Why you need a WMS system (according to our VP of Product)

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Every ecommerce business needs a robust technology stack. The need for some of that technology is immediately apparent. Of course, you need an ecommerce platform, a payment gateway, and an email marketing service provider. 

But what is a Warehouse Management System (WMS), and do you really need one? We spoke with Diana Nolting, VP of Product at Linnworks, to learn what a WMS and warehouse technologies are and how it can make your online retail business a more efficient and profitable operation.

What is a WMS system?

A warehouse management system (WMS) is an advanced piece of software that manages the various processes required in order to move stock in, around, and out of your warehouse, ensuring efficient inventory control, streamlined operations, and improved order fulfillment.

“When we talk about a WMS system, we’re really talking about the processes that you use to help manage the fulfillment within your warehouse. So it’s the operational heart and the central nervous system of where the fulfillment is happening.”

Diana Nolting

When an online seller is in its infancy, this information is often managed on paper, whiteboards, and spreadsheets. But this approach soon becomes problematic as the business scales. “When we look at a business starting out in ecommerce, the warehouse might just be the backstory,” says Nolting. “After all, a warehouse is just a room with products on shelves. But as that business grows, it becomes more of a challenge to make sure you pick, pack, and ship the right items to the right person, on time, every time.”

A Warehouse Management System enables you to track and optimize those processes, helping your business become a more efficient and profitable operation.

What are the basics of a WMS system? 

At its core, warehouse technologies help streamline inventory tracking, order fulfillment, receiving, and shipping processes within a warehouse or distribution center. 

Core functionalities of WMS systems

Warehouse technologies utilize barcode scanning and real-time data to provide accurate information about inventory levels, storage locations, and order statuses. By optimizing workflows and automating tasks, WMS systems enable businesses to enhance inventory accuracy, improve order accuracy, minimize labor costs, and maximize overall operational efficiency in their warehouse environments.

Types of WMS systems

When it’s time to bring in your first WMS system to manage your warehouse and your fulfillment, online sellers have several different options:

  • Standalone WMS systems: These are independent software applications designed specifically for warehouse management tasks. They operate on local servers and are installed on-site at the warehouse or distribution center. Standalone systems offer robust functionality tailored to individual warehouse operations but may lack integration with other business systems.
  • Cloud-based WMS systems: Hosted on remote servers and accessed through the internet, they offer the advantage of scalability, flexibility, and accessibility from any location with an internet connection. Cloud-based WMS systems, including Linnworks, provide automatic updates and require minimal IT infrastructure, making them cost-effective and easier to maintain compared to standalone systems.
  • ERP (Enterprise Resource Planning) WMS systems: Part of a comprehensive software suite that integrates various business functions, including accounting, human resources, and inventory management. ERP systems offer centralized data management and streamlined workflows across different departments. While ERP systems provide extensive functionalities beyond warehouse management, their warehouse technologies modules may not be as specialized or customizable as standalone or cloud-based WMS solutions.

What are the key features of a robust WMS system? 

A robust WMS enables your warehouse teams to work smarter without wasting too much time contemplating each task. Key features of a WMS system will typically include:

Inventory tracking and management

Inventory tracking is essential to modern warehouse management. “You want to make sure that it’s really easy to understand where everything is,” says Nolting. “You need to account for items stored in different ways and locations. This helps your staff plan the most efficient route around the warehouse, enabling them to pick, pack, and ship orders as quickly and accurately as possible.”

Efficient inventory tracking ensures that companies can accurately monitor goods throughout the supply chain, from receiving to shipping. This capability enables timely stock replenishment, minimizes the risk of stockouts or overstocking, and optimizes warehouse space utilization. 

Additionally, robust inventory management within warehouse technologies facilitates accurate forecasting, enhances order fulfillment accuracy, and reduces costs associated with carrying excess inventory. 

Integration with other systems (e.g. ERP, CRM)

Integrating a WMS with an ERP or Customer Relationship Management (CRM) system streamlines operations, enhances data accuracy, and improves decision-making. This integration ensures seamless communication between departments, optimizes inventory management and enhances customer service, ultimately driving efficiency and reducing costs.

Real-time data and analytics

Real-time data and analytics help businesses make informed decisions quickly, enabling them to adapt to dynamic market conditions and optimize warehouse operations efficiently. This enhanced visibility allows for proactive inventory management, ensuring stock levels align with demand to prevent stockouts or overstocking situations. Moreover, it allows for timely identification and resolution of any issues or bottlenecks in the warehouse, enhancing overall productivity and customer satisfaction. 

“Because we’re talking about physical products, you must be prepared for unexpected events,” says Nolting. “If there’s a spill, that could create a backlog while the issue is resolved. So you need a system that can make sense of the data that’s coming through at the speed they need it to come through.”

What are the benefits of implementing a WMS? 

There are many benefits of implementing a WMS. These include:

Increased efficiency and productivity 

“A lot of companies present their differentiator on how fast their goods get to the customer,” says Nolting. “This is a critical metric to track.”

Speed of delivery isn’t just about keeping customers happy. There are also very practical reasons for speeding up your processes. “When you work in a warehouse, you soon learn the shipping truck usually arrives at a set time in the day,” says Nolting. “If the order doesn’t get on the truck, you’ve just delayed your customer receiving it by a day or more. If it’s a Friday, that might add three days to the delivery schedule. That will cause order cancellations and refunds, and it will cost you money.”

Enhanced accuracy in inventory and order fulfillment

Delivering the right product to the right person at the right time is only part of the battle.

“Specific products may need to be shipped using specific packaging and couriers,” says Nolting. “Get this wrong, and your delivery may fail.”

Regardless of the size of your business, customers will compare your service with the likes of Amazon, which, with its own delivery network, has wholly redefined customer expectations. “You must work hard to match those expectations,” says Nolting. “Of course, Amazon has a huge advantage, but the customer doesn’t see or make allowances for that.”

Cost savings and ROI

Speed and accuracy all add up to cost savings and improved ROI.

“It’s only when you start tracking metrics like the cost of pick or cost of pack you can fully understand the cost of running your business,” says Nolting. “With this information, you can start looking for those marginal gains that drive profitability.”

Compliance and security enhancements 

Compliance with global privacy regulations like GDPR is a significant benefit of selecting a cloud-based system like Linnworks. When companies build and host their own bespoke systems, they take ownership of the security of their customers’ data. This can significantly add to the costs of maintaining the system and be a significant business distraction.

“Our job includes keeping our customers’ data safe,” says Nolting. “It’s not an afterthought. It’s a primary focus of our business. Let us worry about the software so you can concentrate on running your core business.”

How to choose the right WMS system for your business

When selecting the right WMS for your business, it’s essential to look at your immediate needs and your business objectives. “You need to be clear on where your business is today and where you’re reasonably looking to get to in the next three years,” says Nolting.

There are several factors that you need to consider. “You need to look at factors in your business that are deal breakers if a proposed solution doesn’t meet your expectations,” says Nolting. “Then you need to consider areas you want to optimize. That may be human capital or growth in order space. Then, you need to look at your stretch goals. Perhaps you cannot currently handle adding new channels to the mix, but that could change with the right WMS in place.”

Choosing warehouse technologies that scale with your business is essential. “If you are investing in a WMS as a growth tool, you need to partner with someone who lives and breathes warehouse management,” says Nolting. “At Linnworks, we are in warehouses all day long and can really help you understand how to optimize your operations.”

“If you are investing in a WMS as a growth tool, you need to partner with someone who lives and breathes warehouse management.”

Diana Nolting

WMS system implementation strategies 

The implementation of any WMS system is a complex process. Therefore, careful preparation is vital to ensure the technology is available on time and budget. 

Planning and preparation

“You’ve got to be sure that you understand what you want to accomplish,” says Nolting. “The more time you can dedicate to planning your milestones, the clearer you can be in implementing your strategies.”

Being prepared will also save you time from going back and re-working unforeseen glitches.

“Making sure you have a partner who will work with you to make sense of what you don’t know is essential,” says Nolting. “They should be asking you all the questions you need answers to before the implementation process starts.”

Training and user adoption 

Because warehouses often have a high staff turnover, it’s essential to consider how quickly your warehouse team can be trained to use your warehouse technologies.

“The most effective way to do that often is to have a system that has embedded ‘micro training’ at the point where the action is done,” says Nolting. “These significantly cut down on the amount of support tickets users raise, which cuts down on the time they are waiting for answers and confusion in the warehouse.”

Measuring success and ROI post-implementation

Measuring success and return on investment post-implementation comes down to setting clear objectives, analyzing real-time data, and making that information available to all relevant stakeholders in your business. 

“If you’ve got a large business, the individuals who are trying to make decisions on investments and budgets in different areas can only help you if they understand the challenges that add extra minutes to the various processes in the warehouse,” says Nolting. “This highlights the importance of those inter-departmental bridge walkers who understand how reducing saves money and drives profitability.”

WMS systems: Looking forward

As the business landscape changes, technology providers are increasingly looking to new technologies, including AI and machine learning, to help their clients become more efficient and profitable.”Building a smart warehouse isn’t about changing everything overnight,” says Nolting. “That’s far too risky a strategy. It’s really about finding solutions, including AI, to real-world problems. That means testing new ideas based on available data.”

The same strategy can be applied to deploying new IoT devices in the warehouse. “It’s all about piloting new devices, learning from the experience, and rolling out successful implementations,” says Nolting. “At the end of the day, AI, machine learning, and IoT devices are just technologies that can be applied to problems. We just have to find the right problems to apply the right technology at the right time.”

Learn more about how a WMS can help you solve more problems in your warehouse

To learn more about how Linnworks can help you solve more problems in your warehouse with an intuitive, flexible, scalable, and robust Warehouse Management System, contact us today or request a demo.  

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