Digital Retail & Technology | Supply Chain & Logistics

How warehouse management systems work and how to apply best practices

August 23, 2021

This article is provided by Reshift Media, a Canadian-based digital marketing and development organization specializing in retail businesses.

A warehouse management system (WHS) combines software and specific processes to offer retailers the ability to stay on top of their inventory and supply chain operations. When it’s in disarray, it can cause negative implications on revenue, customer satisfaction, and future planning. A WHS provides retailers with an essential, virtual birds-eye view over a warehouse, including how and when items move through the warehouse, and it gives real-time insight on things like order fulfilment, tracking, labour, and analytics.

If you are a retailer that uses a warehouse or fulfilment center, remaining aware of what’s going on will either offer reassurance that operations are running smoothly, or will highlight areas that need improvement. Either way, your inventory situation and all the processes that follow require constant attention, and a WMS will do this for you by removing the guesswork, which will help you, as a retailer, succeed at an optimized level. Below is a summarized overview of how a WMS works, things to keep in mind when selecting software, and some of the best practices to follow in the warehouse when implementing a WMS software.

How a Warehouse Management System Works

Each WMS will look different depending on the software you choose, but there are main processes within each software that will look similar throughout, and it is important to recognize how they work to utilize the system in the best way possible.

Inventory Management

This is the first process because a WMS relies on inventory to work. As you order goods, the WMS will process that data and then use it to provide future details, such as stock level. It will also help keep track of where each item is and where it sends from, such as if you have multiple warehouse locations, or if it is on its way to the warehouse(s) from your supplier.

Not only is it important for you as a retailer to know what you have in stock in order to effectively sell to consumers, but especially if you have an eCommerce element within your business, as you do not want customers to make it to the finish line (the checkout page on your website), and purchase their items, only to find out later that what they purchased is not available. Reducing the number of times you stock-out and overstock can lower overall inventory costs by 10%. A WMS will also help you organize your user interface on your website to ensure what is displayed is actually purchasable, which will save you from facing any future customer service issues.

Picking, Packing, and Shipping

The second process of a WMS software looks at the steps that occur after ordering goods. This can include the items you want to send to your store or the items that need to ship to a customer’s delivery address. This process is particularly important because, as a retailer, you want to be able to track not only the items going into your warehouse or distribution center but the items going out as well.

A WMS will offer this detailed tracking overview for you, as well as provide a list (packing slip) to the warehouse of what is included in each order. Once they receive this list, the items are picked, subsequently packed, and a shipping label is produced. A WMS will also offer insight into what stage each item is in, such as if it is being picked or packed, if something happens to an item, or if an item is returned by a sender. It is all provided in a digital, automated report sent directly to you.

Analytics

The final process of a WMS is the data that comes with it. Useful data is gold – it provides retailers with visually displayed pieces of information that they need to keep track of what’s going on and how to improve. Especially when it comes to warehouses, which as a retailer, you are likely not going to visit daily, the data produced by a WMS allows you to be a fly on the wall  to the processes going on in a facility that is not necessarily nearby.

A WHS can provide real-time updates on specific details on inventory, such as what items are selling better than others, data on peak times of the year, and so on. Looking beyond inventory, a WMS will also provide insight into warehouse location workers to ensure safety protocols are consistently followed.

Selecting a Warehouse Management System

When choosing a WMS software, it is important that it seamlessly integrates into your business. However, as maintaining efficient business processes and staying on top of warehouse operations are becoming increasingly challenging, selecting the appropriate WMS is imperative. It is important to understand the types you can choose from, which we have briefly outlined below.

  • Standalone Systems: This type of WMS is on the more basic side in terms of what it can offer retailers, as it is typically used just for warehouse operations such as supply chain flow. This software is typically within the warehouse itself and used on the existing hardware.
  • Cloud-Based Systems: This is a web-based software that uses cloud technology, often using SaaS, which can be extremely appealing to retailers, as you can access it anywhere at any time. It is a popular option, and it can provide an enhanced version of the same features you will find in a standalone system. 
  • Supply Chain Systems: Supply chain management (SCM) is quite broad, meaning you can class a WMS as a subcategory within it. SCM software can offer a greater overview of warehouse systems, as it can automate tasks but also provide insight on vendors, risk, and other business processes. That said, retailers would need to find SCM software that offers warehouse features.
  • ERP Systems: Enterprise Resource Planning (ERP) software is used to monitor the business as a whole and can combine many of the features offered in other WMS systems. ERP software automates across departments and can offer many benefits, including the ability to ensure there is a flow between all aspects of a retail business. It is, basically, an all-in-one solution.

Best Practices

Whether you already have a WMS software, or you are looking to acquire one, there are some practices to keep in mind.

First, it’s important to move away from manually entering data. The entire point of utilizing WMS software is to rely on its automated capabilities, and manually entering items into the software can often lead to some undesirable results if mistakes are made. If your items have a barcode, which they most likely will, a WMS software can offer the ability to simply scan a barcode, and the information will be automatically entered.

Next, it is important to stay organized; it is key to remain aware of how your warehouse or distribution center is set up, as it will help keep you, warehouse staff, and the WMS software operating at an optimized level. A WMS software can only work as well as the warehouse it connects to. If a warehouse is disorganized, there is a lack of strategy, or the several systems within a warehouse, such as picking, packing, and shipping, are not properly organized within the warehouse itself, your WMS will not be of much use. Solutions might involve reorganizing the floor plan if needed to be more efficient.

Prioritizing safety within a warehouse is also an important practice to follow. When a warehouse is at its best, it will extend to the success of your business. With fewer opportunities for injury and unproductivity, thanks to an increased focus on safety, the staff in your warehouse(s) will be able to work more efficiently, and the data presented from your WMS software will be much more reliable and accurate.

Lastly, try to remove as many touchpoints as possible. A way to reduce the number of errors and delays is by limiting the number of separate tasks. For instance, rather than having one person pick the inventory in your warehouse, having another pack the times, and another creates the shipment label, try and combine the responsibilities. By doing so, you are helping to reduce any inefficiencies caused by a lack of communication or direction, and this can translate directly into the efficiency of your WMS software.

Utilizing a WMS software can offer many benefits as a retailer, and it is important to ensure the software you select will further enhance the practices you follow. Ultimately, this will provide your customers with an optimal experience when engaging with your business, which is key.


About Reshift Media

Reshift Media is a long-time partner of the Retail Council of Canada. The company is a Toronto-based digital marketing and development organization that provides leading- edge social media, search and website/mobile development services to retailers around the world. Please visit www.reshiftmedia.com to learn more.

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