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Understanding warehouse management system benefits for manufacturers

Warehouse management system (WMS) software helps control the movement, storage and accounting of materials or finished goods through a warehouse. Warehousing management system benefits can be seen throughout the manufacturing process. WMS software directs the picking, replenishment and putaway of goods identified and tracked by an automated data collection system, typically bar codes and scanners. It takes orders -- literally -- from an ERP system and feeds back inventory and transaction data. 

WMS software's greatest benefit comes from streamlining processes to move items faster and store them more efficiently. When all goes well, this leads to reduced inventories and labor costs, increased accuracy, and happier customers.

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"You can go from 92-93-percent inventory accuracy to well over 99 percent and it will pay for itself in less than a year," said Steve Banker, service director for supply chain management at ARC Advisory Group.

Banker said the benefits of WMS become clearer when companies consider the costs of incorrect or delayed orders. "If you don't ship what a customer wants, it's costly to resolve those issues -- for both sides," he said. Such negotiations can lead to partial payments or worse.

The best WMS software supports the following operations:

  • Cross-Docking: Moving inbound goods directly to outbound trucks so they don't have to be stored
  • Picking and Location Logic: Picking goods from certain locations to meet a particular goal and identifying optimal locations and picking patterns
  • Slotting: Placing products in the best locations for serving certain kinds of orders, such as for the most frequently picked items
  • Task Management (including task interleaving, a method for minimizing wasted trips by grouping dissimilar tasks)
  • Automated Data Collection (ADC): A single platform for devices such as bar code scanners, RFID tags, and voice-recognition systems
  • Yard and Dock Management: Managing inventory in or near trailers, especially for cross-docking

Greg Aimi, supply chain director at AMR Research, said more vendors have been adding "kitting" (assembling or packaging items that belong together) as well as reverse logistics and refurbishment tools and workforce performance management to their WMS solutions.

Web portals for dock scheduling are also becoming more common. "All of the independent vendors have been adding more to their suite of software beyond warehousing," he said, referring to vendors who specialize in WMS, rather than ERP.

About the author: Freelancer David Essex has covered information technology for BYTE, Computerworld, PC World, and numerous other publications and web sites.

This was first published in December 2009

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