Guide to WMS Systems for Small Warehouses

4 years ago

Selecting the right warehouse management system for your small business can have a significant positive impact on the bottom line so it’s important to have an idea of the goals you’re planning to accomplish with a WMS and the specific functionality you’ll need to achieve those goals before speaking with vendors.

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 for a Small Warehouse?

Traditionally, small warehouses use external commerce platforms to streamline logistics, but often this requires additional costs to integrate with warehousing systems. Integrating a WMS with the other components of your business can reduce costs and free up internal resources.

A well-designed WMS can significantly improve your inventory management process, resulting in better and faster data collection, more accurate inventory and warehouse management, more timely deliveries, and better customer service.

A good WMS will also streamline the purchasing process, reduce waste, reduce labor costs, and make compliance with industry standards more efficient.

Additionally, you can often extract sales, profit, and margin data from your warehouse management software to analyze performance against budget.

  • How do your decisions affect your inventory management process?
  • Determine inventory levels at what time?
  • Identify your preferred inventory levels:
  • In your beginning inventory level?
  • In your ending inventory level?
  • In your work in progress inventory level?
  • As your run rate inventory level?
  • What are the current processes?
  • Ordering your inventory
  • Placing outgoing shipments
  • Tracking inbound shipments
  • Measuring inventory velocity
  • Comparing inventory levels
  • How will you make decisions?
  • Equipment Performance
  • Location Performance
  • Inbound and outbound times
  • Order quantities and times
  • Sales information

Applications of WMS

After you have the important details about how you will be using your warehouse management system, you can select the right warehouse management system to fit your needs.

Below is a list of applications that WMS is commonly used for:

Modular warehouse management systems are better for small businesses because they tend to be less expensive and can be configured to your specific needs in a way that is impossible with other warehouse management systems.

Modular warehouse management systems combine the right software with the correct equipment and infrastructure to fit your needs.

Benefits of Modular WMS:

  • Less Expensive
  • Less complex

Small businesses are designed for customization, and modular solutions allow you to select modules, rather than predefined and expensive packages.

Integrated Warehouse Management Systems

Because smaller warehouses cannot afford the high price of integrative warehouse management systems, modular might not be useful to them.

Integrated warehouse management systems integrate with any web-based system, but may be too complex for small businesses.

Benefits of Integrated WMS:

  • Saves money because it uses web applications like ERP or E-commerce platforms
  • No custom programming is necessary
  • Good for warehousing firms and distributors

Risks of Integrated WMS:

  • Might be extensively costly for small teams
  • Designed for high volume, frequent deliveries
  • Require dedicated IT Support
  • Not designed for occasional deliveries
  • Core Warehouse Management System Functions

Below is a list of the functions that a WMS software can provide:

  • Inventory Management
  • Stock Levels
  • Purchase Orders
  • Receiving
  • Shipping
  • Stock turnovers
  • Transfers
  • Usage-based stock control
  • eCommerce

When you select a warehouse management system, make sure that it is designed to integrate with your eCommerce platform.

  • Equipment Management
  • Inventory Management
  • Transfer Order
  • Order Processing
  • Control Stock
  • Sales and accounting
  • Yard Management
  • Advanced features

Software can include advanced features such as:

  • Graphical representation of warehouse performance
  • Cross-dock facilities
  • Advanced Quality Management
  • Work orders and Scheduling
  • Pre-pack process management
  • TMS integration

Researching WMS

Before evaluating and selecting a warehouse management system, you need to define your requirements and identify the available solutions.

Below are key steps for your research process:

Find out if there is a necessary capability that is missing from your current warehouse management system and determine the cost of upgrading or migrating the business processes. Make a list of your requirements and determine how the available warehouse management systems compare to your requirements. Review the manufacturer’s literature and compare different modules. Look into the vendor’s history and reputation and ask for client references. Consult with a company that helps businesses choose a warehouse management system.

Choosing WMS

When choosing a warehouse management system, take into account a number of factors, from the system’s scalability to its functionality, support, and unique requirements.

Factors in Choosing a WMS

System Scalability

The number of users the WMS will have to support should be considered, due to the fact that the number of users directly affects processing speed and quantity of reports that can be generated on a daily basis.

Number of users for barcode scanners:

In order to determine the necessity of implementing a plan for a scanner replacement, you need to understand the level of use your current equipment sees and analyze whether specific features of the equipment will be helpful if you are to continue using the device.


To identify your requirement for implementing a plan for scanner replacement, you need to know the level of support that the warehouse management system and barcode scanner manufacturers provide.

In addition to the support provided by the WMS and scanner manufacturers, the cost of support provided by independent service providers should be considered when you are choosing a WMS.

WMS vendors are getting better at providing support services on time and cheaper.


The ability of the WMS to support your growth needs also affects your decision. Sufficiently scalable WMS’s are not only able to handle your current volume, but can also handle additional volume or other changes without a significant increase in operational expense.

If your business model includes the possibility for a large number of users, you need to consider the number of users that the WMS is capable of supporting. Scalability could also mean the ability to enable in-house reporting and processing if your business will require you to become more involved in the details of how your warehouse is managed.

Customization and Uniqueness

While it is important to ensure that a WMS satisfies your specific needs, it is also important to ensure that the WMS can support special and unique business requirements that you may have.

Importance of Customization

Most WMSs are likely to include certain custom development options, so you need to research whether you will be able to customize the WMS to fit your business needs. Most WMSs can be integrated to existing ERP interfaces and customized to fit the needs of your business.

Turnkey and Off the Shelf

Some WMS vendors differentiate between turnkey solutions and systems that can be easily customized and integrated with existing ERP and eCommerce systems.

Tips for Choosing a WMS

Ask for a comprehensive demonstration of the warehouse management software’s capabilities in order to determine how well the WMS will meet your requirements.

Ask for information about how the supplier will post future updates and upgrades so that you can receive the upgrades on time – making sure you don’t have to pay for new licenses if you can use the license you already have.

  • Ask questions about what customization is available and how much it will cost.
  • Ask about service and support.
  • Ask about scalability (both vertically and horizontally).
  • Ask about growth plans to upgrade to the next version.
  • Ask about installation and customization fees.

Do some research on the company providing the solution.

Ask about training.

Ask about how the warehouse management system will integrate with your existing business software.

As with most technology decisions, you’ll get what you pay for.

Pay special attention to any long term contract. Most WMSs are considered critical business software and are high on the list of high value targets for hacking.

Other Points to Consider when Choosing a WMS

If you are choosing a WMS for a new business:

Consider the level of support you will need once the warehouse management system is installed and implemented. If nobody can support your business operation, the whole investment just wasn’t worth it.

How well will the warehouse management system integrate with the rest of your systems? It is a fact that a WMS usually interfaces with other business systems in order to provide valuable information.

Consider whether you will have the ability and time to spend implementing and supporting your WMSs. As mentioned above, implementing a WMS usually requires extensive knowledge of warehouse management, as well as software development tools.

If you are an established business considering a WMS:

Consider your business objectives. Alternatives to a WMS may fulfill your business objectives but will not provide you with the supercharge your business needs.

A warehouse management system may be more of a strategic asset for you than simply a solution for warehouse management. In most cases, changing your business processes will have a positive impact on the whole company.

If you are moving from a manual to a computer-based system:

Be prepared for change. Change is the only constant in life and is unavoidable. The implementation of a warehouse management system involves change, whether you like it or not.

Many changes are related to the technology. If you have been using manual systems, you will have to adapt to computer-based systems.

If you have converted from a manual mode to an automated mode, you’ll have to un-learn some of your bad habits. Software experts have labeled these as “tools of ignorance”. They are tools which reduce your perception of what the computer system is capable of doing.

If you are moving from a custom-built solution to a turnkey solution or vice versa:

Knowing beforehand what kind of warehouse management system you have will save you a lot of money, time, and heartache. If the system is built from the ground up by a specialized team, you’ll need to re-educate yourself in the ways of a successful warehouse manager. You’ll have to get back up to speed with the latest warehouse management information and techniques.

If the system is a turn-key solution, make sure that it will fit your needs. Consider whether you already have a built-in reporting system, older software that hasn’t been updated, and customized features that have to be replaced.

If your software is an in-house custom-designed application, be prepared for the costs of conversion. Consider the costs in terms of human resources, equipment, and communication. For example: moving from the MS Access database to SQL Server will enable you to have multiple users and more storage capacity. You will also save time and your sanity by moving from an MS Access setup to a robust SQL server database.

Overall, choosing a warehouse management system is a complicated decision that involves a lot of factors. The most important thing to remember is that if you get a solution that is comprehensively deficient in any one of the points above, bad things will happen.

You will have to trudge on for months to correct the defects, or you will spend more time and money rolling out a new system that is more compatible with your business needs. If you have any doubts about the reliability of your WMS, don’t even think about breaking ground. Instead, go for a test drive.

Tips for setting up a WMS for a small warehouse

Choosing a flexible and scalable WMS

For SaaS-based WMS, make sure you have a trial period, which will allow you to find out if the solution will fulfill all your business needs.

If you are looking for a turn key or off-the-shelf WMS, be aware of what you are getting into. If you have a small warehouse, you don’t know how your business will develop in the future. There is a large chance that in a year or two, you will require a different solution.

So take time before choosing the right warehouse management software.

An alternative to a WMS may fulfill your business objectives, but will not provide you with the supercharge your business needs.

Find the Right Warehouse Management System

Ask the right WMS questions

When selecting a warehouse management system, try the following:

Define your business objectives, and see if your WMS will meet your needs. Think of your requirements and expectations.

Consider the costs.

Determine what kind of warehouse management system you have and how you will upgrade the system. Evaluate whether the systems you already have will support the WMS you intend to instal and what future upgrades you will have to make to the system.

What are the core WMS features you should be looking out for?

The core warehouse management system capabilities include:

  • Demand forecasting – based on weather conditions, sales volume, and other factors. This is used to create a viable demand planning simulation.
  • Order management – creating orders, fulfilling orders, and tracking them through the supply chain.
  • Inventory management – evaluating, recording, and communicating information on the quantity and location of all items in the inventory. Inventory locations can range from a single shipping location to global distribution centers.
  • Inventory reporting – monitoring the warehouse’s inventory status and business performance.
  • Transactions processing – inventory status and management reports.
  • Warehouse management system software – for purchasing and sales transactions.

Order management

Warehouse management system for managing the logistics of warehousing and distribution, delivering data and value-added services to the most productive users. A Warehouse Management System (WMS) is often an integrated part of a larger ERP system, designed to meet the specific requirements of warehousing applications. Such a system depends on the modules that make up its standard package.

Features Warehouse management system

Warehouse management is a complex area of logistics, requiring a system that can deliver data and value-added services in a flexible and scalable manner, while offering exceptional ease of use.

These systems are turned to by large companies in order to improve the efficiency of their warehouse operations, and settle disputes with their couriers and shippers by generating reports in the event of lost shipments, theft or loss of shipments by the shipper or the couriers. They also use the system to create, track and confirm the delivery of orders to their customers.

Capabilities of the software

The basic feature of a warehouse management system is to minimise the effort that a warehouse needs to make in order to fulfil customer requirements. It also automatically generates detailed shipment and inventory reports with little to no effort, as well as automatically handle issues such as obsolete, defective, or missing goods.

With todays warehouse companies, the management software is a way to keep track of orders, warehouse inventory, and shipping. The software allows them to easily manage everything from their phone or tablet.

The warehouse management system will handle all related processes, from taking customer orders to calculating the amount of products that will be required in order to fulfil these orders and send them to the different distribution centers, where they will be sent to the customer.

What are the features of a Warehouse Management System

A typical Warehouse Management System (WMS) will contain certain features and functions. Graphic level, functions that are not always fully developed, can be highlighted in the following links:

Warehouse management system is the type of software primarily used in the market, and all other platforms offer more or less the same features and functions are all more or less tried and tested software is also easily expanded It provides with functions and features such as:

integration with accounting systems and other external systems, such as POS (point-of-sale), ERP / MRP (enterprise resource planning / material requirements planning) and CRM (customer relationship management);

  • multiple user accounts;
  • archiving (virtual unlimited storage space);
  • manage customers and suppliers;
  • schedule shipments, goods received and goods dispatched;
  • work with complex maps;
  • track and monitor goods movements and inventories;
  • integrity and security of data;
  • integration with online storage (cloud storage) and other modules;
  • creating tags;
  • create the orders;
  • precise stock management;
  • automated stock picking and packing;
  • find missing parts of serial number;
  • value-added services, such as analytics (for example, sales analysis or stock level checks from a certain period of time);
  • support multiple warehouses and locations;
  • manage suppliers and customers;
  • user-friendly interface for customers and other warehouse workers;
  • integrity of data;
  • and many more.

An expert view

Steven Harris, founder and CEO of Innovar, Inc. in the US, enterprise-wide warehouse logistics software provider with international locations, shares his opinion about warehouse management software:

“In today’s business environment, it is difficult for warehouse managers to achieve visibility and control of their business due to increasing complexity of the supply chain process, the sophistication required of picking decisions, and the growing value of time – all of which are compounded by operational expenses and the fact that ERP systems are not typically designed to address warehouse logistics.”

Case Study

The Tom’s Hardware organization is a vertically integrated IT hardware distributor with over 1,000 employees, ten manufacturing facilities, and nearly 10,000,000 square feet of logistics space. Tom’s Hardware has grown to be the leading source for computer hardware and PC related products in the United States. Each of their ten distribution facilities handle thousands of items, from hundreds of manufacturers, many of which require a fast, well-designed and integrated warehouse management system.


Tom’s Hardware instigated a project to develop a new warehouse management system with a Microsoft technology platform, which could meet their specific needs in terms of large volume and complexity of inventory. In this case, Microsoft Dynamics AX was used as the platform, which is an enterprise resource planning (ERP) solution that not only streamlines their processes and operations, thus providing a centralized and secure system for all business operations, but through integration with Microsoft SharePoint allows warehouse managers and quarter-end reconciliations, customer order and shipment reporting.

Tom’s Hardware went on to develop a Microsoft integration warehouse management software to meet their specific needs and challenges. The software runs on Microsoft Dynamics AX and Microsoft SharePoint for integration with enterprise-wide warehouse logistics software for the company.

Providing visibility to more than 100,000 items for sale, Tom’s Hardware required an administration and visibility tool that could support a solution that needed to address their unique needs. This included supporting an environment with multiple warehouses with varying product mixes, including both direct-to-customer and direct-to-dealer, managing most used hardware, printers, monitors and peripheral items, and supporting demand forecasting, forecasting trends, and shipping velocity for each individual distribution center, together with audit details of product levels, delivery dates and customer service.


Tom’s hardware used a solution based on Microsoft Dynamics AX coupled with Microsoft SharePoint to build a Warehouse Management System that covers:

  • Inventory Management
  • Order Management
  • Picking and shipping
  • Work in-process
  • Order management

The order system is a key feature in the system, which means that the system must support all business area processes: the customer order, the information must be accurate, and be as streamlined and efficient as possible.

Picking and shipping

Picking is the act of selecting the required items from a warehouse. The goal of picking is to pick a complete order for shipment, or complete shipment for acceptance, by moving the required number of pallets and crates from the shelves in the warehouse and bringing them to the shipping area.

The system must support a dynamic process, with adjustable routing, picking and shipping processes, and including picking options and preferences.

Warehouse management system reports

A warehouse management system (WMS) is a software application that communicates information on the quantity and location of all items in the inventory. Inventory locations can range from a single shipping location to global distribution networks involving multiple warehouse locations. A WMS software application can manage inventory from many locations and websites with a single software application.

The software gives you an inventory that is simple to control and manage, making it an ideal tool for the global supply chain. The product dashboard allows you to view all product orders by picking list. You have the option to view a picked item or non-picked item by filter.

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