One of the most dangerous consequences of poor warehouse management is workplace injury. Many businesses turn to WMS software to balance safety, efficiency and profitability. A WMS benefits operations by reducing human error, maximizing efficiency and productivity, and positively impacting overall business via automation.
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Around one in 20 workers suffer workplace injuries in the warehousing industry. More than five work-related incidents take place in warehouse environments every year. Along with workforce safety, warehouse managers also have to keep an eye on the daily processes surrounding inventory, shipping, returns, demand and security.
Table of Contents:
Brief Introduction
Before we talk about the importance of warehouse management systems, we’d like to provide a brief overview of what WMS actually means. A warehouse management system provides software solutions for businesses with complete visibility into their inventory while managing their warehouse operations.
It ensures that you manage your operations as efficiently as possible. Warehouse management helps you control overall warehouse processes, including receiving, picking, putaway, inventory tracking and order fulfillment. These objectives often lead to better inventory and shipment accuracy, cost reductions, worker efficiency and material handling.
How Does WMS Software Work?
Running effective logistic operations is difficult without a proper warehouse management system. WMS software provides warehousing solutions for companies looking for more than just simple functions like storage and location information. Functionality can vary depending on requirements like picking, packing and shipping to an advanced level of managing material handling or yard management.
The major objective is to ensure your goods move efficiently within the warehouse. These systems optimize warehouse space via data retrieved from the system. It manages inventory and stock while tracking warehouse performance, etc. Choosing the right solution can help you speed up order fulfillment.
Your system will vary based on its deployment and implementation methods. There are four types of WMS to choose from — standalone, cloud-based, third-party and integrated ERP modules. However, the most common type is the standalone system, thanks to its features that support day-to-day warehousing operations.
There are many warehouse management system benefits that can boost your overall operations. If you’re planning on running a successful business, you’ll need every edge you can get.
Primary Benefits
Depending on your requirements, industry and size, your warehouse management system benefits may differ slightly. Nonetheless, these are the top ten advantages of warehouse management systems:
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1. Reduce Operating Expenses
A well-designed WMS reduces operating expenses in a variety of ways. This type of system determines the most effective use of both labor and space to minimize waste. WMS software can help you determine where to keep certain materials, products and equipment to optimize the flow of your warehouse.
Some advanced systems have warehouse floor simulators, enabling users to create potential floor plans within the system. These simulators let you place pallets, shelves and other equipment you’d need to accommodate in your warehouse.
Warehouse simulators help identify potential issues and create workflows.
Part of the use of warehouse management systems is common to support both FIFO and LIFO principles, giving warehouse managers the flexibility to run their warehouse without restrictions. FIFO ensures picking expiring and perishable items first, while LIFO allows placing shelves against the walls for more space.
This versatility allows users to configure their warehouse to run at peak efficiency, saving money and time.
2. Enhance Visibility
Inventory visibility is one of the most significant WMS benefits. WMS software provides real-time data on your inventory through barcoding, serial numbers and RFID tagging. These methods allow users to document each item as it enters the warehouse, its movements on the floor and during transportation from one location to the next.
WMS solutions allow users to track inventory within a single warehouse or multiple locations.
This type of visibility is necessary to create demand forecasts, which provide insight into which products are most popular with customers during specific times of the year. These forecasts assist leadership in deciding which products to invest in and which ones may be losing their place in the market.
Increased inventory traceability is one of many WMS advantages that is extremely helpful in the event of a recall. Serial numbers placed on the final product let you track the item back to its original lot ID to determine if the product is part of the faulty batch. Traceability ensures you only have to recall damaged goods rather than any other goods you suspect are tainted.
3. Improve Management
Another benefit of a warehouse management system is Just-in-time (JIT), inventory management, a practice in which stock levels are kept low and product moves quickly through the warehouse. Rather than holding onto inventory for long periods of time, your warehouse receives it “just in time” to fill an order.
While this process can be quite complex, achieving a balanced, just-in-time inventory is a breeze with the right warehouse management program. The first tool needed to maintain a just-in-time system is accurate demand forecasting.
A WMS provides forecasting to generate optimal inventory levels to meet demand without underestimating or exceeding it. This greatly reduces safety stock and related carrying costs. Leveraging just-in-time warehousing can also reduce waste and scrap related to perishable items.
4. Strengthen Security
Most warehouse management programs require employees to use individual user accounts when entering transactions. This process creates an audit trail that connects specific employees to certain transactions, improving accountability and reducing the risk of theft and other issues. It also allows employers to identify new training opportunities and other ways to improve employee practices.
Additionally, user-based access levels prevent unauthorized access to certain reports and analyses. It allows each user to see the necessary information needed for their work. This way, you don’t have to worry about company secrets and losing your competitive advantage.
5. Boost Performance
One of the most important warehouse management system benefits is consistent updates. Warehouse management software vendors regularly introduce new features to reflect current industry best practices. This practice makes it easier for organizations to stay on top of the latest developments and continually improve their processes based on these innovations.
With cloud WMS, continuous improvement is even easier. Updates and new features can be added to the system automatically, reducing the need for in-house IT staff. But businesses using an on-premise system may or may not receive regular updates from their vendors, depending on the terms of their contract. This pitfall is yet another example of why many buyers are moving to the cloud.
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6. Optimize Inbound and Outbound Logistics
Just as users can optimize the location of inventory and equipment, they can also perfect how it’s moved around the warehouse. As soon as you plan on receiving inventory, the benefits of a warehouse management system provide inbound planning tools such as scheduling and putaway management.
These tools allow you and your supplier to determine the best date and time to receive a shipment based on the labor and equipment availability.
Use WMS to manage wave planning.
Warehouse management systems also help plan outbound picking and packing routes. WMS software supplies a variety of algorithms to determine the best route for picking materials. Depending on the size and nature of your product, users can select zone, batch or wave picking to reduce warehouse traffic and other holdups.
These algorithms also manage employee location, allowing staff to focus on the tasks closest to them first. This optimizes their time and energy while increasing productivity.
7. Efficient Labor Management
As you’ve already read, a WMS lets you freely determine which picking, packing and putting-away methods work most effectively for your business. In addition to helping optimize inventory placement and route creation, WMS solutions can determine the best employee for the job. These solutions help you assign jobs to team members by considering factors such as skill level, proximity and current tasks.
In addition to creating schedules and assigning daily tasks, WMS software provides a broader understanding of your workforce. You’ll see high turnover rates in warehousing and distribution centers as churn continues to increase. Using labor forecasting and KPIs, warehouse managers can see when they may need more or less staff, identify top performers and seek areas of improvement.
8. Increase Employee Morale
When operations flow seamlessly, employees feel better about their work environment. This idea is especially true when they see managers making specific efforts to optimize their time. There’s less stress, and the improved productivity and profitability elevate workers’ moods, particularly for warehouses offering holiday bonuses.
While a WMS solution isn’t a cure-all for every issue within your workforce, it can do a lot to ease the frustrations of both management and manual laborers. A more relaxed and organized work environment allows employees to think twice before attempting an improper lift or using questionable equipment.
This all adds up to a safer, more enthusiastic and satisfied workforce, further enhancing the overall success of your business.
9. Enhance Billing Management
Most top WMS solutions either have billing management tools built into the system or integrate closely with a third-party app to provide this capability. This functionality allows you to use activity-based billing, which tracks all warehouse-related activities for certain suppliers to generate proper fees. WMS software may also process credit card payments and connect to major eCommerce platforms.
10. Strengthen Customer and Supplier Relationships
Warehouse management system benefits extend beyond the organization itself. With high inventory visibility and the ability to schedule the receipt of shipments, you can optimize both supply and demand chains. One of the most obvious benefits for suppliers is the reduced wait at docks and loading bays.
Customers enjoy overall improved order fulfillment, reduced delivery lead times and fewer order inaccuracies. The reputation of your business among customers and suppliers will improve under such a system.
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Disadvantages
Making the right purchasing decision requires knowledge about the software’s advantages and disadvantages. These are some of the disadvantages buyers need to watch out for when selecting a system:
1. Long-term Costs
Most systems require data maintenance, which can be costly for small and medium-sized companies, especially on a long-term basis. Implementing a successful WMS requires undergoing certain steps that might incur a certain amount of costs, depending on the scale of your project. Also, the configuration cost might increase with upgrades or changes to the project.
SMBs can avoid staggering upfront costs by opting for a cloud-based WMS with a monthly subscription instead.
2. Level of Expertise
Implementing the system requires expert knowledge, and it’s even more challenging when your processes are too complex. Not having the right resources to handle the software can throw a wrench in your operations and lower your ROI. If you want to prevent future losses, you can invest in a role-based training approach.
3. Customization
In general, customization can take a lot of time, effort and money. As a result, businesses tend to neglect finishing their customization journey. This mistake often makes it difficult to implement future upgrades.
4. Tight Security
Installing a warehouse security system is incredibly important to safeguard your inventory. Despite the insurance you’ve maintained, losing inventory due to warehouse theft can cost you a lot of money. Once something is taken from your warehouse, the odds of getting it back are incredibly slim.
Sure, buying a security system is a big expenditure, but leaving yourself open to theft is no way to do business.
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To Sum It Up
At this point, WMS benefits are easy to see. But if you’re looking for more information on the importance of warehouse management systems, make sure to check out our WMS Software Buyer’s Guide. Use it to learn more about WMS capabilities, goals for implementation and questions to ask vendors.
A well-designed warehouse management platform is the best way to quickly improve the success and profitability of a business. It’s important to take the time to find the perfect WMS platform for your organization in order to accommodate your business’s unique demands. But the sooner you invest in and implement one, the sooner your organization can start reaping the rewards.
Have you ever used a warehouse management system? Which aspects were most beneficial to your business? Let us know in the comments below!