What is Warehouse Management? | Systems, Types & Benefits


Any business that sells goods or services which require the use of tangible assets will require a location to store said items. There are a number of options available to businesses including purchasing land and a warehouse, renting warehouse space, using a distribution centre or partnering with an order fulfilment company.

Regardless of which option is chosen, proper warehouse management is needed to maximise the potential of success for the company. It is irrelevant if you have the most advanced warehouse and fulfilment equipment if they are coupled with underperforming employees and poor management. Incompetent or inefficient warehouse management can lead to consistently unsatisfied customers and lower profit margins.

As some of the most delicate points of the supply chain concern inbound and outbound logistics, it is crucial for businesses to master the art of warehouse management and understand why it is so integral to the overall efficiency of the entire supply chain and the general success of a business.

What is Warehouse Management?

Simply put, warehouse management refers to the internal processes and conventions that influence the daily operations of a warehouse. Multifaceted, warehouse management comprises of:

  • Receiving goods
  • Dispatching goods through order fulfilment
  • The organisation of warehouse space
  • Inventory management
  • Employee timetabling
  • Process review for optimisation

The objective of effective warehouse management is to consistently review internal processes to ensure that fulfilment and restocking of goods and assets is done with as much efficiency as is reasonable, whilst integrating new technologies and processes when possible.

Benefits of Good Warehouse Management

Though customers are not often privy to the processes behind order fulfilment and warehouse management, such processes are critical to customer satisfaction. Efficient warehouse management is crucial in fulfilling orders accurately and as efficiently as possible, to any delivery timescale agreed to by the customer.

Effective warehouse management can, over time, transform a company from one stuck in a bygone era of retail, to a trailblazer in the modern marketplace. Companies such as Woolworths and Toys ‘R’ Us were casualties from the old era or retail, partly due to their failure to embrace modern purchasing trends, such as online shopping. Other companies, such as Argos, though they were slow to react to changes in technology and consumer purchasing habits, had just enough to survive the transition and now thrive, thanks to efficiently transitioning their business model and fulfilment processes.

Though it can be complex and challenging, optimising your warehouse management internally, or via an external warehouse management system (WMS), can reap many benefits, including:

  • Faster order fulfilment and overall service
  • Higher-quality service via real-time stock levels, tracking and holistic aftersales systems
  • The overall effect on the entire supply chain
  • Positive customer experience
  • Improved relationships with suppliers and manufacturers

Five Essential Processes of Warehouse Management

Warehouse management encompasses one large and important portion of the overall management of the supply chain. An all-in-one warehouse management system can allow business owners to evaluate each function across the warehouse and quickly gain real-time data to discover where improvements can be made throughout the process.

1. Receiving and Stocking

All warehouses will be required to receive goods from trucks and place them in storage. A WMS will be required to scan each pallet, determine inventory levels and add them to the stock levels kept on-site.

Once added to the inventory levels, an effective warehouse management process will determine whether the goods are intended to be kept in short-term or long-term inventory storage.

2. Inventory Tracking

Effectively the monitoring of stock levels, ensuring that workers and systems know exactly which SKUs are readily available and where they are physically kept in the warehouse. If they are not readily available, your inventory tracking system should also be able to inform you whether that specific SKU is en route from the supplier.

Specialist inventory management systems can inform you as to how much inventory is to be shipped to a customer, whilst it can also be set up to alert you to purchase more stock based on projected demand volumes.

As you grow and your inventory turnover accelerates, keeping on top of your inventory management  – for accuracy and tracking – becomes even more crucial.

3. Reporting

Any warehouse management system worth using should produce inventory reports that cover the entire warehouse. Important information to keep track of include order accuracy, total orders, total orders fulfilled per house, delivery time accuracy and more. Each report is required to work on internal efficiency and productivity.

Reports are also useful to businesses when determining inventory forecasting, accelerated inventory turnover and seasonal inventory expedience to determine labour management and staff requirements.

4. Picking and Packing

Possibly the most important aspect of a warehouse, a well-implemented warehouse management system will produce what is known as a “pick list” for each picker: usually based on the most efficient floor plan, relative to where each item is stored in the warehouse.

When an order is picked and removed from the inventory, it is passed on to a packing employee, who will then securely package the goods in appropriate delivery packaging and affix the relevant shipping label on it.

5. Shipping

Once an order has been picked and packed, a shipping carrier will usually retrieve orders from the warehouse and transport them to the next location: this is typically the end customer.

Newer WMS will send an automatic order tracking message to the warehouse and the customer so that shipments can be tracked in real-time.

What is a Warehouse Management System?

A WSM is a software system that is used to simplify the process of managing a warehouse via integrating the software into every aspect of the warehouse management structure, where possible. An all-encompassing warehouse management system can aid you in various ways, including:

  • Real-time inventory data, including location and quantity
  • Tracking, monitoring and reporting of productivity – allowing you to implement improvements to employees, processes and warehouse space
  • Useful training and development via the creation of step-by-step guides for daily processes
  • Use of automation and algorithm analysis to create data sheets and daily operating plans and sales forecasts

Types of Warehouse Management System

Which type of WMS is beneficial to your business? There are two main options: standalone or integrated.

Standalone WMS

Though a standalone warehouse management system can be integrated with other systems, it is pushed primarily as a warehouse management software that governs all other systems not necessarily built with the standalone WMS in mind.

Pros of a Standalone WMS

  • A wide array of overall warehouse management systems and features
  • Possibility of integration with other management and tracking software systems

Cons of a Standalone WMS

  • Costs of multiple different systems
  • Lack of holistic interconnectivity as a purpose
  • Isolated management system is not necessarily built to work seamlessly with software from other providers

Integrated WMS

An integrated WMS is quite literally that: seamlessly integrating within your warehouse and existing IT frameworks. As the data is centralised, it means that the integrated warehouse management system shares information within the database, including inventory and orders.

Pros of an Integrated WMS

  • Lower startup costs, as all systems are centralised and tailored
  • Seamlessly connected workflow between all departments
  • Improved customer service and experience
  • Centralised data and information

Cons of an Integrated WMS

  • May sometimes have a reduced feature set, in comparison to a standalone WMS

The Benefits of a Warehouse Management System

Implementing an advanced warehouse management system within your warehouse process can yield a number of benefits, here are five:

1. Saves Time

Whether picking and packing orders, receiving and stocking deliveries or performing a dreaded stock take, a WMS can simplify the process and save hours of time through real-time stock tracking and scheduled cycle counts.

2. Rapid Order Fulfillment

Improving the order fulfilment process is highly important in today’s competitive market where next-day delivery is seen as a necessity. A warehouse management system can provide a multifaceted view of your order fulfilment so as to revise processes and increase efficiency.

Your pickers and packers will increase their productivity and workplace agility via the WMS working in tandem with your barcode scanners to reduce processing times.

3. Elimination of Errors

A warehouse management system can reduce administrative time and therefore reduce the risk of human error. 

Using a WMS, warehousing staff can confidently use barcode scanners when receiving or sending out goods: the warehouse management system will automatically inform workers if they have selected an incorrect product as well as automatically amend inventory levels.

4. Reduced Costs

As order processing and fulfilment eventually require less time, as well as other warehouse processes, overall processing costs will be reduced.

5. Richer Data

Advanced WMS will provide more detailed information, data and reports, meaning that decisions can be made with data informing them.

The richer the data, the more confidently alterations and suggestions can be made, as well as more quickly implemented.

Warehousing staff can also be monitored for productivity, to determine choking points in the process that require improvement.

Warehouse Management or Inventory Management?

As both are common terms, it is critical to understand the difference between the verbiage when they are used, as there are differences:

Warehouse Management

When used correctly, the term warehouse management includes broader aspects of operations, including staffing, warehouse monitoring, reporting, warehouse layout and order fulfilment.

Inventory Management

Primarily concerned with the ordering, moving, storing and selecting materials required to fulfil orders or produce goods.

Three Tangible Ways eCommerce Relies on Warehouse Management

In order to implement and maintain proper warehouse management, you may require the assistance of external experts to manage your warehouse and any systems or tools. Ways in which expert warehouse management can facilitate growth for your eCommerce business include:

1. Improved Storage

Expert warehouse management can allocate floor space in the warehouse in the most practical and efficient way, whilst also allowing the WMS to plot the most practical pick list for your warehouse staff, saving time and money.

2. Facilitate Improved Logistics

As your eCommerce business grows, a WMS can assist you in projecting the amount of warehouse staff required as well as sales trends, meaning you can organise your warehouse and amend logistical partnerships with haulage companies, accordingly.

3. Expedited Order Processing and Shipping

Lean improvements to your warehouse management mean that your supply chain receives improvements and each section of the warehouse can be optimised to increase efficiency in picking, packing, shipping and delivery.

Crucial Considerations to Make When Researching a WMS

Should you be committed to managing your own warehouse it is crucial that you thoroughly research whether a warehouse management system is suitable for the requirements of your business. Some considerations to make are:

1. Does the WMS Have Tangible Return on Investment?

Attempt to gain success data from the warehouse management system provider, detailing where they have implemented a system into a business that has yielded tangible results for its clients.

2. Is the WMS Compatible with Existing Systems and Equipment

It is critical that any warehouse management system you review is already compatible with the existing tools, equipment and systems within your warehouse to avoid additional purchases unless an entire refresh is on the agenda.

3. Ensure the WMS Connects with Your Sales Platform

Whether you use Shopify, Alibaba, Amazon or another sales platform, ensure that the warehouse management system is compatible with your online store to guarantee a smooth transition, as well as being able to meet sales demands whilst minimising commercial hiccups.

Outsource Warehouse Management with Breakwells

Sometimes, management and administration are not the most enthralling of business processes, particularly for the new entrepreneur. The time, effort and costs involved in the management and licensing of a warehouse may be too much for some: remove the pressure of storage and order fulfilment by partnering with Breakwells for all of your logistical needs and requirements.

Give us a call today.

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