What is a Warehouse Management System (WMS)?

High demands on delivery capability, complex global supply chains, volatile markets. Efficient warehouse management is crucial to the success of a company. The demands on quality, speed and flexibility in warehouse management are increasing. A warehouse management system (WMS) is an important tool that helps companies to optimize stock levels, automate intralogistics processes and thus increase customer satisfaction.  

What is this introduction to modern warehouse management systems about? 

• We explain what a WMS is and what functions it offers for the operation and organization of a warehouse.  

• We describe the advantages that a warehouse management system has for companies.  

• We also take a look at technological innovations that promise particular productivity gains in conjunction with a WMS. 

For a better understanding, we will accompany this introduction to the function and benefits of WMS with excerpts from the video ‘Warehouse Star Tour’ by Bitergo GmbH.   

What is a Warehouse Management System? 

A warehouse management system (WMS) is a software solution that efficiently manages all operations within a warehouse. This includes managing stock levels, optimizing storage locations, processing orders, incoming and outgoing goods, integrating shipping service providers and connecting to higher and lower-level IT systems such as ERP, warehouse technology, etc.. The WMS also provides particularly transparent digital documentation of warehouse processes. A WMS helps to monitor and control all warehouse processes in order to maximize their efficiency and accuracy. 

What are the Functions of a WMS? 

The main functions of a WMS are: 

WMS-Function Inventory Management 

A WMS offers real-time transparency of stock levels. The responsible persons therefore know at all times which items are available and where they are located. This real-time data enables precise inventory management and prevents overstocking and bottlenecks. Inventory management also makes it easier to plan and fulfil orders and returns. This increases the efficiency of the entire supply chain. Automatic low stock notifications and integration with other systems such as ERP (Enterprise Resource Planning) ensure seamless and reliable inventory control. In short: a WMS provides the best possible overview in the warehouse. 

WMS-Function Incoming Goods 

Automated processes for incoming and outgoing goods reduce errors and speed up processing. The integrated use of barcodes and RFID technology makes the recording and tracking of goods more precise and efficient. Real-time data enables immediate stock updates and integration with other company systems ensures seamless processes. Employees can focus on value-adding activities while the Warehouse Management System takes over routine tasks, increasing overall warehouse productivity. The Warehouse Management System (WMS) brings order and structure to incoming goods, even at peak times. 

WMS-Function Order Picking / Order Processing 

The Warehouse Management System optimizes the picking process by suggesting the fastest and most efficient route for order picking. In doing so, it takes into account factors such as the storage location of the items, the order sequence and possible bottlenecks in the warehouse. The integration of real-time data and intelligent algorithms avoids bottlenecks and maximizes the productivity of all resources. This results in a significant reduction in picking times and an improvement in the overall performance of the warehouse. With a warehouse management system (WMS), picking becomes precision work. 

WMS-Function Storage Location Management 

A WMS helps to optimize the placement of goods in the warehouse. The aim is to save space and speed up access to the stored goods. Factors such as weight, size and frequency of access are taken into account in order to further optimize storage and shorten distances for employees. For example, the system can suggest placing frequently used items near the dispatch stations, while seasonal or rarely used items are stored further away. The Warehouse Management System (WMS) gets the most out of every warehouse. 

WMS-Function Outgoing Goods / Shipping Management 

Integration with shipping service providers enables seamless processing and tracking of deliveries. The system automatically selects the best shipping service provider based on cost, delivery time and service quality. It also offers automatic creation of shipping labels and documents and the ability to track the shipping status in real time. Customers receive up-to-date information on the delivery status of their orders, which increases transparency and improves customer satisfaction. By automating these processes, time and costs are significantly reduced. With a Warehouse Management System (WMS), goods dispatch becomes a matter of course. 

WMS Function Reporting and Analysis 

The reporting and analysis functions make it possible to collect, analyse and present data on stock levels, movements and workflows. Detailed reports allow warehouse managers to gain important insights to optimize stock levels, identify bottlenecks and achieve efficiency gains. The analysis functions provide the ability to track trends over time and create forecasts that are essential for strategic planning. Effective WMS reporting and analysis strengthens decision-making and contributes significantly to improving overall warehouse management. The Warehouse Management System (WMS) provides real-time warehouse operations with automated reporting. 

The Advantages of a WMS 

The implementation of a WMS has numerous advantages: 

• Increased efficiency: The automation of many manual processes increases efficiency.
  
  
• Increased quality: At the same time, the error rate is reduced by avoiding manual input processes.
  
  
• Cost reduction: Optimized warehouse processes and better use of resources (space, storage locations, transport, personnel) lead to considerable cost savings.
  
  
• Improved customer satisfaction: Fast and precise order processing ensures satisfied customers and increases customer loyalty.
  
  
• Scalability: Cloud-based WMS solutions in particular offer convenient options for growing with the company and adapting to changing requirements. 

See also our blog article: 

• Warehouse management with Excel versus a digital Warehouse Management System - comparison and recommendations, especially for small companies

Technological Innovations in Warehouse Management Systems 

The rapid development of technologies such as artificial intelligence (AI), robotics and the Internet of Things (IoT) is also revolutionizing warehouse management. These innovations are further improving the efficiency and accuracy of warehouse processes: 

• WMS and automation: Robots and autonomous industrial trucks take over tasks such as storing and picking goods, which significantly increases efficiency. In combination with a WMS, their use is all the more effective and safe. Modern WMS offer suitable standardized interfaces for this purpose.
  
  
• WMS and data analysis: With the help of big data and AI, companies can make predictions and continuously improve their warehouse processes. The information that is recorded, stored and analyzed in a WMS is the ideal data basis for this.  
  
  
• WMS and IoT: Connected devices enable seamless communication between different warehouse areas and ensure real-time transparency. This starts with handheld devices such as mobile scanners and will be significantly expanded in the future through the use of intelligent sensors. The WMS is the central platform for collecting and productively linking this data. 

Warehouse Management Systems:
Challenges and Solutions 

A warehouse management system (WMS) offers warehouse operators numerous advantages. But there are also challenges that need to be overcome: 

Costs for implementation and operation: The introduction of a WMS can be expensive, but in the long term the investment is amortized by the savings achieved. 

See also our blod articles: 

• What does a Warehouse Management System cost? Guide and overview of Warehouse Management System costs

• Free Warehouse Management: When do you save money? When does it get expensive?

WMS training for employees: Training employees in the use of a WMS (Warehouse Management System) is crucial in order to fully utilize the benefits of this technology. Thorough training enables employees to understand the functions of the WMS and use them effectively and accurately. This leads to overall improved operational efficiency and accuracy. In addition, training helps to deepen understanding of the underlying business processes and promotes compliance with operational standards. Well-trained employees can respond more quickly to new system upgrades and solve problems independently. 

Data integration: Integrating a WMS into existing IT systems can be complex, but modern WMS offer flexible interfaces and integration options. These enable a seamless connection with ERP systems, transport management systems and other relevant platforms to ensure a smooth flow of information. Through integration, companies can better coordinate their entire supply chain, from procurement to warehousing to delivery. This not only promotes efficiency, but also enables real-time data analyses and reports, which are essential for making informed decisions. Well-planned data integration maximizes the functionality of the WMS while optimizing operational processes by minimizing redundant data entry and increasing the accuracy of information. 

What are Warehouse Management Systems: Conclusion   

A warehouse management system is an indispensable tool for modern companies. It not only offers more efficient warehouse management, but also makes a decisive contribution to improving the entire supply chain. By utilizing the latest technologies such as AI and IoT, the future of warehouse management is becoming even more exciting and promising. Investing in a WMS is therefore an investment in the future of a company. 

And here is the complete Bitergo WMS (Warehouse Star) video: