Welp MagazineA good WMS can help your e-commerce retail business avoid all of that by automating the process and creating documents that are easy to audit.
What is a WMS?
A warehouse management system is a software application designed to support and optimize warehouse functionality and distribution center management.
Why do you need a WMS system for e-commerce?
Perhaps you’re still not convinced you need a WMS system. Well, think back to all the hassles you’ve overcome so far with your e-commerce business. And remember, if you want to grow your e-commerce business, you’re going to need inventory management….
How does a WMS System for e-commerce literally save hundreds of hours?
People always think money is the most important thing, but time is more important than money. You can get more money, but you can’t get more time. And, if you’re saving time, you can allocate more of your time in the other areas of your business. So, when you add them all up, they’re more valuable than money. – Andy Stanley
Once you get that new WMS system, you’ll see how it can boost your profits, cut costs and save time for you.
How much time can a WMS system save?
A completely automated WMS system can literally save hours of work, whether a business is operating a warehouse or a small distribution center. A warehouse management system reduces shipment processing times and improves customer service, which can result in increased sales and revenue.
According to a study conducted by MIT, freed-up time from automation is the single biggest benefit of WMS systems. Warehouse management software allows businesses to operate faster and more efficiently. If you’re thinking about doing business with a third-party logistics company, you’ll need your own warehouse management system.
Inventory and Order Tracking
A warehouse management system simplifies tracking for inventory and orders and lets you know when something is out of stock, overstocked or a high-value item.
Automated Shipping
If you’re shipping your product to customers, you need a warehouse management system. Prepackaging equipment and shipping software helps save time and money. It’s also a way to standardize and keep track of your shipping procedures across the board.
Automated Collection of Data
A good WMS uploads data to a database to be accessed by management. It helps the management team make more informed business decisions, which will save more time and money in the long run. It’s hard to run a business when management is making decisions with incomplete data.
Increased Speed and Efficiency
WMS software automates manual processes to increase speed and efficiency.
Statistical Reporting
A good WMS system gives you information you can use to improve your business. That’s another area for cost savings.
Improved Customer Service
It’s all about the customer. Customer service is vital to a successful business. Companies realize the need to provide excellent customer service in the highly competitive retail marketplace. A WMS system will help you do that. The bottom line: a WMS system can deliver better service at lower costs. Your customers will see better service and you’ll see increased sales and sales. Think about this–which type of customers are you more apt to keep: the ones who are happy with your customer service or the ones you have to constantly chase down for their payment?
Strengthened Competitive Advantage
An outstanding WMS will give a company a competitive advantage and a cost advantage.
Improved Operations
Increased efficiency, increased customer service and improved operations are just a few of the positive attributes of a good WMS system. And, remember, most of them are free of cost. Adding efficiency, reliability and accuracy will only improve your bottom line.
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What to look for in a WMS for e-commerce?
Report Accuracy
It’s important for a WMS to generate accurate reports. Databases are constantly being updated, and you need to know that what you’re seen on your screen will reflect what you actually have in the warehouse. Accuracy and timeliness are crucial for running an efficient business.
Easy to Set Up and Use
You don’t want to waste hours and hours messing around with a complicated software program. You’ve got a business to run, and you need to devote most of your time and energy to that. A good warehouse management system should be intuitive and easy to use. Don’t waste money on a complicated system that will eat up your employees’ time trying to figure out how to use it. In addition, you’ll want to make sure that the user interface is easy to navigate.
Synchronized Tracking System
A good WMS system will integrate with an already existing tracking system to help you gather and generate the information you need to manage your business. You should be able to quickly and easily see:
- The status of inventory, when it was purchased and when it was sold
- All orders that have been placed
- All payments that have been made, and where the money was sent and from where it came
- All damaged and defective goods, as well as what has been resold
- When goods were received and sent out
- The location of all goods within the warehouse
Document Automation
You’re wasting money and time if you’re manually creating documents and shipping notices. A good WMS system will help you automate those procedures so you can track your shipments no matter where they’re headed. You can also use it to set up documents for on-time delivery, to get payments on time, to handle returns and to generate sales orders.
Business Intelligence
Data can tell you what’s working and what isn’t. A good WMS system will give you access to this data. You’ll get valuable insight into shipping costs, sales performance, and customer preferences, among other things. This information can lead to more accurate business decisions, which will free up more time for you to spend on your e-commerce business.
What are some things to look for?
- Quick loading time
- Ability to run without a lot of IT knowledge
- Ability to add, remove, and change information quickly
- Accuracy and reliability, even with heavy use
- Accurate and complete reporting
- Does the WMS integrate with other software?
- Ability to track inventory levels
- Ability to filter reports
- Continuous improvement
- Security
- Synchronization with tracking software
- Easy to manage and easy to use
- Centralized control over all warehouses
- Easy to use interface
- Free training
- Online tutorials
- Customer support
What are some commonly-used features by WMS software?
Labor Hours Allocation
WMS software can help you allocate labor hours to specific activities so that you can easily see where time is being wasted. You can analyze when employees are working and what they’re working on; feedback can help you improve your performance.
Purchasing and Sales Performance
Most WMS software will allow you to look at your purchasing and sales performance on a daily, weekly, monthly or yearly basis. In addition, you can look at performance by particular warehouse or by a particular item. That type of information can help you refine your business model to be more efficient and profitable. This, in turn, will free up more time to spend on your business which will further improve your sales.
Reconciliation
Because a WMS system integrates with an existing database, you can automatically reconcile inventory items with what is in stock. You know where the product is, what it’s worth, how much you’re paying for it and how much it costs, and what the profit margin is, too. The result is inventory accuracy and better business decisions.
Sales and Inventory Performance
A WMS system can track your inventory on a daily basis so that you can see the performance of your business. How much of each item you have in inventory and how much money you’re spending to stock it. That information will allow you to make on adjustments in your business model to maximize your profit.
Track Orders and Inventory for Customer Service and Support
You can track orders and inventory for customer service and support. You can segment orders by customer and keep a close watch on their orders and orders.
What are some considerations for selecting a WMS?
Technology
A WMS will be easier to use if it uses software that you already use in your business. Look at the software that is running your accounting system already, as well as your tracking software. Then find out whether the WMS uses the same type of software. You’ll have one less learning curve if you can use the same type of software with the WMS.
System Requirements
Evaluate your current infrastructure and look for any strains that might be too much for the system to handle. You’ll need to make sure that the computer and network infrastructure is capable of handling the workload that the WMS will entail.
Size of Warehouse
Don’t just look at how many items you have in stock; look at how much physical space each item takes up. You’re going to need more than basic functionality if the warehouse is big and holds a lot of inventory. Evaluate your business model to see if you have enough products to justify a warehouse management system.
Return on Investment
WMS systems are expensive, but they can increase business efficiency and profitability. A WMS can cut down on your costs and increase your profits. Before you buy your WMS, look at the potential ROI that you’ll get. You’ll get the greatest ROI if you buy your WMS when your business is struggling, so that you can use the savings on your WMS to prop up your business. If your business is doing well, you’ll get slightly less of a return. Nevertheless, you’ll still get a nice return because your business will be more efficient and profitable.
Operational Importance
Look at the data that you measure for your business. Every facility has different data. You may need to use tons of inventory data, or you may need to track everything from shipping records to customer complaints. You want to be sure that the software’s reporting capabilities will suit your needs.
Compatibility
The software that you use to get your business to work should also be used in your WMS. Also look at the software that is used by everyone else in the warehouse. If everyone is using a common type of software already, it makes it easier for you and your employees to get accustomed to new software. You can also look at software that you use for business applications outside the warehouse, such as computer-aided design. If a lot of this software is the same for the software that the WMS runs on, you’ll have fewer changes to make in your business.
How do you procure WMS for e-commerce?
The first thing that you should do is determine what level of WMS you need. You can’t be exact when you make this decision; you can only make a rough guess. You’ll need to answer these questions: Who uses this WMS? What kind of system do they use? What are their skills?
- Are there more than five people working with it?
- Is it a commodity company? Are there a lot of products that are similar?
- Is there a lot of inventory? Will items rotate out of stock quickly?
- What is the warehouse space like? Is it a large warehouse with a lot of different sized items?
- Are there more than one location?
- What is the typical throughput? How much product is shipped per week?
- What does the data need?
- Do you need to see shipping costs, sales performance, and customer preferences, among other things?
These factors will help you to decide what capabilities you need in your WMS.
Is more than one person going to use this WMS? If so, it should have a good documentation tool to help people get familiar with the WMS. Most people that use the WMS will be new to it.
How are you going to connect this WMS to your e-commerce system?
If you plan to rely on distributors, and they have their own integrated warehouses, you may not need a connection. If you have your own warehouse, you’ll want to connect to your WMS.
Do you want to use it to ship directly? If you have a lot of dropship orders, shipping each one directly would be no problem. If you have a lot of orders that are shipped directly, are you from a bad neighborhood? You’ll need to hire guards and equipment to protect your shipments.
Will you offer a mobile checkout? If you are going to allow customers to initiate the checkout process from their mobile devices, you are going to need wireless connectivity and all of the application delivery features that come with it. Fixed posts are expensive, so you’ll want to use the mobile-specific connectivity options if they are available.
Will you be running additional scanners? If you’re going to run more scanners than you already have, you should get WMS software that handles them. This will help you save time and money on the equipment.
Review the WMS Features
There are a few types of WMS applications based on their abilities. These are the features that you should look at when you assess the WMS:
Inventory tracking: Real-time and historical. You might only need real-time information if you’re going to use it to measure the flow of items in your warehouse. Historical tracking is important if you’re going to be auditing your performance over time or if you’re going to be doing market analysis by items.
Pricing and discounting: You need this feature to optimize your sales.
Order entry and fulfillment: You need to manage over and under-flow of your orders. This will help you to create an accurate forecast of the items that you need to keep in stock.
Physical / spatial management: Inventory flow.
Procurement: This is essential for any WMS. You can use it to track inventory levels in your warehouse.
Shipping: To track shipments from your warehouse, to connect it to your e-commerce software, or to track shipments that you have in-progress in your warehouse. You have different ways to connect to your warehouse management system for the different ways that you want to ship.
Reports: You want to make sure that your reports are flexible, actionable, and customizable.
Information Integration: If you are already using an enterprise resource planning (ERP) system, you will want to make sure your WMS has similar features to your ERP as possible.
WMS Software Methodology
If you’re an e-commerce retailer, you may want to consider a manufacturing-style approach for warehousing. This is especially the case if you are running dropshipping. This method allows you to configure different warehouses for each supplier and each supplier for each drop area location. When a customer orders something, you don’t do any warehousing; you forward the order to the correct supplier. While this approach will have costs associated with it, you will be able to fulfill orders very quickly. You can manage all of your suppliers and distributors in one WMS. This makes it very easy to set up and manage.
If your e-commerce business is not that demanding, you can create some fuzzy rules and simply divide your inventory by which data load each shipper requests. The drawbacks to this approach are that you won’t be able to use a mix of shipping methods. You will also not be able to implement warehouse management algorithms and techniques. This is a simple approach that allows you to choose a location based on the carrier and shipping method that you prefer.
How to select the best WMS for your e-commerce business depends on how much shipping and receiving is done at your warehouse. Think about the need to ship directly and how many dropship products you need to keep. After you’ve done this, you’ll have a good idea about what kind of solution you need to implement. You’ll also want to make sure that you have a good vendor partner to help guide you through the purchase process.
There are a lot of WMS solutions available on the market today, but not all of them are created equal. You want to find one that is a good fit for your company and your shipping needs. This will help you to cut down on costs and shipping time as well as optimize your shipping costs. You only want to buy the solution that you need. If you buy more than that, you will have to spend money and time cutting features that you don’t need to use.
What do you think?
Are you ready to buy a WMS? Is it time to get your warehouse management services in order?
