Warehouse Management Systems in Modern Warehouse Operations
Technology plays a crucial role in the efficiency of modern day business operations. The same applies to logistics. A company’s logistics has to provide the required quantities of goods most efficiently at the right place in the right order at the right time . The most basic functions of logistics would include: a) transport, b) handling, c) storing, and d) commissioning. Warehousing is a vital part of a company’s logistics and hence the automation of this function can have a great impact on overall efficiency of the business. However, while automation can provide significant improvements in productivity and accuracy, it can also prove to be the wrong solution
Modern organizations reply mainly on Enterprise Resource Planning or ERP software to automate their various functions. An ERP can be defined as an integrated information system built on a centralized database and having a common computing platform that helps in effective usage of enterprise’s resources and facilitates the flow of information between all business functions of the enterprise . A Warehouse Management System or WMS is nothing but an ERP designed for the specific function of warehousing.
The basic function of a WMS is focused on controlling the movement of materials and storing them. Later, replenishing and put away of stocks was also included. Today, state of the art WMS have several added functions that enable the organization to integrate functions related to warehousing to attain a more comprehensive and effective automation. Some of the modules available include: a) Customs Management, b) Billing of Logistics Services, c) Web Portals, d) Dock and Yard Management, e) Management Information, f) Labor Management, g) Inventory Management, h) Order Management, i) Finance, and j) Transportation Planning .
One may argue that a WMS is not meant for every company. While small businesses often rely on internally developed systems to manage their stocks, the quantity of goods stored as inventory is generally quite low. Hence, managing their recording, storing and replenishing is manageable through a manual management system. However, even slightly larger companies or SMBs and SMEs dealing in fast moving products, require some form of automation to improve their efficiencies.
With client demands growing and electronic communication becoming the mainstay of businesses, electronic data exchanges have become a must in order to provide instant responses to customer expectations. At the same time, those responsible for driving the business of an organization, the sales and marketing departments, increasingly rely on real-time data collection and reporting to stay ahead of competition and meet required targets. Even departments such as finance and accounting constantly need to draw up real time information.
Having to manually draw out such information and then conducting an analysis and reporting can be a very time consuming affair. It would require dedicated resources and would still fail to provide the required data fast enough. There is also the potential for human error, leading to inaccuracies in the information received. Having an automated system with a single point entry for data that is accessible by all functions and can be used to instantly draw up automated reports is the need of the hour. This is what a WMS does for the entire warehousing function.
A WMS can not only integrate all of the functions and operations within the warehouse but also coordinate and share information with related departments such as sales and supply chain, enabling an organization to have a more comprehensive view of the status of its overall operations instead of having to look at separate reports and updates from each department, having to then draw relevant data from each report to decipher meaningful and usable information.
The WMS can be applied to all kinds of organizations, such as: a) Stores that offer direct marketing catalogues, b) retailers that need more advanced management systems than the ones available in-house, c) e-commerce and online shopping portals with growing geographical reach, d) businesses with multiple distribution centers, and e) organizations aiming to increase the reach of their products across the country or even globally. In all these scenarios, have a basic manual warehouse management or even a semi-automated system to manage warehousing begins to fall short of the actual requirement. For businesses that rely on high accuracy of inventory and supply chain management, WMS is fast becoming an imperative.
Implementing a WMS can have several potential business benefits that include: a) improved visibility of stock, b) increased accuracy of inventory and stock, c) reduced errors in picks, d) automated replenishing, e) faster response times, f) remote accessibility of data, and g) fewer returns . However, the most important benefits that a business witnesses is in the areas of inventory.
Effective management of inventory is known to produce tangible business gains for any organizations. Accuracy in maintaining a streamlined inventory can lead to backorders being reduced, better levels of customer service and improved fill rates. Knowing just how much stock is required at any given point in time allows the company to manage its stocks better, leading to reduced inventory volumes. This in turn reduces the amount of space required by the company to hold stocks, thus leading to more efficient use of space in warehouses.
The are several other tangible benefits of implementing a WMS, such as: a) reduced cost of inventory transportation, b) reduced shipping costs, c) fewer errors in shipping, d) reduction in human capital required to handle paperwork, order picking, e) improved levels of access for employees with lesser dependence on colleagues to carry out day to day tasks, and e) massive time saving in physical checks of inventory.
In conclusion, considering the different add on features that are available with basic WMS, businesses can select a management package that best suits their needs. This would enable them to have a WMS package that is cost effective, works well with the organizations objectives to improve efficiencies and drive tangible business gains, leading to overall increase in cost benefits. A high end WMS with maximized added on functions provides an organization with heightened control over its various functions, with real time communication and reporting. This allows for reduced scope for errors, faster response times, accurate tracking and maintaining of orders and inventories as well as effective and dynamic communication, not just within the organization’s departments but also with external stakeholders such as suppliers and customers. With such integration of functions, the benefits of the WMS extend beyond warehousing and have a positive impact on the efficiency and productivity of related departments such as sales, marketing, finance and supply chain. With customization options being provided by software vendors, WMS can prove to be beneficial to organizations of all sizes, dealing in a host of products and services
Gudehus, T., & Kotzab, H. (2009). Comprehensive Logistics. New York: Springer.
Ray, R. (2011). Enterprise Resource Planning. New Delhi: Tata McGraw Hill.
Richards, G. (2011). Warehouse Management: A Complete Guide to Improving Efficiency and Minimizing Cost in the Modern Warehouse. London: Kogan Page.
van den berg, J. P. (2007). Integral Warehouse Management - The Next Generation in Transparency, Collaboration and Warehouse Management Systems. Utrecht - The Netherlands: Management Outlook Publications.