Your distribution center needs to be able to control inventory movements, from receiving and put-away to picking and packing, as well as the management of returns. A warehouse management system helps you do that.

A WMS can also serve as a key link in the supply chain, including materials management, product allocations, and shipment planning. What’s more, a WMS typically offers workforce planning and productivity analysis.

But unless you are a third-party logistics service bureau focused only on warehousing and fulfillment, your order management or enterprise resource planning system may be sufficient for handling your inventory.

Most order management systems are designed to handle all of the inventory movement and fulfillment activities required by most catalog or e-commerce companies. Though ERP systems were not originally intended to encompass these functions, many of them have added such features in the past few years due to the growth of e-commerce as a sales channel.

Of course, the opposite is also true: Some newer e-commerce systems deliberately avoid warehouse management functions, assuming that you will integrate with a WMS.

So how do you know if you need a separate WMS? If you have warehouse and fulfillment functionality in your order management suite, you need to determine how much better a WMS will do the tasks your order management or ERP system can already handle, and how much more efficient it will allow you to be.

This is of course tied into the basic ROI question: How much will you save by implementing a WMS compared to the costs of implementation?

Before addressing that question, though, remember that whatever theoretical payback you calculate must take into account challenges you will encounter in implementing and integrating the WMS into your current systems architecture. Getting a WMS to function completely in sync with an order management system in particular is fraught with difficulty.

Why? For one, the logic of any given WMS may not be consistent with the logic of any given order management solution. Take “line-item allocation,” for example. There is no universal standard by which allocations of line-items on an order are processed among the various order management systems themselves. So expecting a WMS to automatically match the way your system currently handles this is probably unrealistic.

At least one major order management system does not do a “hard” allocation on line-items until they are batched for picking. But if the WMS is doing the batching, then it most likely needs to be modified to hard allocate when the orders are ported to the WMS.

Moreover, not all systems handle the relationship of line-items to orders in the same way, which can have a significant impact on the way an order is picked, packed, and shipped.

Worse still, you can’t anticipate every mismatch in the logic of the two types of systems. Only careful testing using multiple inventory management scenarios can reveal them all.

And some unanticipated modification of either the WMS or the order management system may be required to get both systems singing in key on the same page. Be sure to allow time for this in implementation.

Indeed, the industry is haunted by horror stories of otherwise well-run companies that encountered massive operational snafus in the hectic holiday season, with tens of thousands of unshipped orders, double-shipped orders, incorrect orders, and every other conceivable kind of fulfillment mistake — all caused by a failure to get the order management system and the WMS integrated properly.

Pay particular attention to how backorders and returns are to be handled between the two systems, as these are two major points of vulnerability.

WMS benefits

A WMS can provide many benefits that your current inventory management system may not address as effectively, if at all. Probably the most common of these is the management of warehouse automation. If you want to employ pick-to-light, carousels, automated picking, or complex conveyor and gate/diversion management, you most likely have a WMS in your future.

The same goes for radio frequency workforce management or the use of handheld or truck-mounted units. And if your supply chain partners require support for RFID in a multichannel environment, you’re almost surely in the market for a WMS.

Another major reason for implementing a WMS is improved space utilization. This can range from directed put-away or random put-away to more sophisticated slotting. (See “Slotting for dollars” on page 44.)

Also related is more efficient receiving and put-away, including automatic put-away, provided the supplier offers an advanced shipment notice (ASN) and item-level barcodes. And if the supplier does not, your own WMS may be the best way to generate barcode labels at the item and bin level.

Some other compelling reasons to acquire a WMS: You need kitting and assembly (MRP) functions that are more flexible or complex than what you currently have.

You may need support for EDI, you require more options than you have for cycle counting, you need a greater range of picking options (wave, zone, consolidated), you must do retail (bulk) distribution as well as direct-to-consumer fulfillment, you have trouble managing “cross-docking” for backorder fulfillment (picking at receiving without item put-away).

Or maybe your current system can’t provide the workforce management and productivity tracking tools you feel your operation needs.

If your decision to acquire a WMS is not driven by the goal of efficiency for its own sake, it may be driven by order volume. When you have reached the point where your order management system simply cannot handle the movement of inventory required to support your order volume in a timely fashion, it’s time for a WMS.

Making a list

To evaluate which WMS will best suit your needs, you have to consider several factors. At the top of the list is support for multiple divisions, companies, and warehouses.

You should also look at both merchandise storage types supported and material handling equipment supported. And can the system handle multiple SKUs per location? How about multiple locations per SKU?

What else do you need to think about when considering a system? Here is an abbreviated checklist of other important features and functions you should look for in a WMS:

  • ASNs (inbound, outbound)
  • Planned and unplanned receiving
  • Vendor performance tracking
  • Support for technology including EDI, RFID, and radio frequency (what RF type, which functions)
  • Barcoding symbologies supported
  • Package labeling
  • Random, directed putaway (with “top-off” capability)
  • Slotting management, space usage evaluation tools
  • Pick batch functionality
  • Picking methods supported
  • Replenishment methods
  • Demand tracking and analysis
  • Warehouse transfers
  • Backorder management
  • Cross-docking
  • Inventory consolidation
  • Hazmat management
  • QC functions (receiving, picking, packing)
  • Manifest interfaces
  • Rate shopping
  • Packing list, shipping label options
  • Logistics management, carrier interfaces
  • Shipment tracking
  • Returns handling

You should also look for a warehouse system that provides productivity analysis, as well as reporting tools and flexibility.

Many WMS applications these days offer the option of a browser interface, which allows you to support authorized access to the system from remote locations. This feature can add significant value to the WMS investment.

Ernie Schell is director of Ventnor, NJ-based consultancy Marketing Systems Analysis, and author of The Guide to Catalog Management Software.

Slotting for dollars

Many merchants acquire a WMS to improve slotting, or determine the optimal placement of inventory for picking efficiency. But you first have to figure out what you want to optimize (put-away, storage, picking, a combination of these tasks? The challenge can be so complex that there are actually separate slotting systems you can acquire. But most WMS applications support slotting as part of their suite of functions, and it is certainly one of the biggest benefits they offer.

The trick to slotting is to provide a way to manage a multitude of variables that are in constant flux. Any slotting tool should allow you to establish, define, and manage warehouse zones; assign item, package, or pallet types (and sizes) by zone or location; use assigned random put-away; optimize picking locations by item demand velocity (and assign A/B/C velocity codes); and minimize picker travel distances and balance these with put-away travel distances. A slotting system should also let you assign items to multiple locations; optimize carousel bin assignments (including assignment of an SKU to multiple bins); and report on workforce efficiency on a user-designated basis.

Some of the WMS systems

While there are dozens of available WMS systems, the vast majority were designed for wholesale distribution or retail store replenishment, with relatively low volumes of high-value shipments in case lots or pallet loads. Only a handful have been configured to handle high volumes of low-value orders, which is the typical profile for direct commerce.

The following are widely adopted WMS applications within the direct commerce, multichannel fulfillment, and distribution environment. Note that most of these vendors offer a multitude of related solutions or “modules” in the inventory management and logistics arena.

Highjump (www.highjump.com): a Web-enabled, highly configurable solution with a comprehensive training program, “HighJump University” (used by Fingerhut and Overstock.com).

Integrated Warehousing Solutions, the IRMS system (www.iws-irms.com): includes interfaces to several order management and ERP systems (used by Danbury Mint, Overton’s, and Woodwind & Brasswind).

Manhattan Associates, Warehouse Management (WM) and WM for Windows (www.manh.com): This widely installed market leader now supports Web services on its powerful new Windows version. Users can expose key application components and data as Web Services to share with other systems. Good at handling very high volumes.

Phoenix Systems Group, Horizon WMS (www.phoenix-sys.com): the only WMS specifically for direct commerce, developed in partnership with major catalog companies by Phoenix Systems Group, specialists in multichannel integration as well as e-commerce, retail, and direct commerce systems.

QSSI, PowerHouse WMS (www.qssi-wms.com): a Windows-based system that integrates to Great Plains. Also available: ePowerHouse (browser interface) and PowerHouse FastTrack (PHFT), a scalable entry-level version (used by Museum of Modern Art and Pets.com).

Radio Beacon WMS (www.radiobeacon.com): with a browser interface, runs on SQL/Server and integrates with Microsoft Dynamics and Sage Software accounting packages. Can support up to 100,000 order lines per day (used at Sports Giant and Caribou Coffee).

Red Prairie, E2e Solutions (www.redprairie.com): available on a software-as-a-service (hosted) basis, Red Prairie uses a services oriented architecture to facilitate systems integration in conjunction with its sophisticated integration suite (used by Harry & David, The Container Store, Dick Blick).

You might also consider systems from these other vendors: Argos, Cadre, Catalyst, Fascor, InfoSite (for third-party logistics providers), Logility, Swisslog, and Tecsys.

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