As a retailer, your warehouse is the backbone of your company.
Your storefront and online presence are important elements of your business, but your warehouse is the skeleton that holds everything together. If your warehouse management is falling short, it won’t matter how good your store or website is.
Companies that can’t ship and manage their orders are doomed to fail.
In order to better manage their warehouse operations, many retailers turn to warehouse management software or warehouse management systems (WMS).
These tools make running your warehouse simpler by handling all aspects of your inventory management. From organization to picking, to shipping, to accurate counts, a warehouse management system can give you complete control over your warehouse operations.
Today, we’ll show you how to pick the right warehouse management system for your business.
Why Do I Need a Warehouse Management System?
The most common question people ask us when discussing warehouse management systems is why they need one in the first place.
There is a simple and a more complicated answer to this question. Let’s tackle the simple one first.
As retailers grow, their warehouse operations grow with them.
When you’re starting out, you may have a stock room where inventory is stored. Your inventory levels might be small enough that you can count them by hand. Everything is kept in one location.
As your company expands, you’ll soon find that your storage needs are growing with it. Now, that one room isn’t enough. You need a bigger room or an entire facility. Counting things by hand and keeping track of where everything is has suddenly become a lot more challenging (or impossible). Managing orders is more difficult. Items are misplaced.
If you continue to grow, you may reach a point where inventory isn’t kept in the same location as your business. You might have multiple warehouses spread out across the country (or the globe). You could pick and ship thousands of orders a day. Tracking this by hand is impossible.
Warehouse management systems help you manage your inventory when you’ve moved beyond that “one tiny stockroom” starting point.
The more complicated answer to the question is that warehouse management systems allow you to better control your inventory levels so that you’re not losing money and customers.
If a customer orders an item and doesn’t receive it because your warehouse doesn’t ship it, ships the wrong item, or ships it to the wrong address, that customer will take their business elsewhere.
You’ve lost a sale, and a customer, and all future sales to that customer.
If you’re not sure how much inventory is in your warehouse, you could be losing money on lost sales because you don’t have the stock to fulfill orders. You could also be paying high carrying costs for stock that will languish on your shelves.
And finally, with huge warehouses or multiple locations, it’s easy for things to get disorganized and for products to get lost. That’s another drain on your bottom line.
At the end of the day, warehouse management software can take a complicated process and automate it, so you don’t have to spend your every waking moment managing your inventory.
Factors to Consider When Choosing a Warehouse Management System
Choosing the right warehouse management system for your business is important.
If you don’t spend time considering your options and your specific needs, it’s possible to choose a solution that doesn’t fit well with your current needs or that won’t scale well as you grow.
There’s no one size fits all solution, but if you consider the following options, your chances of picking the right WMS for your business increase dramatically.
· Integration
In today’s world, odds are you’re already using a wide variety of software at your business.
Because of this, it’s important to make sure your warehouse management system will work with the software tools you’re already using. Otherwise, your warehouse management system is going to be less effective and create some long-term headaches.
Using a siloed WMS means your staff will have to work longer and harder to complete tasks that should be automated. This lack of automation often leads to mistakes that cost your company money.
Here are five of the key types of software you’ll want to be able to integrate with your warehouse management system for maximum effectiveness.
1. ERP
If you’re using Enterprise Resource Planning, you’ll want to be sure your WMS options integrate seamlessly with this software.
Your ERP has a wealth of data that will be valuable for your WMS.
WMS/ERP integration gives you access to all of your ERP data in a simple-to-use interface. This makes it easier for all employees to see the bigger picture and adjust.
By integrating ERP, you’ll likely reduce the amount of redundant data you see as well, meaning you’ll always have the best, most accurate, up-to-date information at your disposal.
See 21 ERP system examples to learn more about options available on the market today.
2. TMS
Your Transportation Management System is another key piece of software you’ll want to integrate with your warehouse management system.
The TMS will give you a fantastic overview of your operational efficiency when linked with your WMS. Together, these two tools can help you better plan and forecast based on performance, figure out accurate allocation amounts, and better manage your warehouse space.
If your TMS and WMS don’t work collaboratively, you’re missing out on a huge opportunity to make your warehouse more efficient.
3. CRM
Obviously, you’ll want your warehouse management system to integrate seamlessly with your customer relationship management software.
By integrating these two tools, you’ll be able to better track all of your customer activities.
From the moment orders are made until they’re fulfilled and shipped, having these two pieces of software working in unison means you’ll have a better understanding of how your orders are being handled.
This way, you can ensure customers that their orders are in good hands and that anything they’ve purchased will be delivered to them quickly and without hassle.
4. CMS
If you use a customs management system for your business, you’ll want to be sure it integrates seamlessly with your warehouse management system.
As the name implies, the CMS is designed for companies who do a lot of business that involves importing or exporting products or materials.
Moving inventory into and out of your warehouses is a lot of work, but doing business globally can up the difficulty level significantly. If you’re a business selling or receiving products from around the world, make sure your WMS is compatible with your CMS to get the full benefit of both of these software solutions.
5. Custom Software
Does your business use any custom software? Have you had software designed specifically for your day-to-day operation?
If the answer is yes, you’ll want to make sure your warehouse management system works with that software.
You’ve already spent time and money creating customized solutions for your business. The last thing you want is to add a new tool like WMS software to the mix and discover it’s not compatible with tools you’re already using.
· Improve Your Forecasting with Better Reporting
One of the less-heralded benefits of warehouse management systems is that these tools can provide better forecasts for your company.
A good WMS will allow you to track your product locations and suppliers and understand how long products are sitting on shelves before they sell.
Armed with this knowledge, you’re better able to plan future orders and adjust inventory levels accordingly. This prevents stock outs and lost sales, as well as unnecessary carrying costs caused by overstocks.
Beyond that, this information will also help you maximize your warehouse space.
Understanding how much stock you need, how often it sells, and similar information means you can create a warehouse layout that is built around efficiency.
Finally, being able to predict how much stock you need to have on hand at any given time makes planning for holidays or seasonal sales less of a guessing game.
Your warehouse management software will help you better understand the flow of products through your business. With this knowledge, you’ll be better equipped to predict trends and forecast for the future.
Without good reporting, you’re guessing and taking shots in the dark.
· Ease of Use
The next thing to consider when selecting a warehouse management system is ease of use. A great WMS that is difficult for your employees to grasp isn’t going to be helpful in the long run because no one will be able to take advantage of all the benefits it offers.
The easier your WMS is to use, the less time you have to spend on training, and the more likely you are to reap the full benefits of the software.
A WMS that is user-friendly will require less monitoring and set up, can be updated to meet new needs and requirements quickly, and will make automating your warehouse management functions easier.
When looking for ease of use, consider software that uses easy-to-follow menus, has a robust help feature and offers a centralized dashboard view that allows for simple navigation to reports and other advanced features.
Beyond that, it pays to understand your provider’s support plan.
Having a warehouse management system where you have live 24/7 support can help make navigating challenges and potential problems easier.
In the end, you want a warehouse management system that has a full suite of tools, but if those tools are difficult to use, they’re not going to help you better manage your warehouse.
Find a solution that has all the tools you need but is easy to pick up and use for the best results.
· Web-Based or Server-Based Storage?
The next consideration involves storage, and it boils down to web-based storage versus server-based storage.
Let’s break down the pros and cons of each.
Server-Based WMS Pros and Cons:
On the pro side of the ledger, a server-based WMS offers up the following:
· Quickly adapts to new advances in technology
With a server-based WMS solution, you will not have to worry about being caught flat-footed by new tech. An on-site software solution will keep up with changes just as well as a cloud-based option.
· Customizable
One of the key benefits a server-based solution has over the cloud software option is that it’s often easier to customize the software to meet your specific needs.
As far as cons go, these are the ones to consider:
· Price
Generally speaking, an on-site solution will cost significantly more money upfront. There will also be costs down the road to maintain and upgrade your hardware and other components.
· Upgrades
Upgrading hardware and software are more involved with the on-site WMS solutions than their cloud-based counterparts.
Web/Cloud-Based Pros and Cons
These days, cloud-based solutions are incredibly popular. They offer flexibility, lower upfront costs, and a multitude of other benefits.
Let’s look at some of the biggest advantages:
· Instant Functionality
Since you’re not installing a bunch of hardware and software, a cloud-based WMS offers almost instant functionality. Once the software is set up, you’re ready to roll.
The setup phase with an on-site solution can be a long process.
· Easy Upgrades
Since you’re not maintaining a bunch of hardware on-site, upgrades for cloud-based WMS software are simple. You won’t have to deal with hardware swaps or things of that nature, as everything is basically handled as downloads from the cloud.
· Price
A cloud-based WMS solution is much cheaper than the on-site option right out of the gate.
Since you won’t be required to buy a bunch of hardware or build systems, you’ll save money. Over time, the costs tend to even out, but the cloud-based software as a service (SaaS) model is cheaper to start with.
· Scalability
The cloud is essentially limitless, meaning your WMS will be able to grow and expand as you do.
With an on-site solution, you will eventually encounter bottlenecks as hardware can only handle so many SKUs or other limiting factors. These are not issues cloud users deal with.
· Increased Cyber-Security
Everyone is worried about protecting their data, and a cloud-based WMS is a very secure way to keep your valuable information safe.
Companies have devoted untold millions to develop cybersecurity tools for cloud tools. You don’t have to develop these tools or even spend money to benefit from them.
So, those are just some of the pros of the cloud-based approach. There are a few cons to consider as well.
· Costs Can Increase Over Time
Since you’re basically paying a company for a license to use their WMS software, you are essentially at the company’s mercy as far as pricing goes.
A cloud-based solution is often less expensive upfront, but over time the prices can even out, and the cloud option can even become more expensive in some instances.
· Customization
Cloud-based WMS providers often keep everyone on the same release version, meaning customizing the software to fit a specific need can be challenging as someone has to build in that new functionality on the provider’s schedule, not yours.
The on-site option is better if you’re looking to constantly customize your WMS and you’re in a hurry to do it.
At the end of the day, there’s no right or wrong answer to on-site versus cloud-based storage.
Cloud-based is easier to set up and cheaper from day one, but it’s really a matter of picking the option that best fits your specific needs.
Do Your Costs Justify a Warehouse Management System?
Adding a warehouse management system to your business is not an inconsequential expense.
Whether you select a server or web-based option, implementation, setup, and training all cost time and money. Because of this, some companies will wonder if there’s a magical number where the costs justify a WMS.
The short answer is no.
There’s no magical financial figure where companies go, “Ah, yes, we need a warehouse management system now because the cost is justified.”
However, if you’re having the following issues, investing in a warehouse management system could actually help you save money, thereby justifying the cost.
If you have three or more of these issues, it’s time to take a good long look at how warehouse management software could save you money and improve your inventory management.
· Your Warehouse is Low on Space
If you’re constantly running out of room in your stock area, it can mean several different things: you’re carrying too much stock, you’re not organizing properly, or you’re just growing so fast as a company that you need more room.
A WMS will help you figure out which issue you have and, in the case of the first two, help you fix it.
· You’re Still Using a Spreadsheet to Track Inventory
There’s nothing wrong with using Excel to track your inventory, but if you discover over time that your spreadsheet has morphed into a spread-novel, it’s time to consider a WMS. You’ll have fewer inventory errors, and your inventory management will be much more manageable.
· Your Inventory Numbers are Off
If you’re finding that your inventory counts are often incorrect, adding a WMS can alleviate this problem and get you back on track.
· Items are Out of Stock
Sometimes you’ll sell out of things even with the best planning. That being said, if you’re regularly running out of inventory on key items, you’ve got an inventory management problem.
A warehouse management system can help you solve these problems by monitoring stock levels and alerting you when it’s time to reorder.
· Deliveries are Lost, Late, or Never Delivered
If you’re struggling to get orders to customers in a timely fashion, you’ve got a shipping problem. The good news is that a WMS can fix these issues, reducing costs, the number of errors, and unhappy customers.
· Your Warehouse Workers are Stressed and Unhappy
Unhappy workers cost your company money in a lot of ways. You can make the lives of your warehouse crew better simply by adding a WMS to the mix.
The WMS will alleviate worker stress by streamlining processes, automating functions, and freeing people to better focus on their job.
· Warehouse Problems are Stunting Company Growth
Is your company on the verge of taking things to the next level, but your warehouse is holding you back? The solution can be as simple as adding a WMS.
At the end of the day, the question here isn’t so much, “Do the costs justify adding a warehouse management system?” but “Can we afford to not invest in this tool?”
Are You Big Enough for a Full WMS?
Another common question we hear is, “Are we big enough to need a WMS?”
Like the previous question, there’s no etched-in-stone answer. There’s no singular point where everyone should invest in a WMS.
However, if your business is big enough to have a warehouse operation where manually tracking inventory is causing mistakes, it’s time.
There’s a common misconception that you need to be a giant company with multiple warehouse locations to fully benefit from a warehouse management system. This is inaccurate.
Even small and mid-sized companies can benefit from using these tools.
If you’re handling a lot of orders and it’s becoming more challenging to manage your inventory, you are big enough for a warehouse management system.
There are options out there for companies of every size. It’s simply a matter of determining what you need and selecting the best option for you.
Final Thoughts
Adding a warehouse management system to your business will require some thought and research upfront, but the effort will pay for itself in increased functionality, fewer inventory mistakes, and happier employees.
Whether you go with web-based or server-based options, there is a warehouse management solution out there that will meet your needs and solve your problems.
If you’re in the market for a WMS and have more questions, please reach out. We’d love to help.
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