To be effective as a wholesale distributor, you need a WMS. It’s essential to understand the benefits and features of a WMS (warehouse management system) to understand why you need one. Most likely you already have a WMS in place, but does it provide what you need? You may not even know you need something until it’s there. But what about if you’ve been running a legacy WMS for years? It may be hard to make a decision to move on to a new system considering cost-benefit analysis. So this guide will help you do just that.
To address that last point, many times you have been doing things the same way for so long that it’s hard to change. The fact is, without constant change and reevaluation, you may be fighting a losing battle.
Benefits of a WMS
There is a long list of benefits and features of a WMS (you can see more on this Quora post). The benefits make it a worthwhile adjustment in your business, so we’ll start there.
This one gets a bit overused, but it’s the primary reason to use a WMS. Your WMS has the capability to coordinate nearly all actions of your supply chain. The more actions it handles in one ecosystem, the easier to optimize the movement of product. When you make a shift from using your eCommerce system or Quickbooks desktop with pen & paper as your WMS, you’ll see big improvements. These improvements can range from more accurate purchasing to faster picking, better route optimization and less material needed for shipping.
A WMS is meant to track all movement of product. So, if you aren’t having to write this out on paper, and a digital number is in front of you, the error is limited. The same goes for picking counts. If you have to scan each barcode for an order, this ensures the order will be accurate. This also helps with accountability. A WMS knows who the last person to touch a product is. You can track this back and be sure to make corrections to your staff procedures. When delivering the product, your WMS tracks the outgoing product and ensures the ordered quantity and delivered quantity add up. This helps also with your cycle counting. When you know how many products were there, and how many have been ordered, you’ll know exactly how many should be left. Reducing errors can eliminate ALOT of headaches.
With clear touchpoints across your supply chain maintained in the WMS, each person is accountable. The last person to touch a product is recorded every step of the way. This makes it easy to trace back lost items, miscounted items and beyond. Stolen items aren’t something we hope for, but it happens. A WMS provides the tools to make sure this happens less.
This is a secondary item. Why? Because many don’t think of the WMS as a sales tool, however, modern WMS’ can certainly help. With the right benefits and features of a WMS, you’ll have better access to inventory. This means suggested products to sell alongside orders and quick access to the last purchase from a customer. With this information, your WMS, with the right features becomes a sales tool. Not only that, the system can feed this back to improve purchase quantities and allocation of inventory across your network.
Costs to manage inventory increase the more you have. More warehouses, more units to store, more employees — they all lead to more costs to manage. A good WMS can lower these costs by reducing the systems required to manage it all. Cut a system, reduce costs. Cut employees needed, reduce costs. Cut inventory needed to serve your customers, reduce inventory carrying costs. The reduction in costs can come from a variety of places. It may even be something you don’t anticipate.
Modern Features of a WMS
The benefits and features of a WMS work together to get things done and make business process improvements. These features may not have been on your radar but can have a serious impact on the profitability of your business. Here are a few things you should be on the lookout for.
It should come as no surprise that most warehouse management systems will allow you to enter multiple warehouses. This is essential for maintaining inventory relevant to each territory. This means the WMS should also allow you to transfer a product from one warehouse to the other. It will also help that the WMS can automatically create transfers based on inventory demand.
You need to know which employees are available. You need to know which employee is doing what task. You need to understand who is at fault in an incident. You should also be able to automatically allocate picking tickets, drivers, and product check-in across the available workers at a given warehouse location.
Purchase Management & Lead Timing
One of the underrated activities of a WMS is the purchasing and lead timing. Purchasing product at the right time and proper quantity can save BIG money in the long run. Having a WMS like the Distribution Hub will automatically create and send purchase orders to vendors. The system will also take past lead times (time from order placed to receiving) and calculate this so it arrives just as the product quantity drops to the minimum required amount.
Allocating product across the warehouse is essential. Making the product allocation smart includes knowing which items are most used, and where the easiest places to access these products are is critical. With product allocation, you want to know how much space you have in the warehouse as well as in each bin (storage place). When the product comes in, your WMS should tell a worker which place to put-away the product to, no thinking required.
Using a bin system, each product in the warehouse is assigned to a bin (aisle, bay, bin). This ensures you can quickly click on a location and know exactly what product is there. It also enables a ‘randomized’ inventory method. It provides greater flexibility, with more accuracy for tracking inventory.
Barcode Scanning and RFID
Of course, your WMS should have barcode scanning and/or RFID capability. This is essential to scanning in product and ensuring the right product goes to the right place. This also means that you need some sort of hardware. Unfortunately, many hardware scanners can run into the thousands. Using modern technology though you can cut this cost and use any iOS or Android device for this task. In the Distribution Hub, our clients use any device, and simply use the phone’s camera to scan up to 20 products at once, faster than is possible with a traditional scanner. See it in action.
Inventory Management & Pricing
Arguably the most essential piece of the warehouse management system is the ability to hold and manage complex inventories. Some of the basics it should hold: ID, name, quantity, locations, price @ specific quantity, weight, length, width, height, variations, kits, relationships with a case, pallet and individual units, SKU, and vendor. Inventory management should be able to track various price levels. You should also be able to set margin rules, mass price adjustments and customer-specific pricing.
Accepting and dealing with orders has become extremely important, even for wholesale distributors. As the acceptible delivery timeline gets reduced, you need to efficiently get orders out the door. Your WMS helps here by making sure each order is first routed to the proper warehouse. Second, this helps to ensure orders are tracked, and product can be picked without errors. Most modern WMS’ will have an app to gather these orders and divvy up the picking across available employees in the warehouse. Knowing the status on each order quickly can help to avoid potential issues with fulfillment.
EDI, ERP, Accounting, and Sales Channel Integrations
Most likely you have other channels and systems in place to manage your business. An accounting system needs to know the information from the WMS for proper recordkeeping. Your EDI needs to be able to accept orders and provide updates to the order files. Having all these things accepted and acted by your WMS is where things can get tricky. Many times, you’ll want to use an API (or existing connection) from your WMS to your other systems. This ensures data doesn’t get lost in the mix. It also saves a ton of time from having to manually export and import data across platforms which is time-consuming and error-prone. The Distribution Hub is capable of 1000+ integrations thanks to our partners at Elastic.io and Zapier.
It may be that you are offering your clients a way to connect directly with your company via a web portal. This allows them to log in on your website, retrieve their customer-specific pricing and make purchases directly. In many cases, you probably have an eCommerce website set up to handle this. In some cases the WMS may provide a direct portal for your clients. Either way, this is a great way to offer convenience for your clients. In terms of the benefits and features of a WMS, this can be a big deal if you are dealing with thousands of customers. Not only does it simplify your client relations, but it allows you to announce and suggest new products while the client is at the point of purchase.
Pick & Pack
When orders come in, they need to get taken off a shelf (or out of a bin) and put into a package (or placed on a truck) for delivery. The picking & packing is typically done via an app which tells the picker where to find the specific products and how many to grab. Many times the picking is done in waves (What is wave picking?) for efficiency. The WMS will then scan the barcode and tell the worker where it is to be staged for packing. At this stage, the WMS should tell them which package to use or what truck to place the package in. Finally, if shipping, the WMS will print a shipping label which enables it to be picked up and shipped to the appropriate customer. This is done seamlessly through the Distribution Hub app.
Typically a WMS will integrate with a shipping provider to deliver real-time shipment information while selecting the best price for shipment across carriers. It will print out the shipping label and even alert the shipping company that the shipment is ready for pickup. Once picked up a tracking number is automatically assigned to the package and the customer alerted.
Fleet Tracking & Routing
This is not a typical WMS functionality. We included it in the Distribution Hub since we saw that there were significant advantages to having your entire supply chain integrated end-to-end. This enables you to take incoming orders, route them automatically across available employees and trucks, and factor in things like capacity, weight, windows of delivery, priorities and even zones of delivery. Handling the last-mile in-house offers other advantages like providing better service, accepting returns, and offering product up-sells while at the delivery. This also enables proof of delivery and accuracy across orders. Our network is expanding and in select cities enables third parties to ‘bid’ on deliveries so as to leverage the power of the crowd.
Every WMS will include some sort of reporting metrics. Things like inventory turn, sales, loss and back stock reports are common. This will likely be something you choose to pass on to your accounting or business intelligence software however since you have more metrics to compare against. Generating reports in excel format enables you to combine data and manipulate so see core metrics movements.
Barcode & Invoice Printing
This is one that may or may not be crucial to your business. It also may not be something that comes standard with your inventory system. If you need to supply barcodes for pods, product or beyond, you will want to make sure you can create and assign barcodes. If you are using the WMS to manage deliveries, you’ll need the ability to print off the invoices. This can be done via a mobile printer for portability or via a regular printer.
Advanced Benefits and Features of a WMS
This section will be saved for a future date in time as this blog has already talked about a few of these. Here are a few things to keep an eye out for in the near future.
Robotic Warehouse Automation
AI and Machine Learning for Product Purchasing and Lead Timing
Pick to Light
Product Recommendation Systems
Sensors for Product Detection
This should give you a pretty detailed overview of the processes any good WMS will be able to help with. As with any system, the features and benefits of a WMS should fit with your company and the goals you’re looking to achieve. With so many feature/benefit mixes out there, find one which will handle the core of your business and ignore the rest. In another post we’ll talk about pricing of a WMS and where to maximize ROI.
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