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What is Warehouse Management? Steps, Advantages and Types

  • Ashesh Anand
  • Aug 16, 2022
What is Warehouse Management? Steps, Advantages and Types title banner

Any firm needs a warehouse because this is where a significant portion of the investment is kept. Since the warehouse is an investment, it is important to understand how it operates and what products are stored there.


Any company that keeps products in a warehouse is aware that good management makes the difference between swiftly and accurately delivering client orders while keeping costs low and receiving complaints about erroneous or delayed shipments and increased operational costs. 


You need a place to store your products if your company sells them. Most frequently, this takes place in a warehouse, distribution center, or fulfillment center.


You can acquire land, rent a building, recruit people, buy equipment, and convince clients to buy from you, but that's not the end of it. How effectively a warehouse is managed will affect how profitable a business is. 


Even if you have the most cutting-edge warehouse, it won't matter if it isn't working effectively. You will be saddled with underperforming employees, a low profit margin, expensive operational and logistics expenses, inefficient management, and strained customer relations.


Also Read | What is Logistics Management? Types and Benefits


What is Management of a Warehouse?


Management of a warehouse's activities is referred to as warehouse management. This includes taking in, tracking, and storing inventory in addition to educating workers, coordinating shipping, scheduling workloads, and keeping an eye on the flow of commodities.


The principles and procedures involved in managing a warehouse's daily operations are collectively referred to as warehouse management. If you look closely, you'll discover that efficient warehouse management entails streamlining and integrating each of those procedures to make sure that every part of a warehouse operation functions in concert to boost output and contain expenses.


What is a Warehouse Management system (WMS)?


A warehouse management system (WMS) is a piece of software created to track the movement of inventory so that it is always aware of where items and finished products are in order to fulfill requests. 


When working with other integrated modules like accounting, order management, inventory management, MRP, customer relationship management (CRM), and more using a single central system and data source, a warehouse management system can be standalone software or a component of an enterprise resource planning (ERP) system


The act of organizing and controlling everything in your warehouse in order to ensure that everything functions as efficiently as possible is known as warehouse management.


  • Arranging the warehouse's inventory is part of this.

  • Possessing and keeping up the necessary tools.

  • Managing the facility's incoming fresh goods.

  • Order picking, packing, and shipping.

  • Monitoring and enhancing warehouse efficiency.


To handle this area of their supply chain, the majority of high-growth shops would employ automation solutions (such as a warehouse management system). From a manual standpoint, there are numerous factors that can and must be taken into account.


Also Read | What is Logistics Management? Types and Benefits

Image depicts different steps involved in a Warehouse management system.

Different steps involved in a WMS

Steps for Warehouse Management


One aspect of supply chain management is warehouse management. Retail order fulfillment, storage, inventory control, shipping, and distribution are all impacted. An all-in-one system enables you to view what's happening across various warehouse operations in real-time, including the receipt of inventory, the packing of orders, the labeling of shipments, and any other movement of items.


  1. Inventory Management


Monitoring stock levels allows you to know which SKUs you have in your warehouse, where exactly you keep them, and whether they are in transit from a manufacturer or on their way to a shop.


When you manage your inventory, you may determine how much goods are available for immediate shipment to customers and when you should order more depending on anticipated volume.


You'll probably turn over inventory more quickly as you expand, open up new markets, and add more product lines. This increases the significance of inventory tracking and accuracy.


  1. Selected and Packaged


In a warehouse, picking and packing are two essential tasks. To collect things as quickly as possible, a warehouse management system should generate pick lists for each picker. Zone picking, wave picking, and batch picking are a few examples of this.


The picker will be given a packing slip listing the items ordered and where they are stored in the warehouse for each new order. The order's items will be picked up by the picker from each location.


After an order has been picked, it is given to a packer who is in charge of carefully packing the items into a box or poly mailer, including any additional packing materials required, and applying a shipping label.


  1. Taking in and storing


Any warehouse operation needs to be able to unload merchandise or freight off trucks at loading docks and store it somewhere else. Each new box that is received and the inventory it has must be scanned into a warehouse management system.


It will then be transported to its temporary or permanent inventory storage location, where it will be scanned once more. Each user should have access to clear instructions from the warehouse management software so they can receive, unpack, retrieve, pick, pack, and send inventory.


  1. Transport


Shipping carriers like DHL, USPS, FedEx, and UPS will pick up orders from the warehouse to ship products to their next location based on the delivery options and shipping services you provide to customers.


Your warehouse management system should be able to automatically send e-commerce order tracking data back to your shop whenever the order ships, allowing your customers to follow the progress of their packages.


  1. Reporting


The operational and inventory information for the entire warehouse should be available right out of the box with a warehouse management system. Order fulfillment accuracy (total mispicks, mispacks, etc.), total orders fulfilled by the hour to gauge staff productivity, orders dispatched on time, and much more may be included.


Additionally, there are reports on people's operations, such as inventory forecasts to comprehend labor management and staffing requirements. With the use of a warehouse management tracking system, you can easily determine which staff members have successfully finished safety training, are licenced or certified to use specific equipment, and have met all other regulatory standards necessary to run a secure warehouse.


Also Read | How does Amazon Use Warehouse Technologies?


Function of a Warehouse Management System


A warehouse management system's goal is to assist businesses in having an effective warehouse by figuring out the ideal setup for storage and workflow. It keeps track of all inventory types so that products may be promptly accessed, and it aids in supply chain management by tracking what is required and when. 


It enables the usage of serial numbers, barcodes, and RFID tags. Even the requirement for periodic manual inventory counts can be done away with by WMS software.


By offering organized procedures for receiving, picking, putting away, and shipping of goods, WMS software enhances warehouse processes. This reduces errors and boosts employee satisfaction. 


In order to better serve customers, it can also communicate with other departments, such as customer support, to let them know how orders are progressing in real time. A warehouse management solution lowers costs, boosts productivity, and improves service through automated processes and improved communication.


Also Read | Guide to Inventory Management


Advantages of Warehouse Management


Although warehouse operations are sometimes hidden from view by customers, they are an essential component of on-time delivery. Good warehouse management makes sure that warehouse operations are as accurate and efficient as possible in order to accomplish this goal. 


For instance, warehouse management entails quickly filling orders, maintaining adequate staffing, maximizing the use of warehouse space for inventory storage, and coordinating communications with suppliers and shipping firms to ensure items arrive on time and orders are shipped out.


The advantages of effective warehouse management, such as quick, high-quality service at a reasonable price, can spread across the entire supply chain, fostering connections with both suppliers and customers.


Optimizing warehouse management, however, can be a challenging endeavor given the numerous components involved. For this reason, a lot of businesses are using warehouse management systems. The company and the customers both benefit greatly from the warehouse management system. A few of them include :


  1. Fewer errors


WMS aids in lowering the number of errors, particularly human errors, that may occur throughout the entire warehousing process. For instance, if everything is barcoded and an inventory barcode scanning system is used, the likelihood of products being accidentally picked up is decreased. 


Additionally, adopting a barcode system generates a digital record of what is being sold and its associated price, making it simpler to determine whether an item has been returned and restocked.


  1. Enhanced warehouse space


WMS aids in enhancing warehouse flow by determining how to make the greatest use of the available floor space in light of the task and material characteristics. The fact that it is made to locate things in relation to sell-by dates, receiving assembly, packing, and shipping points suggests that the costs associated with keeping inventory could also be decreased.


  1. Effective labor


A WMS that is effective may allocate the appropriate work to the appropriate person at the appropriate time. By utilizing labor forecasting, it can efficiently assign jobs on a daily basis and create timetables, helping to maximize worker, equipment, and space efficiency. 


Since labor is typically one of the greatest expenditures associated with warehouse operations, KPIs can also be used to analyze staffing, which is crucial.


  1. Faster Inventory Turnover


WMS can significantly enhance inventory control, resulting in a quicker inventory turnover. By minimizing inventory movement and increasing record accuracy, it can assist shorten lead times by lowering the need for safety stock.


  1. Lower costs


WMS greatly reduces overall costs by making the best use of storage space, labor resources, and inventory resources while boosting productivity.


  1. Greater customer satisfaction


WMS reduces paperwork by allowing for the electronic maintenance of various inventory-related reports, tickets, and packing lists. Product availability can be more precisely established through well-organized processes from purchase to delivery, providing customers with more realistic delivery dates, lowering the number of customer complaints, and improving overall customer service.


Types of Warehouse Management System


WMS software can be found in three primary categories: standalone (on-premise, sometimes an indigenous legacy system), cloud-based, and solutions integrated into platforms for ERP or supply chain management (either on-premise or hosted in the cloud). Every type of WMS has benefits and downsides, and each firm will determine which is ideal for them:


  1. Standalone WMS


These programmes are typically used by businesses to deploy their own hardware on-site. The organization can maintain tighter control over its data and software, and they typically offer greater customisation (albeit they can be expensive). Despite having a far higher initial cost than alternative possibilities, once a corporation buys the system, they own it. 


At the same time, the organization is in charge of upgrades, maintenance, and any associated expenditures. It gets harder and harder to adopt new technologies and integrate the WMS with other platforms as it gets older.


  1. Cloud-based WMS


Cloud-based WMS solutions can be quickly set up and have lower initial expenses. They are more adaptable to suit seasonal and other varying market conditions when delivered as software-as-a-service (SaaS), and they are simpler to scale as businesses expand. 


Cloud-based warehouse management provides a quicker route to innovation through frequent updates. And the responsibility for keeping the system up to date falls to someone else. 


SaaS providers also make significant financial and technical investments in security measures and offer disaster recovery capabilities. Additionally, it is simpler to link cloud warehouse management systems with other solutions.


  1. WMS that are integrated with ERP and SCM platforms


Some warehouse management systems are created as modules or applications that connect to ERP and supply chain management systems. These have the benefit of working better with other solutions in fields that overlap, such accounting and business analytics. 


To enable end-to-end transparency and the coordination and coordination of warehousing and logistics activities, they offer a comprehensive view across the business and logistics chain. These skills can ultimately be leveraged to streamline processes and deliver quick, agile fulfillment experiences.


Also Read | Data Lakes vs. Data Warehouse: Definition & Differences


You must have total control over every activity taking on inside the structure if you want to run your warehouse properly. In other words, if you've discovered that completing x, y, and z would increase productivity, you need to be confident that your team will do x, y, and z – and do it well. 


The development of organized workflows, procedures, and standards for your staff to follow throughout everyday operations is a crucial component of warehouse management. Your team members will always be aware of their specific responsibilities if adequate routines are in place.

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