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Warehouse Management Systems

What is a warehouse management system, how does it work and what are the benefits?

If you’re considering a warehouse management system (WMS), but are not quite sure what a warehouse management system does or how it adds value to your business, this article is for you. We’re unpacking some of the most frequently asked questions about warehouse management systems as well as some information on Manhattan Associates warehouse management system to help you decide whether a WMS is the right fit for your business requirements.

What is a warehouse management system (WMS)?

A warehouse management system (WMS) is a software application which is specifically designed to optimise an organisation’s warehouse or distribution centre (DC) and its operations. The warehouse management system that you choose allows an organisation to manage the entire process - from the time stock enters your warehouse, until it’s shipped to your customers.

What does a warehouse management system do?

A warehouse management system is used to plan, organise and optimise your warehouse operations. The aim of the system is to ensure that you can provide the right goods at the right time while optimising both efficiency and costs.

Discover how Supply Chain Junction helped Tarsus Distribution improve their warehouse operations by using the  functionality contained within the Manhattan WMS, as well as implementing new processes and systems. Tarsus increased their warehouse efficiency, customer service and subsequently their business success by 60%!

Read the full case study

 

The functions of a warehouse management system include:

Inbound Logistics

Inventory Management and Control

Outbound Order Processing

Shipping and Loading

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Yard management and appointment scheduling

Inbound planning is where warehouse success begins. Yard management is the practice of managing the vehicles and/ or trailers as they arrive at your facility and then directing them to either a yard location or appropriate dock door. This function works best when coupled with appointment scheduling as your facility has finite capacity and planning the arrival of deliveries against that capacity ensures that the workload is smoothed throughout the day.

 

Receiving

Receiving is pivotal to the success of your warehouse and, ultimately, your business. Whether you are receiving against ASNs, PO’s or blind and whether your inventory is labelled, pre-allocated or arrives unplanned, mistakes and errors during the receiving process negatively affect every downstream process that follows in your warehouse.  So the importance of ensuring your WMS helps to drive an effective receiving process is critical.

 

Reverse Logistics

Returns or reverse logistics is a fact of life and with the continued rise of Omni Channel fulfilment is  only growing as many retail and wholesale companies are dealing directly with their end customers. Reverse logistics is often a science unto itself and requires careful thought and upstream planning, this coupled with streamlined warehouse processing that typically includes effective inventory disposition assignment, touch screen processing, re-labelling and allocation is where an effective WMS will assist

 

Cross Docking

There are many forms of cross docking including flow through, merge in transit, ship to mark for, pure cross dock, these can then be coupled with multiple warehouse processes such as put to store, opportunistic substitution and allocation. The important thing to consider with cross docking is that the main aim is to ship out the inventory you receive without having to make any changes to how it was received and this is where your WMS should seamlessly match the inventory received to the open orders to facilitate this.

 

Putaway

An effective putaway process assists in speeding up your order fulfillment time as most ERP systems wont let you sell inventory that you don’t physically and systematically have - which is why your dock to stock metric is one of your most critical.Your WMS helps to optimise your putaway strategy, allowing you to improve warehouse capacity, inventory availability, as well as reducing excess travel, preventing damage to inventory and reducing congestion in aisles.

 

Full Stock Take

Most warehouses will require a full stock take at least twice a year - sometimes more if your auditors require it. As a full stock take typically requires that you stop operations whilst the physical count is being performed, it’s essential that your WMS helps you accurately plan, coordinate and execute this process so you can back to the business of fulfilling orders ASAP.

 

Cycle Counting

Cycle Counting is typically broken into two components:

1 - Planned Counts - This is where your inventory team counts X number of items and/ or locations on a regular basis based on criteria such as item velocity, item value, days since last counted, etc

2 - Exception Counts - As the name suggests these counts are typically executed when an exception such as a short pick or alternate location selection occur, but they can also be proactive by asking pickers to confirm that locations are actually empty once they have picked the last item in the location

Most warehouses have a combination of full stock takes and cycle counts in place, but the most mature use cycle counts only as they have proven that their inventory accuracy is sufficient to warrant the trust and flexibility to do so

Lot and Serial Tracking

If you are a company that operates in the pharmaceutical or food distribution sectors you’ll be all too familiar with the need for tracking lot, batch and expiry dates. These are specifically important when ensuring you are supplying the freshest inventory, and when there is a product recall, as you will need to know exactly what lot, batch and expiry of the recalled item you have shipped to each and every customer.

High Tech Electronic companies also need to track serial numbers for warranty purposes. There are often manufacturer rebates for specific items and the only way to claim these is by ensuring you provide information on which serial number was sold to which customer. In addition, when an item is returned, it’s critical to match the serial number sold to the customer with the one returned.

Wave Planning

 The wave is one of most important functions of a WMS as it performs the following core functions:

  • Selects the appropriate customer orders
  • Allocates inventory
  • Creates replenishments where necessary
  • Creates, sequences and organises picking tasks
  • Prints any required labels
  • Releases work to the warehouse to be fulfilled

Picking

Picking involves selecting the appropriate items that match your customer order requirements, as it is one of the most important functions in a warehouse it needs to planned, organised and executed effectively and this is where your WMS should come into its own.

There are many types of order picking including:

  • Discrete Order Picking - Picking one order at a time
  • Batch Picking - Pulling down a large amount of a single item that has been ordered by many customers and then sorting that item to satisfy the orders
  • Cart Picking - Picking and packing several customer orders into the final shipping containers via a picking cart or trolley
  • RF Picking  - Radio Frequency devices are the most commonly used to present tasks to pickers
  • Voice Picking - Pickers are presented with picking tasks via a headset and speech instructions and then fedback to the WMS via a headset
  • Tote Picking - typically used in omnichannel operations where multiple customer orders are picked into a single tote and then sorted at a put-wall
  • Full Pallet Picking - Involves selecting a full pallet, typically from reserve racking to satisfy an line
  • Pick and Pass - this involves multiple pickers selecting items for an order and passing the container between the various zones from which the items need to be selected.
  • Put to Store - this is typically used in a retail distribution environment and involves “putting” the contents of an item’s carton or pallet to individual store locations
  • MHE Assisted Picking - in high volume, high labour cost distribution centers, picking is either performed or aided by using material handling equipment such a put to light, ASRS, goods to man and various other forms

Outbound Quality audit

Auditing or checking your orders prior to despatching them to customers is typically driven by a number of factors including:

  • Order Picking Accuracy Metric - the more errors, the more you should audit
  • Specific Item Requirements - these can include high value, highly desirable, value added services,
  • Customer Requirements - these can include priority customers, customers who raise the most delivery complaints and returns
  • Staff Monitoring - additional checks for pickers who have low accuracy metrics
  • Security Requirements - if you believe there is theft then you should be auditing specific items and staff that are under suspicion
  • Random Audits - it is good practice to perform X of Y checks to ensure that your teams are aware that the picking work will be checked  

 

Load Building and Loading

The process of building a load can either be performed in the wave, via integration to a Transport Management System (TMS) or after orders are picked. Your WMS should enable the flexibility to perform any combination of these processes.

Loading is the process of the WMS systematically directing the shipping teams as to which orders to load onto which vehicles, at which dock doors at the appropriate time to meet the despatch cut off time.

Rating and Routing

The process of rating and routing can either be performed in the wave, via a third party carrier system or after orders are picked. The aim of rating and routing is to systematically select the most appropriate carrier to transport your customer orders based on the price and service level requirement of the customer.

 

Shipping Documentation

Prior to dispatch, your customer orders and delivery partners will typically require supporting documentation, whether this be electronically verified or printed at the time of despatch. The typical core documents include:

  • Carrier Compliant Shipping Labels - these are typically placed on each “container” shipped so as to allow the carrier to scan and verify throughout the shipping process
  • Manifest - this typically lists the entire contents of a shipment or load and can often be referred to as a ‘bill of lading’ depending on the purpose and destination of the cargo
  • Invoice - typically an invoice is generated from the ERP and electronically sent to customers once the contents of an order has been fully loaded and no further changes need to be made
  • ASN - the Advance Shipping Notice is sent to the receiving party so that they can plan in advance based on the contents of the shipment that is in transit

Your WMS should be able to generate or trigger the creation of these documents in a flexible and tailored manner that meets your requirements.

Discover how Supply Chain Junction helped Tarsus Distribution improve their warehouse operations by using the above functionality contained within the Manhattan WMS, as well as implementing new processes and systems. Tarsus increased their warehouse efficiency, customer service and subsequently their business success by 60%!

Read the full case study

The features of a warehouse management system (WMS)

 The features (or modules) of a warehouse management system include:

Core warehouse management

Distribution management is an umbrella term for all of the activities and processes within your warehouse. This includes things like inbound logistics, inventory management, outbound order processing and shipping.

 

Slotting optimisation

Slotting optimisation helps you to determine the best locations for your inventory by strategically grouping items based on the following aspects.

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This helps improve productivity, worker safety and order accuracy. Fast moving items are placed in the most accessible location in your warehouse, while large, heavy stock is placed toward the back of your warehouse where it’s unlikely to get in your way.

Labour management

Omnichannel and increasing customer demands require greater productivity and efficiency. Labour management allows managers and supervisors to predict workforce requirements, track productivity and set incentives for staff. By rewarding and incentivising strong performers, you will boost staff morale and ultimately improve customer service levels.

There are typically four steps in the labour management journey, with each having incremental benefit.

1. Historical Average  - this is where your associates are measured against past averages such a pick tasks/ hr. As a result of your teams simply knowing that they are being measured, you should see a 10% increase in productivity. The trick to this is to ensure that the measurements are consistent and this is where labour and WMS play a key role

2. Reasonable Expectancy - once you have defined and built the historical average, you can then start to set goals and expectations of your employees and teams. Once your employees have a benchmark goal and can be measured against this with the necessary feedback you should see further productivity gains

3. Engineered Standards - Engineered standards are typically made up of the following core elements, which once implemented successfully should result in roughly a 30% productivity improvement:

    1. Discrete standards
    2. Travel elements
    3. Vehicle calculations
    4. Labour programs
    5. Change management

4. Pay Incentive - This is typically the holy grail of labour management - being able to reward your employees based on their productivity, safety and accuracy performance and once implemented successfully with result in enormous benefits sometimes up to 45 % from the current base. Once in place you should be able to regularly perform the following core functions

  1. Incentive payments
  2. Labour forecasting
  3. Labour scheduling
  4. Detailed labour planning
  5. Ongoing feedback and improvement cycles

 Labour management and your warehouse management system

Billing management

Billing management software is typically used by 3PL's to ensure they are systematically recording activity based costs, such as number of value added services activities and storage costs, so that they can accurately invoice their customers for the services they provide to them.

 

Warehouse mobility

Warehouse mobility aims to ensure that management spend less time at their desks and more time on the warehouse floor, helping to increase staff productivity, improve order turnaround times and overcome inventory accuracy challenges. Warehouse mobility is becoming the go-to capability for modern warehouse managers as described in the unbound warehouse mobility whitepaper:

The following two minute video demonstrates how warehouse  mobility aims to improve productivity, interaction, employee satisfaction and order cycle time:

Supply Chain Intelligence

You need a warehouse intelligence dashboard. The KPIs on your WMS dashboard pull in all the relevant information to allow you to assess the health of your business and make key decisions to help it stay on track. Monitoring your warehouse performance will assist you to compare data over time, reduce costs and ensure consistency.  

What are the benefits of a warehouse management system?

The benefits of a warehouse management system include:

  • Real-time access to quality data giving you increased visibility throughout your supply chain
  • Accurate demand forecasting
  • Reduced labour costs due to efficient labour allocation
  • Streamlined warehouse processes
  • Optimised warehouse layout
  • Improved inventory accuracy
  • Improved pick accuracy
  • Decreased time between picks
  • Improved warehouse flexibility and responsiveness
  • Improved warehouse safety and security
  • Improved supplier relationships
  • Improved customer service levels
  • The ability to implement an ongoing optimisation strategy

To ensure that you are achieving the maximum ROI from your WMS, you should be benchmarking your operations against the best and then using those benchmarks to calculate the potential ROI you can achieve by implementing the right WMS.

Contact us to assist you with an ROI study

When do you need a warehouse management system and why?

Warehouse management systems are used when your workload and customer order requirements exceed your ability to manually meet demand through the use of basic tools like spreadsheets, or if your ERP is not flexible and functional enough to support those requirements.

 

Things to consider when deciding whether your business needs a warehouse management system: 

  • The amount of times your warehouse team touches or moves inventory is too high
  • You continually have to increase your warehouse staff to handle your inventory each year… especially in peak season.
  • You have no way to measure the performance of your pickers and warehouse workers and, coupled with that, you really don’t know how many people you need to successfully fulfill orders.
  • You have a large amount of aging inventory.
  • The time from product arriving at the warehouse until it is available to sell to customers takes forever.
  • Your warehouse has inventory stored in areas it just shouldn’t be - such as the aisles and dock
  • You have a large number of returns that are caused by picking issues and many unhappy customers because of it.
  • Each time you walk into your warehouse you feel like it is a sinking ship.
  • You are running out of warehouse storage space.
  • You have a large number of customer complaints due to shipping issues
  • Your business is growing rapidly and your warehouse cant keep up with the increasing order volume demands

How much does a warehouse management system cost?

There are four cost elements associated with purchasing a WMS and the associated ROI

  1. License Fees
  2. Implementation Fees
  3. Hardware
  4. Internal Costs 

Want to know what it would cost to implement a WMS? We can assist you by providing you with an estimate based on your requirements. As a Manhattan Associates' Geo Partner in South Africa and the Middle East, let us assist you in determining the best solution for your business.

GET AN ESTIMATE


 

Let’s break down the common elements of each cost:

 

License Fees

Depending on the vendor you are dealing with you’ll typically need to pay software license fees in one or a combination of the following methods

  • Upfront perpetual licensing – this usually involves an upfront fee for the right to license the number of users required to successfully run your WMS plus an ongoing annual maintenance fee
  • Ongoing SaaS licensing – this usually involves regular incremental payments for a dedicated period of time and includes license fees, annual fees and hosting costs

WMS license fee calculations are typically based on the following inputs

  • Users per site
  • Total users for all warehouses
  • Modules required

Implementation Fees

Most WMS vendors will have a project methodology that the follow which results in a baseline project implementation cost. Variants to this typically include:

  • Business Process Requirements
  • Integration Requirements
  • MHE Integration Requirements
  • Internal Client Skillset and availability and handover
  • Testing, training and go live approach
  • Project Management from the Client Team
  • Change Management from the Client Team
  • Travel expenses

Once the above elements are clearly defined, you should with reasonable accuracy predict the implementation fees required to successfully get your WMS up and running

 

Hardware

Your deployment approach will dictate the bulk of your hardware costs. The two main choices are either on premise or hosted. If you choose on premise then you will need to cater for all of the server, infrastructure and third party licensing. If you choose hosting your costs will be the recurring hosting fees and ensuring that you have sufficient bandwidth to ensure that the operation can run seamlessly.

Other core costs will include:

  • RF and/ Voice devices
  • Label and laser printers
  • Any Material Handling Equipment you choose to implement
  • Peripherals to support your hardware
  • Network costs

 

Internal Costs

Your Internal WMS team costs should also be considered and factored in. They typically contribute 50% or more of the effort in the initial implementation of a WMS and your success is heavily dependent on their involvement and skill set.

 Want to know what it would cost to implement a WMS? We can assist you by providing you with an estimate based on your requirements.

GET AN ESTIMATE

 

CONTACT SUPPLY CHAIN JUNCTION

Interested in discussing your requirements for a warehouse management system? One of our warehouse management experts will help you achieve your business goals.

Contact Supply Chain Junction