What is a Warehouse Management System (WMS)?

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Any large, sophisticated logistics or supply chain business must optimize, monitor, and manage warehousing and distribution tasks. These tasks include yard management, dock scheduling, order management, inventory management, and much more. Manual techniques like stock counts and spreadsheets complicate these tasks. For example, as a business owner, manual inventory counts is a tedious job that can take hours, and in most cases, there is always the danger of human error while updating. A warehouse management system (WMS) addresses these challenges smartly and efficiently.

With a WMS that regulates and automates warehouse processes right from receiving and putaway to storage, picking, packing, and shipping, you can save costs and make your company’s warehouse operations more productive and efficient. But choosing the right WMS for a company based on its requirements can be tricky. This is why it’s important to know what the market offers and what the business owner should look for before finalizing.

This guide will help you comprehend the fundamentals of a WMS, its benefits, and its types, allowing you to choose the right WMS for your business.

What is a warehouse management system?

A warehouse management system (WMS) is a software application that helps businesses regulate and organize their daily warehouse operations. They include organizational tools, policies, and procedures that provide optimal warehouse operations, benefiting your business and consumers. A WMS manages all your inventory, including raw materials and finished goods, allowing your organization to conveniently monitor inventory along with its location, whether in a facility or in transit.

  • WMS optimizes the six fundamental warehouse operations that include receiving, putaway, storage, picking, packing, and shipping.

  • By making the best use of warehouse space, WMS ensures adequate staffing, better order management, and much more. This helps businesses save costs, reduce errors, and increase the number of flawless orders.

  • All operational processes are consolidated into a single platform through an integrated approach, linking mobile, tablet, and desktop access to a centralized system. This helps manage warehouse tasks from anywhere, enhancing the overall supply chain.

Benefits of implementing a warehouse management system

Growing businesses should consider the advantages of a warehouse management system, including but not limited toincreasing warehouse productivity and saving costs. Let us go through the following list of benefits that make WMS a worthy investment for your business.

Increased productivity

A WMS improves the efficiency of warehouse and logistics operations by swiftly moving the goods through your warehouse, improving every step of the fulfillment process by enhancing efficiency, uniformity, and quality control. For example, WMS helps optimize the warehouse layout. This ensures easy accessibility to the product location, maximum space allocation, better workflow organization to avoid bottlenecks, and reduced floor traffic. All this guarantees accurate and timely order fulfillment, increasing consumer trust and satisfaction.

A WMS also enhances efficiency through precise activity records, which help warehouse staff choose, pack, and dispatch merchandise. Since the warehouse worker understands what to do next in the order process, they can do more in less time.

Accurate invoice management and inventory records

A well-designed WMS integrates all warehouse functions. For instance, a single order triggers inventory movement, invoice generation, truck loading, and delivery schedule. A robust WMS also supports inventory management, order fulfillment, and efficient control of warehouse operations. A WMS likewise improves tracking and order fulfillment visibility. This visibility improves customer service by giving warehouse operators access to real-time data and providing clear, accurate information to customers. A WMS also offers integrated or third-party invoicing management tools, letting you track supplier transactions and make performance-based payments. Another advantage is that a WMS can link to ecommerce platforms and process online payments.

Lower warehouse costs

One of the significant benefits of a WMS is reducing costs. A WMS offers effective inventory protection technology to help prevent lost and stolen products. Closely monitoring what items or products enter and leave your warehouse helps minimize waste, theft, and, eventually, costs. A WMS also lowers energy expenditures. These tools automatically switch lights on and off by configuring them to turn on just when needed or when it is dark. It’s a great way to save business energy costs.

Enhanced security

A healthy warehouse business requires a reliable, efficient, and secure WMS. In the current scenario, where supply chain interruptions, breaches, and cyberattacks are prominent, a well-protected WMS can help safeguard your organization from downtime, decreased employee productivity, reputational damage, and possibly customer loss (and income).

A cloud-based WMS protects your supply chain by providing backup and security features, ensuring your company’s activities continue despite a cyberattack, system failure, or other catastrophes.

Reduce “lost” inventory

When there are expired products, you’re liable for the following costs:

  • Labor costs to unpack, store, and send the merchandise to the warehouse.

  • Electricity bill to keep products cold or climate-controlled.

  • Disposing costs if these things don’t sell and expire.

Lost inventory is expensive due to these hidden costs. Even with frequent manual inventory counts, tracking perishable inventories is challenging.

A WMS can help reduce waste by enforcing a first-in, first-out rule that ensures removing the oldest perishable items first. It can monitor inventory and purchases in real-time, helping locate any item in the warehouse at any stage in the order process. This is more suitable for perishable product sellers owing to real-time updates, increased analytics, and comprehensive KPIs.

Different types of WMSs

With businesses having different needs, choosing a system that suits their requirements becomes imperative. Among the different types of WMSs, the most common ones include:

  • Standalone systems

  • ERP modules

  • Cloud-based systems

  • Supply chain modules

Standalone systems

Smaller warehouses or those who don’t want to add a new system to their supply chain operations would be better off with a straightforward standalone system. For instance, newer ecommerce businesses that are still developing their supply chain and logistics processes.

A standalone system manages a warehouse, keeps track of stock, and proves cost-effective. But unfortunately, a company can’t accomplish much with this system since it requires additional software and tools to operate the warehouse. Therefore, businesses that intend to expand and require more technology in the future might want to invest in a more robust system.

ERP modules

Enterprise resource planning or ERP software works best for expanding businesses that want to automate tasks, improve efficiency, and cut down on staff. The system has numerous prominent features, including robust reporting, multiple units of measure, multiple locations and currencies, email integration, unlimited file size, and high transaction volume. ERPs usually evolve with the business. Examples include two-way interaction with ecommerce websites, mobile picking, barcode scanning, landed cost monitoring, lot tracking, and CRM.

Unfortunately, the benefits of an ERP system aren’t apparent until long after implementation, which is an expensive procedure. Another downside is that the effectiveness of an ERP installation relies on the staff’s education and training to use the system appropriately. When deciding which ERP system to buy, businesses must utilize the resources of their staff. This can be a complicated process involving the heads of finance, operations, IT, and maybe even sales, marketing, and HR. Companies employing manual techniques like spreadsheets and piles of paper files may need to hire an integration specialist to help with the long process of moving their data. When the leadership team is opposed to these new approaches and technologies, there may be pushback from the employees.

Supply chain modules

Supply chain management is the art of delivering the correct product at the appropriate time, location, and cost. It manages the movement of goods and services, including raw materials, work-in-process inventories, and finished products.

Unlike warehousing-only systems, supply chain modules (SCM) control the whole supply chain. Supply chain management software helps with various tasks, such as assessing risks and running business processes like managing customer contacts, suppliers, transportation, material handling, and inventory control. It also automates product cycles, the buying of materials, and stock management. You could put all your tools for managing your fleet, inventory, and warehouse on a single SCM platform. Supply chain systems are usually preferred by larger enterprises and third-party logistics providers (3PLs).

Cloud-based systems

A cloud-based WMS is a SaaS-based warehouse management system. With a 100% web-based interface, it can be viewed from any device with an internet connection, allowing users to access it from any location. Since external servers are utilized to execute and store program data, the company does not need to have any hardware on-site. The customer pays a monthly licensing price without installing or maintaining equipment or servers.

Cloud-based warehouse platforms have many benefits, like quick integration and ease of use. They are much easier for technical installation and maintenance as they run on servers and systems outside your organization. Another significant advantage is that it helps bring all parts of a business together on a single platform, simplifying and easing work for the users


Ecommerce, integrated logistics, and fast delivery are changing the business ecosystem, making WMSs more crucial. Businesses are adapting their WMS deployment approaches to stay competitive in the market. Implementing them increases your company’s potential and competitiveness by enhancing productivity, optimizing space, reducing costs, supporting the latest technology, and improving customer service. Therefore, if you are operating a large, complicated logistics, supply chain, or product-based business, use a WMS to optimize and scale your performance.

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  1. Eshwar Padmanabhan

    Interested to know more about the solution as the features are addressed at a high level. Would like to obtain more detailing and implemented use cases.

    • Henry Jose

      Thank you for your comment and interest in our guide on WMS. We appreciate your feedback and would be happy to provide more detailed information and implemented use cases. Please let us know what specific areas you would like more information on, and we will do our best to provide you with the requested details.

  2. SRK Innovations

    This is very innovative and informative also useful Article. Very good article on latest trending topics.

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    • Henry Jose

      Thank you!

  3. Prashuk

    Well done on providing such a well-structured and informative guide!

    • Henry Jose

      Thank you!

  4. Victoria Mostova

    This article brilliantly explains what a warehouse management system is, breaking down its core functions and benefits. For anyone wondering “what is a warehouse management system,” this piece is a must-read, offering clear insights into how it streamlines operations and enhances efficiency in managing inventory. Great job demystifying WMS!

    • Henry Jose

      Thank you for your appreciation!


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