Every medium-sized and large eCommerce company needs a WMS (Warehouse Management System). If you send more than 1,000 parcels per month, you simply have to have WMS software that will help you run your warehouse, manage logistics and eCommerce operations, and establish cooperation with the third-party logistics company (also frequently called an order fulfillment company or logistics partner).
In this article, we are going to take a closer look at the WMS systems. You will find answers to questions like: What is a Warehouse Management System? What are the types of WMS systems? What benefits does the WMS system have?
Small eCommerce companies typically deal with logistics and eCommerce operations on their own. They are responsible for supply chain management and the fulfillment process. And yes, if you’ve just started or the scale of your enterprise is small, it’s a reasonable solution. This way, you save money and can it invest in sales and marketing.
However, the situation drastically changes when your company starts to grow, and you are shipping at least 1,000 products per month. At this point, handling logistics in-house is close to impossible. This is the moment when your business needs WMS software and a 3PL (Third-Party Logistics) partner.
What is the WMS system?
In short, the Warehouse Management System helps you manage and organize work in your warehouse. It’s a software solution that supports you in supply chain management, inventory replenishment, inventory auditing, shipping, and managing products.
The WMS system is an IT tool that organizes all warehouse work based on available data (products, orders, inventory, shipping, etc.). It also helps you manage your warehouse team, as it assigns tasks that have to be done. Thanks to the WMS, all work in the warehouse is automated, and you don’t have to control it yourself.
Although WMS is a software product, you have to be aware that one cannot simply purchase via the Internet. The vast majority of WMS manufacturers don’t share price details nor offer the option to download these applications. That’s because the WMS systems work similarly to ERP software. They have to be adjusted to your company’s needs and characteristics. Only this way can you make the most of it. Typically, it takes up to several months to fully implement WMS in your eCommerce company.
How does the WMS system work?
Warehouse Management Systems are advanced IT tools that have to be implemented in a warehouse by a team of IT specialists and logistics experts who have experience strictly in planning the warehouse processes.
Now, what does the WMS system do? Their job is typically threefold:
- Logistics and customer service facilitation: A decent Warehouse Management System should comprise transparent logistics and customer service-related capabilities. It should help you track orders, fulfillment times, shipping procedures, and customer feedback. More advanced products also support you in dealing with returns and complaints.
- Inventory auditing and management: Have you ever had this problem? Someone ordered a product on your website, and oops, it’s not in your inventory. This happens frequently and has an adverse impact on your customer service and UX. Thankfully, the WMS can save the day. A system of your choice should provide accurate, real-time inventory management and auditing so that whenever any of your products are sold-out, no one can order them via your store’s website.
- Time and money savings: Although implementing a WMS is a costly and time-consuming endeavor, in the long run, it’s a beneficial decision. Having a fully functional WMS that’s tailored to your needs will allow you to save money and time. Additionally, your store’s CX can also go sky high. With a WMS, there are no delays or order mix-ups.
FUNCTIONS OF THE WMS SYSTEM
Generally speaking, Warehouse Management Systems can be divided into two major groups:
- Systems with basic functions: Goods inbound, picking and packing, inventory management and replenishment.
- Systems with advanced functions: They have all the basic functions plus various picking and packing strategies, integration with the warehouse automation systems, and advanced controlling and reporting features.
The WMS systems verify the compliance of the delivery with the order, verify the compliance of EAN codes, generate barcodes, arrange products in the warehouse according to specific rules, carry out picking and packing of single orders or multiple orders at the same time, verify the type and quantity of products (also during picking and packing), generate notifications for specific products/orders, control your inventory and shipments, and finally–ship parcels. And that’s just the list of basic functions!
It is worth noting that even medium-sized enterprises usually need WMS software with advanced functions. In most cases, basic systems quickly become insufficient.
BENEFITS OF THE WMS SYSTEM
The list of benefits is actually quite long, and it comprises the following elements:
Full control over the warehouse
With a WMS, you have full control over your staff, warehouse, and the 3PL company. You can monitor what’s going on at any given moment and quickly check your order statuses.
With no delays or mix-ups, productivity goes up. Shortly, you’ll be able to send more parcels per day and spend less time preparing parcels for shipment.
Your customers are satisfied with the service provided by your company because they received exactly what they ordered, and the parcel came on time and in perfect shape.
Reduced administration work
The majority of WMS systems also offer accounting, tax, and administrative features. As a result, you don’t have to spend time preparing and printing necessary documents. Everything happens automatically.
Stock safety and tweaked order planning
You don’t have to worry about your stock levels anymore! Furthermore, the WMS helps you in order planning, which prevents dead stock from happening. Read more about this issue in this blog post.
Types of the WMS systems
There are three major types of WMS software commercially available:
- Standalone: That’s the most popular type, especially because it’s normally the cheapest one. Standalone Warehouse Management Systems are typically deployed on-premises in your native network and hardware. However, you have to be aware that standalone WMS systems lack many of the tools and features that can be found in the cloud or integrated solutions.
- ERP: In this case, you actually order an ERP system with built-in WMS features. ERP modules are extensive software products that are used to manage all the resources in your enterprise. Besides core applications, such as HR, sales and marketing, finance and accounting, and CRM, they can also be used to manage warehouses.
- Cloud-based: Typically, that’s your best bet. They offer all the features and functions available in the standalone products, but they are backed by the enterprise cloud technology, making them more versatile and quicker in implementation.
Tiers of the WMS software
There are three tiers of the WMS systems:
- Core: That’s the tier that offers just the basic functions (mentioned above). Typically, standalone WMS systems are limited to core functionality.
- Intermediate: They have some advanced options and can be better tailored to your company’s needs. For example, they can consist of barcode scanning features and support multi-warehouse companies.
- Advanced: These solutions are almost strictly for the largest international companies. In short, they deliver the most comprehensive warehouse management functionalities available on the market, perfectly tailored to the client’s needs. However, implementation can take up to two years and can cost over 650,000 USD.
The WMS systems in eCommerce
Today, Warehouse Management Systems are common in the entire retail and eCommerce industry. It doesn’t really matter whether you sell your products on the Internet or through brick-and-mortar stores.
A rule of thumb says that if you ship more than 1,000 parcels a month and run at least one standalone warehouse, you should opt for the WMS system.
Today, large eCommerce companies can ship tens of thousands of parcels each month. In such a dynamic work setup, you simply need 24/7 support that will help you manage and oversee all the processes that happen within your warehouse(s).
The cost of the WMS system
The overall cost of implementing a WMS depends on three crucial factors:
- Your warehouse infrastructure
- Implementation and maintenance of the system
If you want to implement the WMS for the first time, you have to prepare for a high cost. The approximate cost of the basic WMS system starts from 15,000 USD. There is no upper limit. And that’s just the initial cost. Bear in mind that there’s also a monthly maintenance fee. All in all, it isn’t easy to assess the exact price as it depends on the functions you need, the scope of integration, additional services, and also, other investments (for instance, in the more advanced eCommerce platform).
How to choose the perfect WMS system?
First of all, make sure that this investment will be profitable in your case. It’s relatively straightforward to make the decision, but keep in mind that it has to be beneficial for your business. Find out what solutions are available in your country.
Simultaneously, conduct some research and understand what your needs are. It’s always a good choice to make a list of requirements. When you have it, send the request of proposal to chosen companies. Pick at least three different vendors so that you can make an informed decision.
Also, make a list of additional questions. For instance, how long will the implementation process take, and what adjustments are necessary? Pay extra attention to questions these companies will ask you and analyze their answers. Finally, pick the company that seems to understand your business and its needs. And remember, don’t go with the cheapest option if it doesn’t seem like a good fit.
It’s time to sum up our discussion. If you run a medium-sized/large eCommerce company, a WMS is indispensable. This software is designed to aid you in everyday work and improve the efficiency of your warehouse. If you run a large eCommerce or retail company, it’s the only way to scale your business and serve more customers per month.
Also, keep in mind that there’s the other side of the coin. The implementation process will take at least several weeks, and you have to be prepared for a serious financial investment. Furthermore, it may turn out that these several months of implementation will adversely affect your productivity. But don’t worry, it’s just a temporary complication.
And remember, if you work with Omnipack, you have access to our Warehouse Management System (and our warehouse as well, for that matter). Working with an experienced logistics partner is also a fantastic opportunity to grow sales, save time, and increase your eCommerce business efficiency. Do you want to find out more? Drop us a line today!