Demand & Inventory Planning

What is a Warehouse Management System?

Demand & Inventory Planning
March 23, 2022
10 min read

Everything you need to know about warehouse management systems (WMS) and how to choose the right one for your business.

What Is a Warehouse Management System?

A Warehouse Management System (WMS) is a software solution (ideally cloud-based) that gives merchants visibility into their fulfillment operations. A WMS tracks inventory from the moment it arrives at the warehouse to the moment it leaves on a last mile delivery vehicle. On the warehouse end, it’s used for everything from high-end management functions to processing inbounds and picking and packing.

Warehouses use a WMS to ensure that the movement of goods through the warehouse is as efficient as possible to avoid inventory shrinkage and dedicate labor hours to the functions that matter most for on-time fulfillment: picking, packing, and shipping.

What is Warehouse Management?

Warehouse management is the process by which merchants and warehouses work together to improve efficiency and decrease operating costs of storage and fulfillment. Warehouse management encompasses both digital processes like inventory reporting and manual ones like slotting SOP’s that drive greater efficiency.

Basic Features of Warehouse Management Systems

WMS should automate as many warehousing and fulfillment processes as possible via direct shopping cart integrations, marketplace integrations (ie Walmart Marketplace and Amazon), and electronic data interchange (EDI) connectors. As selling becomes increasingly complicated due to multichannel fulfillment, the WMS provides visibility into day-to-day operations and logistics and delivery statuses

A WMS that seamlessly integrates with a merchant’s ecommerce shopping cart and marketplace listings eliminates the need for multiple spreadsheets and manual order uploads. It also cuts down on customer service requests by sending customers regular updates on their fulfillment status and real-time delivery tracking.

A fully integrated WMS will help automate four major processes:

  • Order Management: New orders are automatically routed to the warehouse for fulfillment so there’s no lag time in fulfillment and no manual upload process.
  • Inventory Management: See inventory levels across all fulfilment centers and reallocate inventory based on demand through a single platform. This real-time visibility prevents stockouts, frustrating customer experiences, and missed sales opportunities.
  • Delivery Tracking: Tracking numbers will sync automatically with sales orders and send shipping confirmations to customers. Partnering with a trusted last mile carrier ensures that tracking information is up to date and reliable.
  • Reporting: Having all of this information integrated through a single platform allows for advanced reporting around demand forecasting and inventory balancing to enable proactive supply chain planning.

This level of integration allows sellers to forecast future demand and anticipate supply chain activities to take the guesswork out of inventory re-ordering and inventory distribution. Eventually, quickly-growing merchants may even be able to sell products without ever having physical possession of merchandise.  

Ultimately, eCommerce merchants that rely on a powerful WMS as part of their digital warehousing strategy make more efficient use of their time and money, allowing them to focus more resources on product development, marketing, and customer service.

Where a WMS Fits in the Supply Chain

A powerful WMS not only streamlines operations within the warehouse, but also feeds efficiency upstream within the overall supply chain. The right WMS will offer inventory insights and demand forecasting tools that help merchants determine:

  • Profitability at the SKU level to determine which SKUs they should prioritizing for reorder and which may be extraneous to their SKU profile.
  • SKU velocity to determine the ideal reorder quantities that balance bulk supplier discounts with healthy inventory turns.
  • Customer distribution and average Time in Transit (TNT). If a merchant discovers that the majority of their customers are concentrated on the East Coast, but they have been importing into a West Coast port, they may want to consider re-routing shipments to a secondary port closer to their end customers.

Optimizing eCommerce Operations with a Warehouse Management System 

eCommerce sales channels have evolved rapidly to help merchants scale their sales operations. Because ecommerce sales are all managed digitally, they handle growth seamlessly and inexpensively. However, many merchants face the challenge of scaling their fulfillment operations at the same pace to meet growing demand from their sales channels. This is where a powerful WMS can stand in the gap and help to digitize warehousing and fulfillment. 

Children’s furniture and toy retailer, ECR4Kids, found that when they relied on technology for their ecommerce fulfillment, they had the confidence to scale up quickly with spikes in demand.

Integrating all sales channels through a single WMS platform also makes inventory, sales, and shipping data much more actionable. For instance, the WMS lets merchants determine real-time stock availability, forecast inventory accuracy, and set reorder points in advance to mitigate shortages. It also enables highly accurate inventory cycle counts to reduce inventory shrinkage or obsolescence.

What’s more, this data can also be used to improve delivery speed and control bottom line costs. A smart WMS will utilize machine learning to recognize patterns in sales and shipping data to help ecommerce merchants understand where their best customers are located and their average price per shipment. With this data, merchants can choose warehouse placement that gets their inventory closer to their end customers, enabling 1 to 2-day ground shipping no matter where their customers are located. The benefits of a smarter distributed warehouse network are 2-fold:

  1. Meet Customer Expectations for Delivery Speed: Data shows that consumer expectations for fast shipping are continually increasing. Distributing inventory closer to end customers enables the fast shipping that ecommerce shoppers have come to expect.
  1. Control Fulfillment and Delivery Costs: Merchants who are fulfilling orders from a single warehouse are likely sending long-zone shipments to reach many of their customers. These long-zone shipments increase Time in Transit (TNT) and drive up costs. Distributed warehousing ensures that most shipments will be delivered in 1 to 2 days via ground, keeping costs down while meeting ecommerce shipping expectations.

See your average TNT with our free network analysis tool

Types of Warehouse Management Systems

Any merchant who has partnered with a small or regional 3PL knows that not all WMS are created equal. Often, regional 3PL’s will employ a Standalone WMS. These systems are typically housed on the warehouse’s server and only track functions within the warehouse. They support receiving and put-away tracking as well as pick, pack, and ship and inventory cycle counts. They often rely on manual processes but serve their purpose for small businesses operating from a single warehouse.

When businesses are ready to expand their warehouse distribution footprint to offer nationwide 1 to 2-day ground shipping, they may first opt to add more regional 3PL’s to their network. However, if each of these regional 3PL’s is operating on its own Standalone WMS, merchants will be stuck in the middle, switching between WMS platforms to monitor inventory levels and fulfillment statuses at each 3PL.

Businesses looking to gain more visibility into their fulfillment in order to scale quickly would be better served by an Integrated ERP System or an Cloud-based Warehouse Management System. An Integrated ERP will enable merchants to integrate their accounting, supply chain planning, and CRM functions into their WMS. While a Cloud-based WMS that connects all fulfillment centers across their network to give a high-level view of inventory levels and order and fulfillment statuses.

Ware2Go’s Warehouse Management System Features

Ware2Go’s WMS, FulfillmentVu features an open API that integrates with over 70 ecommerce and retail technologies. It serves as a single connection point between fully sales channels and full-service fulfillment capabilities. Ware2Go’s distributed network is flexible and adaptable to scale quickly with shifts in demand or channel requirements. FulfillmentVu’s key features include:

  • Connected Channels – The merchant portal can be fully customized for easy access to link order fulfillment to virtually any sales channel, ecommerce provider, marketplace, or EDI.
  • Warehouse Management – The portal’s warehouse management capabilities include retail compliance, third party billing, lot and expiry tracking, as well as management of big and bulky items, and serialization.
  • Transport Flexibility – The technology is supported by Ware2Go’s flexible fulfillment network, capable of managing transportation options including small parcel, less than load (LTL), full truckload (FTL), international shipping, UPS SurePost and UPS Mail Innovations. All transport modes and fulfillment types can be handled through a single network and dashboard.

FulfillmentVu’s advanced fulfillment capabilities connect Ware2Go’s nationwide 1- to 2-day delivery network. It is supported by Ware2Go’s rigorous service level agreement (SLA), which guarantees 99% accurate and on-time fulfillment, a 48-hour dock to stock time, and same-day fulfillment for all orders received before 3:00 PM. Merchants are also supported by Ware2Go’s dedicated client support team and data analysts who help identify opportunities for cost savings and revenue growth with regular reporting and analysis.

To learn more about Ware2Go’s best-in-class WMS, reach out to one of our fulfillment experts.

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