The Warehouse Management System (WMS) is an indispensable software for controlling and managing inventory (see also inventory management) and storage locations within closed operations (e.g. distribution centers or manufacturing plants). Structurally, WMS solutions usually fall under a host system, such as Enterprise Resource Planning (ERP).

Who benefits from WMS systems?

Software-based support is of interest to all parties involved in warehousing. The more complex and larger the inventory, the more sense it makes to organize it with the help of suitable software. The demands of operators of smaller warehouses (e.g. garages or basement rooms) and traditional brick-and-mortar retailers, who keep inventory on the business premises themselves, are quite different from those of large warehouse operators. While less specialized solutions are sufficient for the one group, which are sometimes also offered as part of other systems, it is recommended for others to use specialized solutions that map the warehouse area in greater detail and regulate it more efficiently.

In areas where inventory management becomes so large and complex that intralogistics is a separate business unit, usually in the context of managing entire warehouses, WMS solutions for modern warehouse management are essential. While Microsoft Excel can still be useful (and is still common practice) in warehousing situations that focus on manual activities, such systems are indispensable for distribution centers that rely on automated materials handling technology. WMS solutions play a central role for most operators of complex intralogistics facilities. Accordingly, warehouse management systems are of particular interest to large companies in industry and trade, as well as to logistics service providers with their own warehouse infrastructure (see 3PL and ‘Warehousing‘). From manufacturing to e-commerce to direct distribution, from fashion to subcontracting to pharmaceuticals, WMS is used in all sectors and industries.

What defines a WMS?

Or to put it another way: when are the functionalities of a system sufficient to also consider it a fully-fledged WMS?

The most objective answer to this question is provided by the Association of German Engineers (VDI). In the guideline VDI 3601 “Warehouse Management Systems” which requirements must be met to be considered a warehouse management system (WMS). Additional information about VDI 3601 is compiled in a separate article. A comprehensive overview of the scope of services of corresponding warehouse systems can be found here.

Functionality of warehouse management systems in warehouse areas

A warehouse management system manages all stocks and processes in a warehouse. As a rule of thumb, everything within the four walls of a warehouse can be included. On the process side, the scope of the WMS extends from goods receipt to goods issue, whereby, depending on the respective software provider and system, adjacent areas such as yard and gate management can also be taken into account. Accordingly, high-quality warehouse software supports all possible tasks and areas of warehouse management.

Warehouse management – tasks of a warehouse management system including material flow control

Goods Receipt

In the area of goods receipt, warehouse management systems (WMS) offer comprehensive functions for optimizing inbound management. These include forward planning and automatic supplier assignment to efficiently control deliveries. Barcode scanning and RFID capture speed up and improve the accuracy of incoming goods registration. A comparison with orders makes it possible to immediately identify shortages or excess deliveries. WMS software also supports quality inspection and inventory labeling, which updates item logistics data in real-time and automatically assigns storage locations. Returns are managed through specialized workflows. Digital documentation enables paperless archiving capabilities. This makes goods receipt more efficient, transparent and error-free, optimizing warehousing and the entire delivery process.

Storage, inventory and space management

Warehouse management software is designed to increase transparency and efficiency in warehousing. Well-organized warehouse management has a positive effect on the entire supply chain. By automating warehouse processes, such as stock transfer or replenishment management, bottlenecks can be avoided, errors minimized and productivity increased. Software-supported storage location management determines the most suitable storage location for each product during putaway. Factors such as size, weight or turnover rate are taken into account, which reduces the time required for putaway and picking. In inventory management, they provide dynamically adjusted, precise information about current stock, quantities and locations. Real-time data helps to avoid stockouts and increase delivery performance.

Order fulfillment

The focus here is on order management, which automates and provides transparency throughout the entire process from order acceptance to delivery. The WMS makes it possible to record and monitor orders in real time. In the context of order control, the warehouse management system efficiently prioritizes and assigns orders to warehouse personnel based on factors such as urgency or storage location. This speeds up picking and shipping. The integration of tracking mechanisms and mobile devices increases precision, while real-time data helps to avoid bottlenecks and delays. Error-free processing in the warehouse also has a positive effect on customer commitment.

Material flow control

The material flow as a subcategory of warehouse management seamlessly follows the order processing. Through automated processes in the management of the stock, the WMS ensures that goods are efficiently stored, relocated and picked. The material flow is monitored in real time to avoid bottlenecks or delays. Solutions known as material flow controllers (MFC) are in operation here. With the help of route optimization adjusted in real time, they can help ensure that inventory takes the shortest and fastest route through the infrastructure of the respective warehouse. To do this, it takes into account both the architecture and topology of the warehouse, the built-in materials handling technology, from high-bay warehouses, automatic bin storage or CubeStorage systems to pocket sorters and automated guided vehicle systems, as well as manual processes such as picking or order picking. The latter can be partially automated and supported using MDT devices. Selecting the shortest routes saves time and resources. The WMS supports the flow of materials by automatically notifying users when stock levels fall below a certain threshold.

Management tools

Good warehouse management systems provide information about every “what” and “how much” and every “how”, “why”, “when” and “where” at any time. This results in numerous possibilities for monitoring and quality control in warehouse logistics. With the help of suitable management tools for the operational intralogistics control center, warehouse activities can be monitored in real time. Important key figures and analyses can be visualised on intralogistics dashboards to assess the current status of processes and their efficiency – from inventory turnover, order or item fulfilment rates to return rates. Work progress graphics enable precise control and adjustment of processes. Resource planning and workforce management tools optimize the allocation of personnel and equipment to increase efficiency. With these functions, the WMS continuously supports process optimization and helps identify bottlenecks and take countermeasures at an early stage, thus improving overall warehouse performance.

As an information system, it also provides detailed information for upstream and downstream systems – keyword business intelligence. In addition to the operational control center in the warehouse, management tools at other company levels also benefit from the processed data.

Interfaces

Interfaces and the flexibility that they provide are essential for integrating a WMS into a company’s entire IT landscape. They help to optimize logistics processes by ensuring smooth workflows with external partners and systems. They enable data exchange between WMS and other systems such as ERP, CRM, EDI, materials handling technology or external systems for automated shipment notifications or customs clearance. This ensures a smooth flow of information and prevents data silos.

The topic is also of enormous importance in the context of warehouse automation. Systems that are highly compatible enable the integration and coordination of a wide range of technologies, be it racking systems, materials handling technology, identification solutions such as barcode scanners and RFID or the use of mobile devices (including handhelds). High-performance, scalable interfaces handle real-time data transmission and allow the user to select solutions without being tied to individual manufacturers. This is a recurring theme, particularly in the context of driverless transport systems (DTS; also known as AGV). This is particularly illustrated by the interface definition VDA 5050, which, from a purely technical point of view, would not be absolutely necessary for particularly adaptable WMS systems (although it makes economic sense).

Picking

WMS support different picking strategies such as single, multi- or zone picking to make the process efficient depending on warehouse requirements. They also control the replenishment organization by automatically triggering replenishment from the warehouse to the picking area as soon as stock levels drop. A WMS also integrates mobile devices such as hand-held scanners, tablets or conventional smartphones, which guide warehouse personnel in real-time during picking and thus reduce error rates. These devices enable precise identification and recording of items. By connecting to automated guided vehicle (AGV) and forklift control systems, the WMS manages the flow of materials and ensures that inventory is transported automatically and quickly to the right place. These features speed up picking, reduce walking distances, and increase productivity in the warehouse.

Packing

Warehouse management systems also optimize packaging processes through automation and transparency. The software controls the packaging and completion of orders by ensuring that all items are correctly combined and packaged. It can also support special individual requirements, such as ‘special handling’ for sensitive or specific inventory. Another important function is document generation. The WMS automatically generates shipping documents such as delivery notes, labels or customs documents and ensures that these are correctly and completely attached to the packages. This simplifies the entire shipping process and minimizes errors.

By integrating the packing process into the WMS, the entire process from picking to shipping is made more efficient. Automation and real-time data ensure a high level of accuracy and, in addition to increasing process speed, also increase end consumer satisfaction.

Outgoing goods

In the goods issue area, the WMS helps to consolidate orders. Transport costs are minimized by bundling and packing orders together. The warehouse software contributes to optimal route planning by grouping deliveries according to destination and putting them in a meaningful order. For international shipments, automated customs processes facilitate processing. ‘Tracking and Tracing‘ functions are taken into account throughout the warehousing process, so that both the shipping status and the tracking of deliveries can be traced in real-time. Last but not least, the system handles shipping and notification of customers or carriers, so that all parties involved are informed of the time of shipment and the respective time of takeover.

Yard Management

Outside the four walls of the warehouse, but also covered by WMS, is the area of yard management or depot management. The purpose of this is to optimize processes in the outdoor storage area. A central function is the management of truck parking spaces, which ensures efficient allocation and organization of parking spaces for arriving and departing vehicles. This allows for optimal use of available space. In addition, the WMS supports time slot management, which coordinates the arrival and departure times of trucks to ensure smooth operations and minimize waiting times. Real-time tracking makes it possible to keep an eye on the status of vehicles and their cargo at all times, so that unloading processes can be managed more efficiently. By integrating yard management processes with warehouse and shipping operations, the WMS ensures a seamless transition of inventory from the transport vehicle into the warehouse, boosting both productivity and overall efficiency in the yard.

The interlocking of warehouse management systems and facility architecture

When implementing a warehouse management system, the individual requirements (such as warehouse topology and throughput) must be taken into account. The WMS and the system architecture within a distribution center are inextricably linked.

From an economic point of view, when choosing the appropriate warehouse management software or WMS, it should be tailored to the respective processes and procedures. The scope of the system should also not be larger than needed, as unnecessarily complex software can have a negative impact on response times.

The requirements that the warehouse management system must meet are defined in the guidelines of the Association of German Engineers (VDI).

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