A Warehouse Management System (WMS) empowers businesses to oversee and streamline the movement of inventory within their warehouse. It also orchestrates the tasks performed by warehouse personnel, ensuring efficient processes to fulfill orders and manage stock optimally.

But long before the advent of WMS technologies (and even computers), businesses still successfully managed their warehouse operations. So why should they invest in the latest technology?

We spoke with Simon Curd, Chief Product Officer at Linnworks, to understand the benefits of a Warehouse Management System and why embracing best-of-class warehouse automation technologies makes so much sense.

Efficiency is essential in warehouse management

A direct relationship exists between your warehouse’s efficiency and your business’s profitability. “Making sure that you’ve got the right stock in the right place at the right time means you’re able to fulfill orders at the speed your customers expect,” says Curd. “Ultimately, the faster you can fulfill those orders, the lower your fulfillment costs.”

This formula is why many retailers track the metric of the fulfillment cost per order. “Looking at that key KPI and driving it down is essential for the most efficient and profitable warehouse operation,” says Curd. Being able to track those KPIs is only possible when you have a system in place to track how the stock is moving through the business. “Many businesses start out tracking their stock using spreadsheets,” says Curd. “This process will get them from zero to maybe 20 or even 50 orders a day.” 

However, as sales grow, sellers rapidly get to a place where using spreadsheets becomes unmanageable. “They’ll quickly find that they have no idea where the stock is, and when something changes, it doesn’t get updated,” says Curd. “To put solid KPIs in place for an efficient business, you need a warehouse management system that is actually running your fulfillment operations.”

The key benefits provided by a WMS 

A WMS is a complex system that bridges the divide between your physical and digital operations. “You’ve got physical products on physical shelves,” says Curd. “Your WMS is the digital representation of what’s on those shelves, helping your warehouse team plan and execute their journey around your warehouse.”  

But your WMS will do much more than visualize your stock and guide your warehouse teams’ movements. 

The key benefits provided by WMS solutions include:  

1. Cost reduction and increased profitability

When every movement of stock in your warehouse has a cost associated with it, time should not be wasted making mistakes. “Errors cost money,” says Curd. “So making sure you reduce those situations where pickers can’t complete their job is essential to any profitable warehouse operation.”

2. Enhanced inventory visibility and control

A warehouse management system will know how many of a specific item is in a particular location of your warehouse.”It will know where you should be picking those items from, and it will be giving your pickers real-time data when they’re picking items of where they should be going next,” says Curd.

This process allows interrelated jobs to work in a synchronized way. “When a pickface (also referred to as a forward-picking location) is running low, someone in the warehouse will have real-time visibility of that and be able to start replenishing stock into that location,” says Curd.

“It allows coordination across the various teams to ensure that stock flows through the warehouse into boxes to be shipped to the customer most efficiently.”

3. Improved operational efficiency

Operational efficiency is an area of warehouse operations that is essential to optimize. “If you’re sending customers the wrong item, not only will it cost you to get the item back and replace it, it will also greatly harm the customer’s experience of your overall service,” says Curd.  

As well as the direct cost of errors when fulfilling products, there is also an indirect cost in terms of customer retention. “It can also help with issues relating to stock which might have been ordered but isn’t available when it comes to the fulfillment,” says Curd.

“If there is an alternative product that could potentially be sent instead to avoid breaking the promise, it may mean you don’t lose the order and retain the customer.”

4. Scalability and flexibility

As well as protecting businesses from unnecessary costs, a good WMS will help ambitious sellers access new opportunities to aid expansion and profitability.

As a business scales, it may be adding new items to its range to capture more market share, which means it will need bigger warehouses or more bin locations to store items in its warehouse. “The bigger the warehouse, the more locations that need to be tracked, and the more concurrent jobs that need to run,” says Curd. “All of this needs to happen in a synchronized way.”

This is where the scalability of a warehouse management system really comes into play. “When more orders come in, your fulfillment operation has to work harder,” says Curd.

“Having a foundational system in place that coordinates all those tasks, regardless of the scale, is essential.”

Sellers also need to consider how they can manage operations across multiple warehouses and geographic locations. “Knowing that you’ve got a solution that is standard across all of your locations helps with your staff efficiency and assures data consistency across your business,” says Curd.

5. Compliance and security

Some businesses will have more complex needs than others. This is particularly true when regulatory compliance and security issues must be considered. “Businesses handling food or medical products may have to store and fulfill items based on shelf-life or ingredients,” says Curd. “For example, there may be rules about separating products containing gluten from gluten-free products. Similarly, some items must be stored in a warehouse environment that meets specific hygiene regulations or provides secure storage.” 

6. Managing batches and different fulfillment options

Managing batches and other fulfillment options is a critical factor of warehouse management in many verticals. For businesses assembling items before despatch, managing all the different components associated with an order can be complex.

“We have a customer that sells barbeques,” says Curd. “They bring in the various components of the barbeque separately and assemble them to order. So it’s a kit. If you’ve got all the different parts but only have three legs, you haven’t got a barbeque. Mapping all the data between raw components and assembled products is another benefit of a WMS.”

Businesses may also be leveraging third-party logistic services or managing multiple warehouse locations. “Knowing that you have the tools to transfer stock in and out of your 3PL provider and between your warehouses will aid your expansion,” says Curd.

Integrating new marketplaces and sales channels may also complicate your fulfillment needs. “Different marketplaces and suppliers will often have their requirements for how things are fulfilled,” says Curd. “Products may need to be shipped in branded boxes with specific packaging. So having a solution that allows you to factor in these different challenges while maintaining your overall operation’s efficiency cannot be underestimated.”

7. Advanced reporting and analytics

Having good reports that reflect the type of jobs that need to happen in the warehouse is essential. “Your replenishment report is one of those key inter-warehouse reports,” says Curd, “It helps ensure the replenishment processes and order fulfillment process work together, and staff isn’t left standing waiting to pick orders.”

Having a good overview of the efficiency of your labor is also essential. “When you walk around a modern warehouse, they will often have a screen showing the throughput of orders with some kind of a leaderboard,” says Curd. “Understanding how fast you’re fulfilling orders will help you understand how efficient your operations are and if you need to scale up your team.

Having visibility to the performance metrics within the warehouse keeps everybody focused on their goals. “Those goals could be the cost per order or the number of orders shipped daily,” says Curd. “That will depend on whichever KPI is most important to the business. Having visibility of those KPIs so everyone knows where they are will help them make better choices as they do their job.”

As well as showcasing productivity levels, this information helps managers incentivize workers and address training needs. “If you can measure it, you can manage it,” says Curd. “As an old adage, this is incredibly relevant in a warehouse.”

The importance of integrations

Integrations are vital for a Warehouse Management System (WMS) as they enable seamless connectivity and data exchange between various systems within an organization’s infrastructure. Integrations streamline operations by facilitating real-time communication between the WMS and other essential platforms such as ERP (Enterprise Resource Planning) or off-the-shelf accounting systems, transportation management systems, and e-commerce platforms.

“At Linnworks, we specifically focus on providing a ‘commerce ops’ solution,” says Curd. “This is focused on the fulfillment process within the ecommerce seller’s business.” Linnworks powers everything to do with how the orders are aggregated from multiple channels into an order management system, how those orders are shared with the inventory management and warehouse management system to ensure that they are picked and ready to go, and how that integrates to the shipping system to make sure that labels are generated and the most efficient shipping solution is chosen. 

“We then make sure that all of the status of those orders is delivered back to the channels so that customers are kept informed of what’s going on with their orders,” says Curd. Outside of this core functionality, Linnworks has partnered with best-of-breed technology platforms that offer all the solutions online sellers need to facilitate their online orders.

Learn how a WMS can benefit your business 

Linnworks’s Warehouse Management System has helped thousands of online retailers build a more efficient, effective, and profitable business.

To see Linnworks in action and speak to one of our commerce ops experts about how a WMS can help your business grow, contact us today or request a demo.