What is a Warehouse Management System (WMS)
In today’s fast-paced and global economy, the distributors and manufacturers are experiencing increased pressure from customers to supply well-priced products with the least lag between order placement and delivery. In medium to large-scale warehouse operations, maximum efficiency cannot be achieved without a warehouse management system (WMS).
What is a Warehouse Management System? What are the benefits?
A warehouse management system is a software solution that enhances visibility into the entire inventory and manages supply chain fulfillment operations from the suppliers to the store shelf. In this and the next post, I will talk about the benefits of implementing a WMS, what features should it have, and how it works.
When paired with lean warehouse management, a Warehouse Management System integrated into your ERP will optimize warehouse operations at all levels. This includes ordering, receiving, storing, reordering, sorting, picking, packing, and shipping. These improvements will be reflected in customer satisfaction and the net profit of the company. Let’s look at what improvements can be expected with the adequate Warehouse Management System.
Benefit 1: Order reception accuracy
A Warehouse Management System minimizes the errors in the receiving process, by tracking mismatches between the purchase order and the actual products received. Products received are scanned against the existing purchase orders. Once scanned, the system will calculate and/or compute any difference between the PO and the physical product.
The WMS will create a label for the products received that can adhere to individual cases or the pallet. The label can be configured to contain the product information, product lot number, product expiration date, and the product serial number within a QR Code.
Benefit 2: Warehouse workflow
A Warehouse Management System optimizes warehouse flow by analyzing the best use of floor space, based on the category of the product and your storage practices. It will tell exactly what bin locations are available for each product received. It will also know exactly where you can store each item, where it fits, and where it is authorized to be. This is important to avoid a scenario where your warehouse personnel stores something extremely light, like a carton of eggs, and places it on top of a heavy case of bottles. By considering the best locations to store products, the system can lower the warehouse operating expenses.
Benefit 3: Sorting and picking
Picking is the process of preparing a sales order to be delivered to the customer. With a Warehouse Management System, the picker sees the items in the order and their bin locations and availability. A good WMS will sort bin locations and will configure the most efficient pick sequence. Since the product’s scan label contains the lot number and expiration date, the system can help maintain product rotation according to your policies, whether through first-in-first-out (FIFO), last-in-first-out (LIFO), or first-expired-first-out (FEFO). When you are done picking an order, the system allows you to print a packing slip and/or a pallet label. These functionalities will decrease the costs by reducing the time and errors of the picking process.
Benefit 4: Just-in-time inventory
Just-in-time (JIT) refers to an inventory management practice in which stock levels are kept low and the product moves quickly through the warehouse. Instead of holding onto inventory for long periods, the warehouse receives it “just in time” to fill an order. While this process can be quite complex, achieving a balanced just-in-time inventory can be accomplished with the right Warehouse Management System.
Warehouse Management Software that crosses information with Route Accounting or Sales Software can build an accurate demand forecasting. These forecasts are used to generate optimal inventory levels to meet demand without underestimating or exceeding it. This greatly reduces safety stock and related carrying costs. If you are involved in the manufacturing or food industry, just-in-time warehousing can also reduce waste and scrap related to perishable items.
Benefit 5: Inventory visibility and traceability
A Warehouse Management System that integrates with a DSD Route Accounting software will provide full visibility and traceability of where the products are in real time. The label created at reception of goods allows a total tracking to every item that enters your warehouse.
- Monitor its movement through the warehouse;
- Determine where it will be stored;
- Organize transfer from bins to picking area;
- Assign the truck it will be loaded in;
- Track truck inventory;
- Register the products delivered in the stores along with the returns, rejections and credits;
- Trace any consignment and PAR level inventory
Benefit 6: Eliminates manual data entry
Without a Warehouse Management System the transactions related to warehouse processes are carried manually. This means paperwork and manual data entry into the accounting system. This form of operation is time consuming, labor intensive and prone to human errors. The sum of all the benefits mentioned before adds up to one last benefit: the elimination of manual data entry which leads to an accurate balance sheet.
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Take a look at How a real warehouse management system works