WMS)?

Warehouse management is an essential part of a supply chain management process. Effective warehouse management helps businesses improve their fulfillment performance, save time and resources, and avoid interruption in warehouse operations.      

Warehouse Management System is a tool that helps businesses run this process smoothly, automatically, and effortlessly. However, to get the best use of WMS, you need to understand what is warehouse management system and how it works.      

What is Warehouse Management System (WMS)?      

Warehouse Management System (WMS) is the software used to give businesses an overall look at all the warehouse operations and allow them to manage the flow of inventory and other resources, from materials purchasing, order receiving to shipping.      

WMS ensures your order fulfillment runs steadily and reduces the risks in the process. WMS is vital in supply chain management, especially for retail or e-commerce businesses with multiple sales channels and warehouses proceeding at the same time.      


Related article: What is Inventory Management? Benefits & Challenges

What is Warehouse Management?       

Warehouse management is the set of practices and processes for streamlining the warehouse or distribution center operations. By tracking and organizing different components such as warehouse storage, inventory management, or order fulfillment, warehouse management helps ensure and utilize the productivity and workflow of goods.       

Why is Warehouse Management Essential?              

Designed to organize and manage warehouse operations, warehouse management is necessary for businesses to maintain their performance and workload.      

The company can face several problems without warehouse management, especially an e-commerce warehouse management system, including excess stocks, lack of storage, or poor time management. As a result, it may lead to the waste of time and budget, which negatively influences other business aspects.       

In contrast, implementing effective warehouse management will pave the way for businesses to optimize all the operations to the greatest extent, which results in on-time delivery, high-quality service at low cost, and excellent customer satisfaction.       

Features of Warehouse Management      

How does the Warehouse Management Process work?       

Warehouse management consists of 6 following steps:      

  • Receiving: To ensure the correct quantity and good condition of items, the first step would be checking in and recording the arriving inventory.        
  • Put-away: Relocate items from the loading dock to the exact storage locations.      
  • Storage: This step allows fast and efficient picking by carefully storing and organizing goods in a logical order.       
  • Picking: Gathering the items is essential to further fulfill sales inventory.      
  • Packing: Before delivery, preparation is ready for chosen items, which must be safely covered in protective packaging and attached packing slip.       
  • Shipping: The last step is to deliver the completed sales orders and confirm the accurate shipping transportation along with the inventory documents.       

Warehouse management monitors and measurement      

Key performance indicators (KPIs) are the operational measurement of warehouse management, which illustrates the efficiency of warehouse operations in terms of 5 dimensions: receiving efficiency or productivity, picking accuracy, order lead time, rate of product return, and inventory turnover.      

By accurately supervising the KPIs, businesses can address and dig deeper into the problems at the earlier stages. As a result, urgent responses are well facilitated to avoid prospective risks.      

Furthermore, KPIs play an essential role in forecasting inventory, which may result in accuracy in fulfilling orders and understanding labor management to boost efficiency to the highest level.       

Warehouse management principles      

There are a total of 5 general principles of e-commerce warehouse management system to help businesses exert efforts in utilizing the warehouse operations:      

  • High transparency: Transparency can allow businesses to view the warehouse operations within real-time data down to the very last details. Through high transparency, all the inventory is tracked and accessed centrally in one location by both customers and business partners.       
  • Data security: Given the numerous drawbacks of cyber-attacks or technical issues, data safety takes precedence over everything else. If appropriate security appliances do not meet specific requirements, warehouse management might be on the verge of loss or collapse.      
  • The proper process of optimization: Due to the variety of activities in warehouse management, defining the exact processes to optimize is significantly essential. Thus, to achieve maximum efficiency, businesses should actively keep the processes updated and reviewed constantly or adjust workflows since one change significantly influences the entire operations.       
  • Proficient human resources: Warehouse employees are the company's core asset since they manage numerous tasks in terms of warehouse operations. Hence, warehouse employees must possess specialist knowledge and skills, which can determine the working performance of businesses.      
  • Customer focus: Customer satisfaction closely correlates to warehouse performance, in which high-quality and on-time delivery are two fundamental metrics. The two metrics mainly depend on the ability to fulfill and organize orders quickly and accurately in warehouse management.       


Benefits of Warehouse Management      

Real-time inventory management      

Warehouse management provides the visibility of accurate and real-time inventory levels, which businesses can take full advantage of to forecast the supply and reduce backorders. Thus e-commerce warehouse management system becomes a well-functioning factor in ensuring the efficiency of warehouse flow to the fullest.       

Cost-saving and time management      

Designed to maintain and control the inventory rotation, warehouse management paves the way for businesses to actively keep tabs on and optimize the operations by analyzing the use of warehouse and equipment features. As a result, businesses can lower budgets and exert less time on non-core processes concentrating on accelerating different aspects.        

Improving customer service      

Effective warehouse management plays a vital role in enhancing customer satisfaction. By keeping the distribution operations constantly updated and adjusting the warehouse flows, this approach commits to distributing high-quality and on-time delivery at a low cost guaranteeing long-term benefits for both customers and businesses.        

How to choose a Warehouse Management System?      

Given several Warehouse Management System (WMS) providers, choosing the right WMS is such a complicated task.       

However, these steps below will help businesses consider before collaborating with a WMS vendor:      

  1. Define your purpose      
  2. Understand business requirements and ROI      
  3. Evaluate vendor’s background, including capability and advancements      
  4. Assess training requirement       
  5. Shortlist the best WMS providers      

You now have an overview of what is Warehouse Management System (WMS), as well as some key takeaways about it. We hope you find the WMS solution that works best for your business . Don't hesitate to contact us for a more in-depth consultation today.    


Giang Huynh  

Công Nguyễn

Công Nguyễn


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