Warehouse Management System (WMS): Definition, Benefits, Features, and Integration Process
- Kevin Ramadhani
- Jul 13
- 10 min read
The business processes of large- and medium-scale industries such as manufacturing and distribution are closely tied to the use of warehouses. The warehouse plays a role as a storage and transit location for stock, whether raw materials or finished goods after production.
Companies need to manage their warehouses optimally so as not to disrupt business processes. One way to manage warehouses effectively is by implementing a Warehouse Management System (WMS). Read the following comprehensive explanation about WMS, including its definition, benefits, features, and integration process with other systems.
Table of Contents
Definition of Warehouse Management System (WMS)
The implementation of a Warehouse Management System enables companies to manage their warehouses effectively and efficiently. But before diving deeper, let’s first understand what it means.
“What is a Warehouse Management System?”
A Warehouse Management System (WMS) is software specifically designed to support all aspects of a company's warehouse management. This includes the processes of receiving, moving, and dispatching goods in the warehouse. As a result, the flow of goods in the warehouse becomes controlled, faster, and more cost-efficient.
Moreover, WMS is flexible in its implementation. It can operate as a standalone system or be integrated with Enterprise Resource Planning (ERP). In fact, WMS features can be added or customized based on your specific business needs. So be sure to determine how you want to implement a WMS into your business operations.
Common Issues in Warehouse Management
Managing inventory is a critical part of business, but it often involves complex, time-consuming, and costly processes. These challenges need to be addressed to make warehouse operations more effective. Below is an overview of warehouse goods flow and the common issues that may arise:
1. Inbound Process
The Inbound Process refers to the entry of goods into the warehouse. This process consists of two key parts: receiving the goods and placing them on warehouse racks.
The primary issue in this process is usually a mismatch between the data of incoming goods and the actual physical stock in the warehouse. Additionally, errors in placing goods are also common.
As a result, there may be stock discrepancies, overstocking, or disorganized inventory within the warehouse.
2. Internal Warehouse Process
Once stored, goods may be moved to different racks for various reasons. Additionally, companies typically perform Stock Opname (physical inventory counting) to reconcile inventory data with physical stock.
A common problem in this process is the inability to track inventory movement within the warehouse, which may lead to lost items. Stock counting (SO) also often takes up a lot of time.
3. Outbound Process
In the Outbound Process, or the dispatch of goods, there are three main steps: picking the items, packing them, and sending them out of the warehouse.
Common issues in this process include picking the wrong items and errors in recording outgoing goods.
Benefits of Implementing a Warehouse Management System (WMS)
After understanding what a WMS is and the common issues in warehouse management, it's important to know the benefits of implementing a WMS.
Implementing a WMS can significantly increase business process efficiency and reduce warehouse management losses by up to 90%. Here are several benefits of a WMS that can support your business needs:
1. Time Efficiency in Warehouse Processes
A WMS can speed up warehouse management by automating sorting, data recording, and packaging of goods. These processes, which were previously manual and time-consuming, can now be handled more quickly and accurately.
2. Easier Storage Layout Management
WMS helps businesses optimize the organization of storage locations. With a layout system, warehouse space is maximized, and item placement and location can be tracked via the system.
Additionally, a WMS makes it easier to implement the First In First Out (FIFO) method. Efficient storage layout supports the flow of goods and aligns with the FIFO principle. This ensures the quality of goods delivered to customers and minimizes expired or damaged stock.
3. Reduced Operational Costs
You might think using a WMS would increase warehouse operational costs, but that's not the case. Most WMS platforms are cloud-based, requiring minimal expensive hardware. The system is flexible, easy to manage, and reduces reliance on manual methods.
Using a WMS can also reduce company losses in warehouse management caused by item damage or loss, and significantly shorten and improve the accuracy of warehouse processes.
4. Improved Employee Performance and Productivity
A WMS provides employees with complete information, such as inbound and outbound schedules, sorting, labeling, and packaging. It can also integrate with barcode or RFID systems, making work more focused, accurate, and efficient.
5. Enhanced Stock Accuracy and Faster Shipping
A WMS minimizes errors in inventory management and speeds up picking, packing, and shipping processes. This leads to fewer shipping errors and stock returns.
Additionally, RFID/Barcode features help efficiently track item locations. These features make it easier and faster for employees to pick and prepare inventory for shipment in a short time.
6. Integrated Inbound Process
By implementing a WMS, inbound item requests are integrated with inventory management systems and stock databases. This ensures the requested items match the needed quantity and minimizes overstock or aged inventory.
Proper arrangement isn’t just important for items already in storage. Inbound items should also be sorted by type and labeled using Barcode/RFID features. This way, item age, quantity in the stock database, and item location are all well-documented.
7. Efficient Internal Warehouse Process
A WMS provides notifications of item arrival schedules and speeds up the receipt and recording of stock. Items are stored in system-designated locations, making picking and sorting easier.
8. Organized Outbound Process
When there is a request for outbound stock, the data is entered into the system and matched against current warehouse stock levels. This helps the company fulfill shipment requests and increase sales.
With the help of a WMS, stock shipment scheduling can be automated. Once the shipping request is approved, the delivery fleet is automatically scheduled. As a result, the outbound process runs efficiently.
You can get a warehouse management system with strong security and seamless integration capabilities tailored to your business needs through the expert team at Prieds.
Features of a Warehouse Management System (WMS)
To ensure your business gets the ideal Warehouse Management System, companies need to pay attention to the features offered in the system. A wide range of features will simplify warehouse management operations. Below are some essential features that a WMS should have for your business:
1. Stock Transfer Order
The Stock Transfer Order feature in a WMS simplifies the management of goods transfers from the source warehouse to the destination warehouse without requiring a transaction. If your company has storage locations spread across various regions, this feature can help track and count stock through a single system.
The benefit of this feature is to properly and evenly allocate stock availability across multiple storage locations. This allows companies to fulfill customer demand quickly due to well-distributed stock availability.
2. Safety Stock & Stock Alert
Implementing a WMS can help businesses easily track stock levels in the warehouse. The Safety Stock and Stock Alert features notify you when warehouse stock is running low or when there is an overstock.
To enjoy the benefits of this feature, companies need to determine the minimum and maximum stock levels. Once these limits are set, the system will automatically send alerts to the company. This way, the company has full control over the stock condition and quantities in the warehouse.
The benefits of Safety Stock and Stock Alert become apparent when stock levels are low or near maximum capacity, allowing efficient warehouse space use and reducing expenses on stock procurement.
3. WMS Integration with RFID Devices
RFID (Radio Frequency Identification) is a form of wireless communication that uses electromagnetic frequencies to identify specific objects. With current technology, RFID can be integrated with various devices to simplify warehouse management processes.
Generally, the tools required to run this system include RFID readers and transponders. The RFID reader emits radio waves that can both read and activate the transponder or RFID tag. Once activated, the tag sends back data to the reader to be translated into readable information.
How it works: first, the scanner sends electromagnetic signals to the RFID tag, activating its chip. Once active, the chip sends its stored unique data back to the scanner to be read or modified.
Second, the RFID scanner forwards the information it received to a system such as WMS. The WMS acts as a data processing and storage hub for the information gathered from the RFID tags—such as updating stock data in real-time.
In a WMS, RFID technology can be used for various warehouse processes, from tracking incoming and outgoing inventory to stock-taking. These devices can tag items quickly and accurately, and the data is automatically updated in the WMS.
Using RFID in WMS significantly boosts efficiency in warehouse inventory management. It also speeds up stock data entry, stock-taking, and item tracking processes.
4. Multi-site Management
Manufacturing or distribution companies typically operate a network of warehouses across multiple regions. To monitor all warehouse activities, a system must be in place.
Companies must apply the same technology in each warehouse and connect them all through a WMS. This enables real-time stock updates across all warehouse locations and simplifies warehouse activity monitoring.
The Multi-site Management feature in a WMS allows companies to oversee multiple warehouses from a single system, ensuring optimal warehouse management and consistent product quality across all sites.
5. ERP Integration
Enterprise Resource Planning (ERP) consists of various modules, one of which is the Warehouse Management System. Because WMS is a component of ERP, it’s very beneficial if the WMS can integrate with your existing systems. This integration helps improve efficiency and accuracy in operations through API integration, enabling seamless transactions and activity synchronization between ERP and WMS.
WMS-ERP integration supports smoother business operations. Data accumulated in WMS is well-synchronized with the ERP system, giving companies full control over warehouse management, accounting, sales, and other business processes.
6. Push Notifications
The information collected in the WMS database enables automatic notifications. These alerts help warehouse staff stay informed on what tasks need to be done via app and email notifications—improving communication, operations, and speed.
Manual warehouse operations often take longer and are prone to human error. WMS notifications provide detailed job instructions—like incoming stock alerts or reminders to pack orders before shipping dates—making warehouse management more efficient in terms of time, cost, and labor.
7. Quality Control Checking
Incoming stock data may include product lifespan, storage location, and condition. This feature helps identify and isolate damaged goods during the inbound process and performs product quality checks—allowing companies to maintain quality standards and prevent defective items from reaching customers.
Tracking warehouse stock brings several advantages: maintaining stock levels, optimizing storage space, and preserving product quality. Inbound data allows quality control measures to be taken so that every product delivered to customers meets quality expectations.
8. Email Reporting & Dashboard
This feature is an output of ERP or WMS implementation. Its purpose is to simplify access to relevant, complete, and timely information for better decision-making. Reports and dashboards are tailored to each function’s needs to optimize the information delivered.
Additionally, the email reporting and dashboard feature gives companies access to monitor and manage performance across multiple warehouses via one system. Access can be customized based on each employee’s role and responsibilities.
WMS or ERP integration helps companies evaluate warehouse performance effectively. The Reporting & Dashboard feature ensures that every warehouse process is recorded and monitored in real time.
Its main advantage is role-based access for warehouse staff and managers, ensuring everyone receives relevant, comprehensive information for faster and better decision-making.
When Should a Business Implement a Warehouse Management System (WMS)?
Deciding when to implement a WMS depends on your business’s unique needs. Here are several indicators that WMS may be right for you:
1. Managing Warehouse Inventory
If your business relies heavily on managing inventory, digitizing it with WMS is a wise move. It optimizes warehouse management, minimizes resource usage, and reduces operational costs.
2. Needing Warehouse Management Digitalization
WMS streamlines record-keeping for activities such as ordering, inbound, outbound, and stock management. Well-organized data improves quality control, reporting, sales forecasting, and helps prevent expired or obsolete inventory.
3. Needing Complete and Flexible Features
WMS offers features like RFID/Barcode, CCTV integration, centralized databases, and alert systems. These can be tailored to your business and help employees perform their tasks efficiently.
4. Speeding Up Stock-Taking Processes
If manual stock-taking is time-consuming and inaccurate, WMS is the solution. It accelerates the process while improving data structure and accuracy.
Integration of Warehouse Management System with ERP System
Prieds WMS can be integrated with various ERP systems
Companies in manufacturing and distribution often already use Enterprise Resource Planning (ERP) systems. One of the key benefits of ERP is its multiple modules—including WMS.
Prieds WMS supports integration with a variety of ERP systems to enhance operational efficiency and accuracy. With API integration, ERP transaction data flows seamlessly into Prieds WMS. Integration can be achieved through three methods:
1. Manual Data Flow:
This method involves manually exporting and importing data between systems. Warehouse staff transfer data in formats compatible with the ERP system, such as XML, CSV, or JSON.
2. Semi-Automatic Data Flow:
Data flows automatically from ERP to WMS, but from WMS to ERP, it must be transferred manually by staff.
3. Fully-Automatic Data Flow:
Data transfers between ERP and WMS happen automatically and in real-time. This requires Open API capabilities in both the ERP and WMS systems.
Preparation for ERP and Prieds WMS Integration
Before integrating Prieds WMS with an ERP system, several stages must be agreed upon and prepared by the company and system provider. This ensures clarity on system specifications and assesses operational team readiness, allowing businesses to maximize the integration benefits.
Here are the key steps:
Inquire & Assessment: Prieds team analyzes the ERP system and the company’s IT capabilities.
Requirements Identification: Discussion on data integration and feature needs.
BPMN Flow Creation: Creating a full data flow blueprint.
SRS Documentation: Compiling a System Requirement Specification document for company approval.
System Development: Once approved, integration development begins.
Benefits of Integrating Prieds WMS with ERP Systems
Integrating Prieds WMS with ERP offers multiple business advantages:
Reduces Human Error: Fully-automatic sync eliminates manual data entry risks.
Boosts Operational Efficiency: Automated data sharing saves time and improves warehouse effectiveness.
Cuts Operational Costs: Using third-party WMS like Prieds is more cost-effective than expanding ERP modules.
Supports Integration with Various Technologies: Prieds WMS is compatible with technologies like RFID, IoT, AGV (automated robots), and facial recognition security.
Speeds Up Decision-Making & Improves Reporting Accuracy: Real-time, accurate data improves reporting, evaluation, and decision-making.
Integrating ERP with Prieds WMS offers significant benefits to your supply chain. Prieds WMS can be tailored to fit your business needs. Implementing a WMS can enhance your supply chain ecosystem’s efficiency. With abundant features, you’ll gain multiple advantages for your business.
To explore more features, integration processes, and the impact on your supply chain ecosystem, implementing a Warehouse Management System provides tremendous benefits for your textile or general business operations. Learn more and consult with the Prieds expert team to start gaining value from Smart WMS for your business.
