What is WMS Software and Why Do You Need It?

Warehouse management might not be the most glamorous topic, but being that we’re experts in all things logistics, we’re rather passionate about it here at Pro3PL.

Warehousing is relatively straightforward of course — pick a suitably sized space equipped with the necessary mod-cons for your needs (temperature and humidity control, heavy-duty racking, etc.) and most of the job is done. It’s the ‘management’ aspect that causes so many businesses to become unstuck.

Efficiency and accuracy are paramount in the world of logistics, and without an effective system to keep your supply chain running smoothly, errors are not a matter of if but when.

Take the effort to select the best WMS for your business, however, and you’ll reap the rewards — taking your operations from chaotic to controlled, and from hectic to harmonious.

But before we get too ahead of ourselves, let’s take a step back. What exactly is a warehouse management system? Why should you care? And how can the right WMS make your business more profitable, and your customers happier?

Today, we’ll break it all down for you, piece by piece. We’ll explore the various types of WMS solutions, the functions they perform, and their benefits. By the end of this guide, you’ll not only understand why a WMS is a worthwhile investment, but you’ll also have enough knowledge to choose the ideal system for your business — because believe us, there’s no such thing as a one-size-fits-all solution when it comes to logistics!

What is a Warehouse Management System (WMS)?

If we compare the warehouse to the human body, the warehouse management system is the brain — it’s an intelligent system designed specifically to keep everything running buttery-smooth.

In short, a WMS is a type of supply chain software that helps streamline and control the day-to-day operations of a warehouse, enabling efficient handling of everything from inventory tracking and order fulfilment to labour management and shipping — all while minimising errors and maximising productivity.

Curiously, the invention of the first WMS is owed partially to Wrigley’s chewing gum, which was the first product ever to adopt the use of UPC barcodes. Before this, every worker was expected to memorise the attributes of all the products in the warehouse, or refer to a reference sheet — sometimes we don’t realise how great we’ve got it nowadays!

Just one year later, in 1975, J.C Penney created the very first WMS. Allowing employees to track inventory levels in real time, the invention triggered a logistics boom. In 1988 Walmart created the first cross-docking system, and only two years later, the first Enterprise Resource Planning (ERP) systems followed.

The WMSs of today look and feel much different from the solutions of the 70s, but their core purposes remain the same: to streamline and optimise all the processes within a warehouse.

So, what exactly does a WMS do?

Imagine trying to coordinate an orchestra without a conductor. That’s what running a warehouse without a WMS can feel like — chaos, confusion, and inefficiency at every turn. A Warehouse Management System orchestrates every movement and process, ensuring that everything from receiving stock to shipping orders is perfectly in sync.

A Warehouse Management System:

• Tracks products as they move through the warehouse, ensuring every item is in the right place at the right time — from the moment it arrives to when it’s shipped out.
• Logs any changes to inventory levels in real-time, so you’re never caught off guard by stock shortages or overages.
• Ensures orders are processed swiftly and efficiently by optimising picking, packing, and shipping processes.
• Helps with labor management, assigning tasks to workers based on priority and workload, making sure every hand in the warehouse is put to good use.
• Integrates with other systems (like ERP and transportation management software) to provide a seamless, end-to-end solution for managing supply chain logistics.

Why are Warehouse Management Systems important?

If you’ve never used a WMS before, you might be wondering whether you really need one. Well, ask yourself the following questions:

— Is inventory often misplaced or lost?

— Are orders frequently mixed up?

— Do customers often grumble about lengthy shipping times or a lack of updates on their orders?

Answered “yes” to any of the questions above? If so, we’d highly recommend you consider investing in a WMS. Still not convinced? We’ve laid out the major plus-points for WMS implementation below:

• Accuracy: A WMS reduces errors by automating data entry and tracking. Fewer mistakes mean happier customers and fewer costly returns.
• Efficiency: By optimising workflows, a WMS accelerates the entire process, from receiving goods to shipping them out. This means faster turnaround times and better use of resources.
• Visibility: With real-time data and analytics, you get a clear view of inventory levels, order statuses, and warehouse performance. This visibility allows for better decision-making and proactive problem-solving.
• Cost savings: Reduced errors, efficient processes, and optimised resource use all contribute to lower operational costs. Plus, the improved accuracy helps avoid costly mistakes and returns.

Where do warehouse management solutions fit in the supply chain?

Remember earlier on when we mentioned that if the warehouse is the ‘body’ of your supply chain, the WMS acts as its brain? Well, just like the human brain, it integrates with and controls all the individual features of the body and their functions.

Here’s an overview of the warehouse management tasks a WMS typically performs:

Inbound & outbound goods management

On the inbound side, your WMS handles everything from receiving goods, checking them for accuracy, and directing them to the appropriate storage locations. On the outbound, it takes care of order picking, packing, and shipping, ensuring each order is processed exactly as intended. Essentially, it keeps track of where everything is, and where it needs to go.

Data analysis

From tracking inventory levels to monitoring order processing times and analysing warehouse productivity, a WMS offers both a bird’s-eye view of your entire operation and detailed insights into specific, specialised aspects of your supply chain.

Order processing

Fewer mispicks, happier customers! A WMS automates and optimises order fulfilment, guiding every step of the process — from generating picking lists to adjusting inventory levels when items are returned.

System integrations

Most Warehouse Management Systems don’t operate in isolation — they integrate with all the other body parts of your logistics operation (alright, we’ll drop the metaphor now). Things like your Enterprise Resource Planning (ERP) and Transportation Management Systems are all connected to the WMS, allowing data to flow seamlessly and providing a unified, all-encompassing view of the supply chain.

With an integrated WMS, everyone has access to the information they need, when they need it.

Types of Warehouse Management Systems

We’ve covered the basics now — you know what a WMS is, and what they do — but did you know there are different types of WMS? Most Warehouse Management Systems fall into one of three categories:

Standalone WMS

A standalone WMS is a self-contained system. Deployed on your company’s premises using in-house hardware, they’re typically legacy or homegrown solutions tailored to meet the precise needs of your business.

As you might expect, this makes the standalone WMS the most customisable type of warehouse management system, but they’re also rather costly to implement and maintain. There’s also a higher level of responsibility when using a standalone solution — if something goes wrong, it’s up to your team to fix it. And, as the system ages, integrating new technologies or other platforms will become increasingly challenging. In short, it’s a bespoke solution requiring a high level of in-house expertise.

Integrated WMS

Integrated WMS solutions are modular, existing as part of a framework of platforms such as Enterprise Resource Planning (ERP) or Supply Chain Management (SCM) systems. They’re designed to work seamlessly, like a cog in the wider supply chain machine.

The major advantage of using an integrated WMS is having a unified view across your entire business, from warehousing to accounting. There’s full transparency and ultimate control over your supply chain. However, implementation can be complex and costly — bad news for small to medium-sized businesses operating on tight budgets.

Cloud-based WMS

Cloud-based WMS solutions are delivered as Software-as-a-Service (SaaS), meaning they’re hosted on remote servers and don’t require heavy in-house infrastructure investments. They’re low cost, and easily scaled too, making them well-suited to companies in growth phases, or brands occupying niches where seasonal demands often fluctuate.

Maintenance and security are managed externally by the provider, along with regular updates, making cloud-based warehouse management systems popular among businesses seeking a set-it-and-forget-it experience. However, because cloud-based WMSs rely on an internet connection, there is a risk that should any outages or network glitches occur, your business could suffer. Data security is another consideration — some businesses may be put off this kind of solution due to concerns over how their private data is handled.

Benefits of a Warehouse Management System

To round things off, let’s examine the overall benefits of implementing a WMS as part of your supply chain network.

Increased inventory accuracy

Why it matters: Accurate inventory data is crucial for avoiding stockouts and overstock situations. A WMS provides real-time tracking of inventory levels, reducing errors and ensuring that you always have the right products on hand.

How it helps: By automating data entry and tracking, a WMS minimises human errors and provides accurate, up-to-date inventory information.

Increased order efficiency

Why it matters: Efficient order processing is key to meeting customer expectations and maintaining a smooth workflow. A WMS optimises the picking, packing, and shipping processes, resulting in faster and more accurate order fulfilment.

How it helps: With features like automated picking lists and optimised packing instructions, a WMS speeds up order processing and reduces the time spent on manual tasks.

More productive warehouses

Why it matters: Productivity in the warehouse directly impacts overall operational efficiency and cost-effectiveness. A WMS streamlines workflows, reduces manual labour, and enhances overall warehouse productivity.

How it helps: By optimising task allocation, reducing downtime, and improving resource utilisation, a WMS helps your team work more efficiently and get more done in less time.

Decreased costs

Why it matters: Reducing operational costs is crucial for maintaining profitability. A WMS helps lower costs by improving accuracy, efficiency, and resource management.

How it helps: Fewer errors and faster processes lead to cost savings on labour, returns, and inventory holding. Plus, optimised resource use means you get more value from your existing assets.

Faster shipping

Why it matters: Speedy shipping is essential for customer satisfaction and maintaining a competitive edge. A WMS accelerates the shipping process by optimising order fulfilment and reducing delays.

How it helps: Automated workflows, real-time tracking, and efficient resource management all contribute to faster shipping times, ensuring that your customers receive their orders promptly.

What about inventory management systems?

At this point, you might be wondering “If I’m looking at Warehouse Management Systems, do I also need an Inventory Management System, too?”

While WMS and IMS are closely related, they serve distinct but complementary purposes in managing your business’s operations.

At its core, an Inventory Management System focuses on one thing: inventory. It tracks every item that enters and exits your warehouse, keeping a detailed record of quantities, locations, and availability. While a WMS helps streamline the entire workflow within your warehouse, an IMS is more narrowly focused on stock levels, inventory turnover, and replenishment.

“But doesn’t a WMS track inventory?”

Yes, it absolutely does! However, here’s where the distinction lies: WMS inventory management is about tracking inventory as part of a larger, more complex system that’s focused on warehouse operations.

The WMS is designed to handle everything from order fulfilment and picking to shipping and receiving. The IMS, on the other hand, only monitors what’s in stock, what’s needed, and when it’s time to reorder.

So, while there’s overlap between the two, an IMS tends to dig deeper into the finer details of stock levels and inventory replenishment, while a WMS is all about getting products in and out efficiently.

Do you need both a WMS and IMS?

The answer depends on the complexity of your operations and the level of control you need over both warehouse processes and inventory management.

Small to mid-sized businesses: If you’re running a smaller operation, you may find that a robust WMS with built-in inventory management features will cover your needs.

Larger, complex operations: If you’re managing multiple warehouses or dealing with a large product catalogue, having both systems in place can make sense. Pairing a WMS with a dedicated IMS offers greater accuracy, deeper insight, and more control over your entire supply chain.

Warehouse Management System FAQs

Is WMS a type of ERP?

No, a WMS system is not the same as an ERP system. While both are essential tools for managing business operations, they serve different purposes. A Warehouse Management System is specifically designed to streamline warehouse processes, including the movement and storage of goods. An ERP system, on the other hand, integrates various business functions such as accounting, procurement, and human resources into one unified system. However, WMS systems can often be integrated with an ERP to create a more comprehensive view of your entire operation.

Is WMS a CRM?

No, Warehouse Management Systems are not the same as Customer Relationship Management (CRM) systems. While a CRM helps manage interactions with customers, focusing on sales, marketing, and support, a WMS system is centred on the management of warehouse activities such as inventory storage, picking, packing, and shipping. A CRM ensures you know your customers; a WMS ensures you efficiently deliver their products.

Is SAP a WMS?

SAP is not a standalone WMS system. Instead, SAP is a comprehensive ERP system that includes many modules to manage various aspects of business operations. One of those modules can be a warehouse management software, but SAP itself is not exclusively a WMS. If you're looking for a dedicated system for inventory control and warehouse operations, you might want to consider the best warehouse management systems tailored to your needs.

What is the difference between SAP and a WMS?

The key difference between SAP and a WMS lies in their scope. SAP is a full-fledged ERP system that covers everything from financial management to human resources and procurement. A WMS system is designed specifically for optimising warehouse or distribution system activities like inventory tracking, order fulfilment, and shipping. While SAP may have warehouse management capabilities, it doesn’t focus solely on optimising warehouse space and efficiency like a specialised WMS would.

Do I need both an ERP and a WMS?

It depends on the complexity of your supply chain operations. If you have a growing business with multiple warehouses or a complex distribution network, combining both an ERP system and a WMS can provide comprehensive control over your business. The warehouse management software will handle day-to-day tasks, while the ERP gives you a broader view of your overall operations, from finance to procurement.

Can a WMS help with inventory control?

Absolutely. One of the main functions of a modern WMS is to improve inventory control. By automating stock tracking, reordering processes, and stock location, a WMS helps you avoid stockouts or overstocking, ensuring your warehouse operates more efficiently. It keeps real-time records of what's in stock and where it's located, ultimately improving accuracy and reducing errors.

What is the difference between WMS and TMS?

A WMS system focuses on warehouse processes—the management of inventory, storage, and order fulfilment within a distribution centre. A Transportation Management System (TMS), however, is focused on optimising the shipping and delivery side of the business. While the WMS handles everything up to the point an order is ready to ship, the TMS takes over to manage the transportation of goods to their final destination.

How do I choose the best warehouse management system?

Selecting the best warehouse management system depends on several factors, including the size of your operation, the complexity of your warehouse processes, and your budget. Key considerations include whether the WMS can integrate with your existing ERP system, how scalable the software is, and what features it offers for inventory control and order fulfilment. Cloud-based options offer flexibility and lower upfront costs, while on-site solutions might provide more customization.

Can a WMS work in a small warehouse?

Yes, WMS systems are scalable and can benefit operations of any size, from small businesses to large distribution centres. For smaller operations, a WMS can help streamline workflows, improve inventory control, and make the most of your available warehouse space. Even with fewer employees and smaller inventories, the right WMS can significantly boost efficiency and accuracy.

Is a cloud-based WMS better than an on-site system?

Cloud-based warehouse management systems offer several advantages over traditional on-site options, including lower upfront costs, easier scalability, and faster implementation. However, on-site solutions can provide more customization and tighter control over data. The choice between the two will depend on your business's specific needs, the complexity of your supply chain operations, and your comfort level with cloud technology.

Investing in the right WMS software is key to efficient warehouse management. With the right system in place, your business can streamline operations, reduce errors, and ultimately enhance customer satisfaction. Want to find out more about how Pro3PL’s industry-leading Warehouse Management Software can help your business elevate its supply chain game? Get in touch with us today.