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What is a warehouse management system? A guide.

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Warehouse Management
A man in a warehouse preparing online orders for customers

Efficient warehouse management is important for any growing ecommerce business. To make sure your warehouse management runs smoothly as your business grows and order volumes increase, you’ll need the right warehouse management system (WMS) to help you.

In this guide, we discuss what a warehouse management system is, why it’s important for your ecommerce business, how it works, and how to choose the right system.

What is a warehouse management system?

A warehouse management system is a software solution that offers visibility into a business’ warehouse inventory and manages supply chain fulfillment operations from the distribution center to the end user.

The purpose of a warehouse management system is to help ensure that goods and materials move through warehouses in the most efficient and cost-effective way. A warehouse management system (WMS) handles many functions that enable these movements, including inventory tracking, picking, receiving and putaway. A warehouse management system also provides visibility into an organization's inventory at any time and location, whether in a facility or in transit.

Why does your business need a warehouse management system?

In today’s effortless economy, customers expect convenience. According to Linnworks research, 76% of customers say convenience is their top priority when selecting a retailer. This means retailers must embrace Total Commerce — conducting commerce wherever their customers are, on their terms. In today’s dynamic, omnichannel, fulfillment economy, connected consumers want to buy in any channel they choose.

In order to be able to meet this demand for convenience, businesses need the ability to respond quickly with warehouse management functionality that optimizes fulfillment capabilities, simplifies complexities and streamlines processes. Manual and time-consuming tasks are common when it comes to warehouse management which emphasizes the need for a software solution to improve operational efficiency and performance.

Here are the benefits of a warehouse management system:

Faster order fulfillment

Customers expect delivery to be seamless. According to Linnworks research, 62% of customers say they are more loyal to a retailer who is open and honest about delivery timeframes. To keep your delivery promises, it’s important that you can ship orders easily and on time.

Reduce the time it takes to fulfill an order through to shipment with a WMS. A system enables your team to move fast on orders with the ability to scan barcodes and access stock counts.

Save time with seamless operations in the warehouse

Make sure your staff don’t  spend too much time looking for items in your warehouse with a warehouse management system.  Increase operational efficiency with a system that tracks where all of your SKUs are located within the warehouse to save your staff time picking, putting away and moving stock to fulfill orders faster.

Pickwaves (digital picklists) and routing sequences reduce walking and processing time in the warehouse making operational processes as seamless as possible.

Map your warehouse into different zones

A good WMS maps your warehouse into different zones, groups and bin types. With a large variety of SKUs, it’s good to have zones for different types of product categories or the way in which products are picked.

A consumption-based stock replenishment feature keeps pick bins full for optimal fulfillment.

Digitize your warehouse operations — no more paper

Not only do pickwaves, or digital picklists, reduce human error and improve inventory accuracy, they also remove the need for printing picklists. With a warehouse management system, your team can use a pickwave that is generated by the system, so the picker has digital instructions right on their mobile device.

Accurate inventory for a better customer experience

The risk of human error and inventory discrepancies in a warehouse are greatly reduced with a warehouse management system due to the ability to scan barcodes and access inventory levels all from one platform. You’ll have the confidence that all inventory tracking — the inventory counts in each of your warehouse locations — is accurate.

Integrated WMS vs Standalone WMS

There are two types of warehouse management software from which you can choose. You can either choose a standalone or an integrated software.

Here we’ll explain the difference between the two systems and the pros and cons of each one.

Integrated WMS

An integrated WMS exists within your ecommerce operating system which includes your inventory, order and reporting systems. It has one cost and it’s one system that your teams can learn and upskill on, as opposed to multiple systems.

Another advantage of an integrated system is consistency. With all of your warehouse data integrated with the rest of your systems in one platform, you’ll have up-to-date accuracy of all data. Your staff also has simplified workflows and won’t have to log in and out of disparate platforms.

Additionally, one system creates a consistent and improved customer experience. Each member of your team sees the same, consistent data, all in one place when fulfilling customer orders or dealing with customer inquiries removing the risk of human error and mistakes.

An integrated WMS is designed specifically for the ecommerce industry with online retailers in mind, whereas standalone WMS has to cater to a lot more markets including wholesalers and manufacturers. This means their features aren’t specifically built for online retailers unlike an integrated WMS.   The main disadvantage of an integrated system is that it doesn’t have the advanced functionality that standalone WMS offer.

Standalone WMS

A standalone WMS is an advanced warehouse management system. The high-level functionality of a standalone WMS is the main advantage of this type of system.

Despite the lack of order, inventory and shipping management features, standalone WMS can often be integrated with other systems you use. Without having an integration like this, your staff will have to go through several more steps than an integrated system just to fulfill an order.

It’s also likely that the cost of a standalone WMS will be high. You’ll have to purchase the standalone system, plus maintain all of your other operating systems. Plus, there’s a lack of real-time integrations with a standalone WMS, meaning delays with syncing any data from other systems.

What is the warehouse management process?

Now that you know what a warehouse management system is and its benefits, let’s take a look at the process that goes on in a warehouse — the pick, pack and ship process.

Picking

Once a pickwave (digital picklist) is created or a list printed, a warehouse team member can start to pick items from the picklist. The picklist is arranged in the most efficient way possible.

Warehouse picking is the process of picking products within a warehouse for an order. In a warehouse zone setup, for example, your team members pick all of the items for orders from their assigned zone to speed up the picking process. Bins move through each zone as warehouse team members gather items for multiple orders simultaneously. Warehouse zoning is an important feature of a warehouse management system.

Other types of picking include:

Wave picking: Warehouse workers use a picking list to collect a group of goods with a cart from their zone. They then send the items in their group (on their cart) to be packed and shipped.

Piece picking: This is where the warehouse team member picks and packs one order at a time.

Batch picking: When multiple orders are picked and packed at the same time.

Packing

The packing process might sound simple, but it’s essential to get it right to make sure the customer gets the right items in their order. When a warehouse team member packs all of the items for an order in the correct packaging, it is then ready to be shipped.

Shipping

As a part of the warehouse management process that greatly affects customer loyalty and positive customer experience, it’s important to ship orders in a streamlined, efficient way.

Implementing shipping integrations (suchs as FedEx, UPS, and ShipStation or 3PLs like ShipBob) into your order management software helps streamline your fulfillment process with automation. A system like Linnworks will automatically select the best option for each order, which is important because customers want choices when it comes to delivery, with two in three shoppers saying they will always choose a retailer that can offer next day delivery.

Using an integrated system for warehouse management helps streamline the process. With an integrated system, you will save time, reduce business costs, ensure consistency and increase operational efficiency for improved experience for your entire team. The streamlined process will ultimately improve the customer experience and loyalty toward your brand.

Here’s what to look for in a warehouse management system.

Software that integrates with your sales channels.

It’s important that a WMS integrates with your sales channels and other operating systems. With the right WMS , you can automatically allocate stock to orders as they are processed.

As we talked about earlier, a WMS should generate pickwaves (digital picklists) from orders placed on marketplaces and other sales channels to make the picking process run much more smoothly within the warehouse. The pickwave is designed with the most efficiency to match how your warehouse is set up.

First In First Out Capabilities (FIFO).

First In First Out is the sequence of inventory that is dispatched. With the FIFO inventory management method, you can assign an expiration date or priority value to your inventory to make sure you dispatch the oldest stock first.

This method has many benefits including reduction of product wastage and reducing the risk that your inventory becomes obsolete. Although you might think of only food and beverage as a risk, it’s important to note that the longer any item is sitting in storage, the more likely the packaging is to become damaged.

A Total Commerce solution.  

In addition to integrating with your sales channels you also want a WMS that integrates with all of your commerce operations. From inventory management to shipping management, a WMS should have all of your systems in one platform so that you save money, time and ensure consistency across all operations.

Linnworks warehouse management system integrates with commerce systems in one central platform, enabling your growing ecommerce businesses to conduct commerce wherever your customers are, driving growth and boosting brand success.

Learn more about how to improve warehouse efficiency

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