E-commerce, Logistics, Education

eCommerce logistics: what is a WMS and how to choose it

Tomáš Kohút
Tomáš Kohút
eCommerce logistics: what is a WMS and how to choose it

Is your business growing and you are starting to hit the limits of your current warehouse management system? Are you increasingly discovering tracking issues or differences in physical and system quantities? Then now is the time to abandon the pencil-and-paper, Excel or other inadequate system option. Switch to a comprehensive warehouse management system that covers all your logistics needs!

Quality warehouse management system is an integral part of efficient logistics. You may be housed in a super-modern warehouse space, but without a complete overview and optimized warehouse processes, your time and financial costs will continually increase as orders increase. How can you avoid them? And what does such a system need to do? Find out below!

What is a warehouse management system (WMS)

A Warehouse Management System (WMS) is a software that monitors and manages the day-to-day operations of your warehouse. It is a basic prerequisite for a so-called managed warehouse, where the handling of each SKU is algorithmically optimized based on data.

WMS also reduces an amount of manual tasks and error rates of operating staff. The warehouse staff are controlled by the system and have minimal room for their own decision-making. Based on information from the WMS, logistics managers can, for example, identify weak points in the operation and adjust workflows. Generally speaking, they show them the big picture for day-to-day tasks and long-term strategic goals.

WMS and warehouse processes

The warehouse management system gives you a complete overview of individual warehouse processes such as receiving, picking, packing and other goods movements. It’s a tool that makes it easy for you to optimize them and with which you are able to react flexibly to current situations.

1. Inventory monitoring

WMS informs you how many pieces of each product you have in stock, how many are on their way from the supplier to you or to the end customer. In addition to current quantities, it also provides data about used stock positions or, in combination with historical data, helps you manage your inventory.

2. Receiving and storing products

After counting the incoming goods, the quantity of product in each box is defined using WMS. The WMS also selects the most suitable location for storage and then also records the quantity stocked at specific positions.

3. Order picking and packing

The WMS optimizes and manages the picking and packing processes. The system guides the warehouseman through the shortest route when picking orders and checks the correctness and quantity of goods picked. The correctness of the products from the orders is also checked during packing, which is completed by automatic printing of an address label for the shipper.

4. Transportation of shipments

Once your shipments are handed over to the carrier, your WMS automatically sends information to your e-shop along with a tracking number so that customers are able to track their shipments online.

5. Reporting

Your WMS automatically generates reports about traffic and inventory throughout your warehouse. These reports should include, for example, data about the speed and quantity of orders picked in a selected time, the percentage accuracy of picking and packing, staff productivity, etc. The reports thus offer important information for inventory forecasting and also for planning warehouse staff shifts.

Advantages of WMS implementation

WMS is an essential tool for effective warehouse management. Implementing a suitable WMS will help you to achieve the following points:

1. More accurate stock counts

The quantity of each product is controlled by scanning the newly received or returned goods. This method also leads to a reduction in stock shrinkage.

2. More efficient order processing

A basic prerequisite is the proper integration of the WMS with the e-shop. This way, your e-shop will always show customers the current stock quantity, which means smoother and faster order processing for you.

3. Higher warehouse productivity

Multi-tasking like counting inventory or repacking orders is always an unnecessary, often high multi-cost task. Accurately recording orders, their quick processing and shipping are essential for increasing the productivity of your employees.

4. Cost reduction

The high upfront investment in the WMS is offset by the increased productivity of the warehouse staff. By implementing it, you eliminate a lot of costs for employees who spend time on non-systematic tasks such as double manual inventory control, “searching” for the right stock positions of each product, inefficient picking process, manual creation of address labels, etc.

5. More likely business growth

The higher the number of orders you record, the better quality WMS you need. The same is true if you decide to expand your product portfolio. The growth of your e-commerce store depends on optimal operations in your warehouse, which you can achieve by implementing an appropriate WMS.

3 key areas to focus on when choosing a WMS

There are a number of WMSs on the market with varying depth and breadth of functionality. If you decide to choose your own software, make sure it meets all the requirements of your specific logistics business. We have identified 3 key areas to focus on when choosing a WMS.

1. Connectivity with your e-shop

Your WMS must be able to communicate with your e-shop. It is important that the transfer of all relevant information takes place bilaterally, meaning from the e-shop to the WMS and vice versa. Only in this way you are able, for example, to automatically keep your e-shop up-to-date with stock information or send your customers information about their shipments.

To give you an idea, here is a simple example from practice. You receive an order on your e-shop and this information is paired with your WMS. This allows the warehouseman to have the order in his scanner, the WMS takes navigates him on the shortest route to pick it and pass it to the staff at the packing counter. Once packed, an address label is automatically printed and the shipment is handed over to the carrier. The generated tracking number is automatically transferred back to your e-shop. Of course, everything also works assuming that the stock and status of a particular order is updated.

Your WMS must also be able to recognize orders that are to be handled on a priority basis. Only in this way you are able to meet the promised delivery conditions.

2. Compatibility with your warehouse equipment

Make sure that the WMS you are purchasing is compatible with all the equipment in your warehouse. This usually includes scanners, terminals, printers, scales and other physical or hardware equipment. If your WMS does not communicate with any of these devices, factor in other related investments up front.

3. Demonstrable ROI

In addition to general positive references and recommendations from other companies, including those that are similar in size and product, try to determine the time and financial savings of the software you are acquiring. Try to get answers to the following questions:

  • How much time do I save with WMS per hour?
  • What is a percentage increase in picking accuracy?
  • How much has the speed of complete order checkout increased?
  • By how many percent has the accuracy of stock record keeping increased?
  • On average, how much money is saved per month? (Note: Always compare total logistics costs with/without WMS).

Would you like to have a more comprehensive idea of what your WMS should meet? Download this list of essential features of any advanced WMS.

Entrust your logistics to Skladon today

Don’t want to spend time selecting and implementing the right WMS? Thinking about outsourcing logistics to an external partner? Contact us!

In addition to other benefits of outsourcing, you will also get access to our client application MySkladon, where you will have a complete overview about your logistics. You will never have to worry about warehouse management or its optimization. We are a partner that saves time and energy for other areas of your business.

„The biggest added value I see in the MySkladon client app is accurate information about our inventory.“

Simona Malanová, Process Manager, Skinners Technologies s.r.o.