Warehouse Management Systems (WMS) are essential tools for businesses that manage inventory in a warehouse or distribution center.
They help optimize warehouse operations, improve inventory accuracy, and reduce costs associated with inventory management.
Choosing the right WMS can have a significant impact on the efficiency and accuracy of your warehouse operations.
However, getting a WMS that’s a good fit for your business isn’t always a straightforward process.
Different types of warehouse management solutions have different features and capabilities, so it’s important to understand the differences between them and invest in the best one for your business.
In this guide, we’ll explore some of the major types of WMS platforms to help you understand their differences.
- Warehouse Management Systems (WMS) help manage and optimize warehouse operations
- There are three main types of WMS: starter, standalone, and automated
- Starter WMS systems are best for businesses that don’t need much inventory
- Standalone WMS systems are a good option for small companies that don’t need to integrate the platform with other systems fully
- Automated WMS systems are great for larger companies that need a comprehensive way to manage their warehouse operations and keep track of inventory flow
The importance of inventory management
Inventory management is a critical component for any business that sells products, no matter the size or scope of operations.
And while following inventory management best practices is essential, it can also be incredibly time consuming and complex.
Inventory management encompasses a wide range of responsibilities necessary to track and manage a business’s inventory and optimize its profitability. This includes tasks like monitoring stock levels, forecasting demand, managing supplier relationships and fulfilling purchase orders.
Businesses use WMS to simplify and streamline these efforts.
These systems help manage the warehouse by providing automated tools for tracking and managing inventory. By utilizing a WMS, businesses can save time and money by streamlining their operations and increasing accuracy.
But not all WMS platforms are built the same way, or with the same goals in mind. Some are much pricier than others, while some may just be flat-out wrong for your particular business.
Let’s get into the specifics.
Warehouse Management System types
Let’s begin with the starter since that is what many small businesses and solopreneurs start out with – hence the name “starter.”
Calling this a “system” may even be a bit generous, as it’s typically just a clipboard and paper or an Excel spreadsheet to track inventory and inventory milestone movements.
Milestone movements are inventory movements or actions that need to happen after an item changes positions based on warehouse activity (receiving, storage, picking, shipping, etc.).
There is a lot of risk with this standalone system since it is mostly manual.
Think about it: to err is human, and if you’re relying on manual effort to record inventory changes, that’s several dozen opportunities to mistakenly input bad data on a daily basis.
Plus, it doesn’t allow you to keep track of warehouse activity digitally and in real time, which makes it difficult (more like impossible) to scale.
Ultimately, a starter system for warehouse management is best suited for businesses that don’t need much inventory and can handle warehouse processes manually.
Standalone warehouse management systems are a step up from manual systems. They are often very affordable and give small business owners access to basic warehouse management features like receiving, barcode scanning, picking, packing, returns, and shipping. Standalone WMS systems also allow you to optimize your inventory with cycle counting functions.
Additionally, these standalone systems are a good option for small companies that don’t need to integrate with other business systems but want something a bit more robust than a lowly Google Sheet.
The bad news is that, again, you’ll likely encounter issues if you experience future growth or desire to scale the business beyond just one warehouse with a few SKUs.
In fact, the two main downsides of standalone systems are that they offer limited scalability for future growth and many have difficulty integrating advanced technologies.
For instance, a standalone warehouse management system may have difficulty integrating with more advanced inventory management software.
Having to figure out how to get more functionality and capabilities when your warehouse business is growing is a good problem to have. When that time comes, you should start looking at automated WMS solutions.
Automated systems are the most advanced type of WMS, enabling you to handle sophisticated operations and optimize processes with automation technologies.
They have in-depth tools for:
- Tracking inventory
- Managing product movement
- Optimizing warehouse layout and space utilization
- Configuring complex picking paths
- Integrating multiple locations on a single platform, and more
These automated systems are great for larger companies that need a comprehensive way to manage their warehouse operations and keep track of inventory flow.
They are also great for companies that are looking to take advantage of modern technologies like artificial intelligence (AI), robotics, the Internet of Things (IoT), and machine learning.
These automated systems can require an experienced team to implement and maintain them, so they are best for businesses with the resources and personnel to do it (though, at SkuVault, we pride ourselves in being a plug-and-play solution).
Therefore, if you are processing a high volume of orders daily, this type of system is the one for you.
Here are a few examples of automated and augmented WMS:
Inventory Management Systems
Inventory management systems (IMS) use software to provide real-time inventory information, automate workflow processes and enable accurate tracking of inventory movements.
This type of WMS is perfect for businesses that need to track their inventory closely and have a large number of SKUs, locations, or distributors.
ERP stands for enterprise resource planning, which is a comprehensive software system that integrates a range of business functions. An ERP system includes features such as accounting, customer relations management (CRM), and supply chain management.
It provides powerful reporting tools, offers seamless integration with other business applications, and can be customized to meet the specific needs of any business.
This type of system is ideal for medium-sized to larger organizations since it consolidates all aspects of the business into one platform, making it easier to manage and streamline business operations.
Because of their broad scope of business processes, ERP systems tend to be much more expensive than other solutions on this list.
According to a 2022 report, the average budget per user for an ERP system is $9,000. After implementation, development, and support, you could be looking at startup costs of $150,000 to $750,000 for a mid-sized business.
Cloud-Based WMS Software
Cloud-based WMS platforms are SaaS (Software as a Service) solutions that offer the same features as an on-premise system, with the added benefit of scalability, a browser-based interface, and designated customer support.
A cloud-based system also provides businesses with access to their data from anywhere, anytime, and allows for quick deployment without lengthy installation times.
Cloud-based WMS platforms (like SkuVault) work best for enterprises that need fast integration and simple management of item order processing.
Another benefit of cloud-based WMS systems is that they provide better inventory control and security at a lower cost than on-premise systems.
Supply Chain Modules
Supply chain modules are add-on solutions to an existing Warehouse Management System (WMS) that are designed to enhance the management and control of the supply chain.
These modules provide additional functionality and features that help businesses to optimize their supply chain operations, improve visibility and control, and streamline processes.
Supply chain modules can include a range of capabilities, such as:
Material handling: Managing the movement of materials, including receiving, put-away, picking, and shipping.
Vendor management: Managing supplier relationships, including procurement, contract management, and supplier performance monitoring.
Customer relationship management: Managing customer interactions, including order management, customer service, and returns.
Order optimization and demand planning: Optimizing order processing and forecasting future demand.
Analytics and reporting: Analyzing supply chain data and providing real-time reporting and insights.
Transportation management: Managing the movement of goods from one location to another, including carrier selection, shipment tracking, and freight audit.
Supply chain management system development technology is extremely broad in scope. Third-party logistics (3PLs) will often use a module in tandem with their WMS to maximize the effectiveness of their services.
Benefits of WMS implementation
So what are the concrete, bottom-line advantages of implementing WMS software? It is quite an investment after all, so let’s take a more detailed look at the benefits:
Improved customer service
Inventory visibility helps businesses to plan orders and stock products more effectively, leading to faster order fulfillment times and better customer satisfaction.
Reduced labor costs
Automated processes and optimized workflows lead to an overall reduction in labor costs as fewer personnel are needed to manage the warehouse.
Increased inventory accuracy
Inventory accuracy is improved as WMS tracks items down to the SKU level and provides accurate information about stock levels.
Improved warehouse security
WMS systems use authentication to control employee access and protect data from unauthorized personnel.
Supply chain visibility
WMS enables businesses to see the status of their supply chain in real-time, which helps them make more strategic decisions and be better prepared to handle any potential issues.
Fewer stockouts or overstocks
Inventory levels are easily managed with warehouse management software, allowing businesses to avoid stockouts or overstocks and improve overall inventory control.
Improved item tracking
WMS systems track items from the time they enter the warehouse until they’re shipped out, providing detailed visibility into every movement of goods.
Better demand forecasting
WMS systems provide data-driven insights into customer buying patterns and help businesses plan better for future demand.
FAQs about Warehouse Management Systems
What is a WMS system and what is its function?
It is warehouse software that is used to manage ingoing and outgoing inventory and warehouse operations.
A good warehouse management system works to help reduce costs and increase productivity.
How can a WMS help with supply chain management?
A WMS coupled with a module can tie together and streamline the aspects of your supply chain, consolidating all of your processes into one.
This in turn provides great visibility for making informed business decisions.
What is inventory management?
Inventory management is the process of tracking and managing a company’s inventory, or goods.
It includes tasks such as order fulfillment, stock replenishment, inventory forecasting, and more.
Managing inventory effectively and accurately is an essential part of any business that wants to remain profitable and efficient.
Which system is best for connecting channels and organizing my warehouse?
An inventory management system like SkuVault is best for organizing your warehouse, connecting channels, and giving you better inventory control.
Inventory management systems provide powerful tools to help you manage product data, track inventory in real time, automate order fulfillment processes, and integrate with other sales channels.
What is a supply chain module?
A module is an add-on solution to a WMS that adds additional functionality and visibility to the existing WMS.
It includes features such as vendor management, order optimization, demand planning, and more.
Supply chain management systems are great for businesses that want to extend their capabilities beyond their current WMS, and a supply chain module is a perfect way to do that.
How can I determine which WMS is right for my business?
Before selecting a WMS, it is important to consider your warehouse operations and needs.
For instance, do you carry expensive medical supplies or equipment? You may benefit from RFID capabilities if you do.
Or, do you have a fashion business that needs to automate inventory and integrate purchasing and customer relationship management systems? If so, then you may need enterprise resource planning (ERP systems).
You should also evaluate different systems and work with a vendor to test which type will fit your needs and give you the features you need.
Why should you implement a Warehouse Management System?
Implementing a WMS can provide many benefits, such as improved customer service, reduced labor costs, increased inventory accuracy, and more.
It also provides better visibility of your inventory so you can make more informed decisions about your business.
Additionally, it helps to manage Inventory levels to avoid overstocks or stockouts.
What are the advantages of warehouse management systems?
Using a WMS can provide a number of advantages, including:
- Improved warehouse layout optimization and inventory tracking
- Decreased warehouse costs
- Increased efficiency and productivity
- Improved customer service
- Better data accuracy and reporting capabilities
- Improved communication between warehouse staff members and more
Are warehouse management systems easy to use?
We can only speak for ourselves, but a good warehouse management system is designed to be user friendly and should require minimal training to understand and onboard new users.
We’ve built SkuVault to include user-friendly features like:
- Easy integration with other eCommerce platforms
- Barcode scanning
- Inventory tracking
- Customizable workflows
- Order management
- Detailed reporting
Perhaps most importantly, SkuVault has a clean and intuitive interface that’s easy for anyone (even non-tech-savvy folks) to navigate.
How can warehouse management systems improve warehouse operations?
Warehouse management systems can help improve the efficiency of the warehouse, reduce costs while increasing productivity, and improve customer service.
By using warehouse system features such as inventory tracking and warehouse layout optimization, warehouse managers can better manage warehouse operations and optimize warehouse processes.
Additionally, warehouse systems can also provide improved data accuracy and reporting capabilities to help warehouse staff better track warehouse inventory and activities.
What is the cost of warehouse management systems?
The cost of warehouse management systems depends on the type of warehouse system you select and your specific needs.
Generally speaking, warehouse management systems tend to range in price from a few hundred dollars to several thousand dollars.
Cloud-based WMS platforms will typically bill on a monthly basis.
It is important to evaluate different warehouse systems to determine which system best meets your budget and requirements.
What warehouse management system features should I look for?
The warehouse management system features you select will depend on your warehouse operations, business goals, and specific needs.
Common warehouse system “non-negotiables” include:
- Real-time inventory tracking
- Integration with eCommerce platforms
- Picking and packing workflows
- Barcode scanning
- Shipping label generation
- Analytics and reporting
- Returns management
- Multiple warehouse management
- User-friendly interface
- Mobile accessibility
SkuVault can help you implement the right warehouse management system for your business
At the end of the day, a WMS helps businesses become more efficient and profitable by giving them better control over their warehouse operations, inventory tracking, and supply chain visibility.
And with the right solution in place, companies can significantly improve customer service and keep their production processes running smoothly.
We built SkuVault as a simple, cloud-based solution to complicated or inefficient WMS platforms. That way, you can spend time working on your business instead of in your business.
Click the button on this page to schedule a demo, or check out our features page to learn more.