What is an effective warehouse management (WMS) system for improving warehouse management efficiency?

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What is a warehouse management system (WMS)?

A warehouse management system (WMS) comprehensively manages logistics operations such as receiving and shipping management and inventory management. WMS is an abbreviation that stands for ” Warehouse Management System.”It manages the process from when materials and products enter the warehouse to when they leave the warehouse. It is a system aimed at optimizing warehouse logistics such as management.Due to its high level of convenience, WMS has been introduced in a wide variety of fields such as wholesale, retail, restaurant and manufacturing industries, and e-commerce mail order . 

Difference between WMS and ERP

ERP is a system similar to WMS that optimizes warehouse logistics. The crucial difference between the two is the scope of control. ERP is an abbreviation for “Enterprise Resources Planning” and is a core system that is translated as enterprise resource planning. ERP aims to comprehensively manage a company’s resources and ensure efficient operation. By centrally managing and visualizing a company’s core data such as customer management, human resources management, financial accounting management, and supply chain management , we aim to improve the operational efficiency of the entire organization.

On the other hand, WMS is translated as warehouse management system, and its purpose is to optimize logistics operations within warehouses. In other words, ERP is a system for managing a company’s business resources, and WMS is a management system for warehouse logistics. In contrast to ERP, which manages core information for the entire company, WMS is a system that only manages warehouses. You might think that implementing ERP, which is a core system, would make warehouse management possible, but warehouse management is a task where local needs arise at each site where the products and warehouse equipment handled are different. Therefore, a WMS that specializes in warehouse logistics management such as inventory management and document management is more suitable.

Background of the use of warehouse management system (WMS)

The reality is that there are many problems and challenges in the logistics field. For example, inventory management is the most important aspect of logistics operations. Naturally, the more inventory you have, the higher your management costs will be. Properly managing a large number of products and materials is not easy. If there is too much inventory, it becomes bad inventory, which worsens cash flow and puts pressure on the company’s cash flow. However, if your inventory is too low, you will lose sales opportunities.

One of the factors that makes inventory management difficult is the complexity of warehouse management operations. The work content is complex and diverse, and it takes time to get used to it, so a lot of time and effort is required to train human resources. In addition, analog work creates a time lag between reports and inventory data. This slight deviation will eventually become a major distortion, making location management difficult and causing deterioration in warehouse logistics. WMS is introduced to streamline inventory management and complex tasks like this.

Benefits of warehouse management system (WMS)

WMS is a system that optimizes warehouse logistics and is expected to improve operational efficiency. There are three main benefits that WMS brings. These are “standardization of work,” “real-time information visualization,” and “cost reduction.” From here, we will explain in detail the three benefits that can be obtained by implementing WMS.

Standardization of work

A problem in any industry is the individualization of work. Decentralization of work refers to a situation in which it becomes difficult to carry out work without personnel with specific skills. WMS is a system that can maintain a certain level of work regardless of the knowledge and skills of the personnel in charge of the work, thereby achieving standardization of work. If we can standardize work and optimize warehouse logistics at the same time, it will help solve the serious problem of the lack of human resources that the logistics industry as a whole is facing.

Information visualization in real time

System management of warehouse logistics allows you to grasp stock status in real time, as data on incoming and outgoing items is reflected immediately. All information related to inventory can be visualized, such as what is stored where, how long it has been in storage, and how long it is allowed to ship. If there is a time lag in inputting receipts and shipments, it can cause order errors, so real-time data acquisition through system management is an essential element for optimizing inventory management.

In addition, by visualizing warehouse information, business goals such as what to do and by when can be set more concretely. By visualizing the work that needs to be done, it becomes clear what is expected of each employee, and specific goals and action plans can be set. This can be expected to improve human productivity.

Cost reduction

Optimizing inventory management is one of the most important issues for logistics companies. Inventory has an aspect of inventory that is intended to be converted into cash. Therefore, it is considered an asset on the balance sheet and cannot be recorded as an expense. Inventory can be recorded as an expense only when it is sold or disposed of. The more defective inventory you have, the greater your tax burden will be. Optimizing inventory management using WMS will lead to improved cash flow and business performance. It is also expected to reduce costs such as disadvantages caused by human errors and labor costs required for work.

Functions of warehouse management system (WMS)

The five main functions of a WMS that improve the efficiency of warehouse management operations are receiving management function, inventory management function, shipping management function, inventory management function, and form/label issuing function. The “arrival management function” is used to check each incoming product individually to prevent inventory discrepancies. The main role of the “inventory management function” is to manage inventory data such as manufacturing dates and shipping deadlines. The “shipping management function” keeps track of product shipping schedules. The “inventory management function” improves efficiency by managing inventory with barcodes and QR codes. The “Form/Label Issuance Function” issues a form. Equipped with these five major functions, a WMS is an indispensable system indispensable for optimizing warehouse logistics.

summary

Warehouse management systems (WMS) optimize logistics operations that require accuracy and speed. Inventory management is an important issue for many logistics companies. The introduction of a warehouse management system (WMS) can be expected to greatly contribute to the optimization and efficiency of inventory management operations. There is great value in considering introducing a system in order to optimize warehouse logistics.