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What is a WMS?

By October 7, 2020September 20th, 2023No Comments

High stacks of products are in the warehouse. Quietly sitting on the shelves. There are a lot of tasks to do in the warehouse. You or your 3PL will complete them with the support of a WMS. But wait, what is a WMS?

A WMS (Warehouse Management Software) is a software application that supports the day-to-day operations within a warehouse. Its main characteristic is how it provides visibility of inventory stock and movement. For example, you can easily find where a product is stored. You can also tell whether you need to replenish stock.

The overall benefit of using a WMS is that it minimises the amount of human error. The order fulfilment process will be smooth and swift. This will increase your customer satisfaction level. For further convenience, the software can sometimes be a part of an ERP system.

The software works by managing different warehouse tasks on a centralised system. You can access the system through multiple interfaces. So, you can use a tablet in the warehouse, while you can use a desktop in the office.

Now, let’s go through the details of what a WMS is and what it can do.

What does a WMS do?

A warehouse management software is capable of doing so many tasks within a warehouse.

Inventory management

Have you ever had that experience where you can’t find an item? Or where the number of stock is wrong? If so, it is likely that you know the importance of inventory awareness.

The system provides features that make daily inventory management much easier. For example, the system may provide a feature where you can count inventory by scanning a barcode or tapping a key.

Overall, it raises accuracy. This can prevent both stock shortages and overstock. Which means you can efficiently utilise your warehouse space and well-distribute your resources.

Some systems provide tracking systems which make it easier to comprehend inventory movement. Besides a barcode scanner,

examples of tracking systems can include radio-frequency identification (RFID) and automatic identification and data capture (AIDC).

This works well with other inventory-related operations as well. Let’s look into them in a bit more detail.

Receiving and putaway

When storing products, a WMS can model an efficient way of storing inventory depending on the product’s features. Such as it’s weight, dimensions, demand and profitability.

For example, heavier products or products with high demand may be allocated near the door for faster processing. It also reduces safety risks within the warehouse.

Plus, you’ll easily know where you stored each item. The system can also provide customisation. So, the company can arrange it according to their other needs. For example, you might alter things a bit for seasonal shopping.

By following the model, the warehouse can achieve efficient operation. You won’t lose time and losses are minimised as you properly handle the shipments.

Picking and packing

Warehouse management software can provide an efficient way of picking. Whether your picking method is batch picking, wave picking or zone picking, it matches its strategy.

The main feature that allows this is the task interleaving functions. Task interleaving is an advanced warehouse productivity practice. It makes use of the time you go back and forth picking products. On the way, you would pick up another product for another order that’s coming up.

Other notable features include accurate picking and packing. The system will make sure you pick the correct item and pack it with the correct material. It minimises mistakes to make fulfilment faster.


Now, let’s look at shipping. When you or your 3PL need to ship the products, there’s a need to get the products into the hands of a courier. If you are doing in-house fulfilment, you probably started off by running to the post office.

Once you get a WMS or you start using a 3PL, this changes.

First, you or your 3PL can book a shipment directly to the courier. This is under the assumption that you or your 3PL integrated their services already. It allows shipping customisation and guaranteed shipment.

Second, it allows you to send or generate related documents. Here are some examples of what it can send or generate.

  • Packing lists;
  • Invoices for the shipment;
  • Advance shipment notifications;
  • Bills-of-lading (B/L) (ahead of shipment as well), and so on.

Lastly, it makes it easier for the courier trucks to pick up your shipments. It allows you to arrange the right loading docks. So, you can effectively guide the truck drivers that come into the warehouse.

Labour management

Warehouse managers have the need to monitor the staff’s performance. This is because managers need to know how much has been fulfilled. Warehouse management software will be able to present this in a way where you can monitor staff performance with one glance.

The software utilises key performance indicators (KPI) to show whether the staff are performing above or below standards. In other words, it provides transparency within the operations. Therefore, it allows the manager to be clear on employee accountability and to find areas to improve.

Another benefit in the labour area is that it eliminates the need to get more labour. This is because the system undertakes some of the functions in the warehouse. Inventory counting is the biggest example. The software can conduct periodic counts that won’t interfere with day-to-day operations. You can then save on labour costs.

(A part of the secret why 3PLs are cheaper than in-house fulfilment.)

Automatic report generation

This function can be found in some of the best WMSs. There are times when the company needs to create reports. For example, in order to show compliance to protocols.

The hassle of creating a report is big. You need to prepare papers. Look back at records. Write them down. It takes time to create one manually when you suddenly need one.

A system that has this function can generate these beneficial reports as often as needed. This not only saves time, but it saves the cost and space of using paper.

Everyone will be able to see the related data simultaneously as well. There’s no need to pass around a copy of the report.

Customer Service

Have you ever wondered why a 3PL is so accurate and fast? One of the answers is because they utilise a WMS.

Using the system allows clearer communication between the warehouse and customer service department. Each team can simultaneously exchange information about each team’s operation through a centralised system.

Therefore, when there is a customer complaint, the two teams can easily communicate to fix the problem. Plus, they can also prevent this from happening again.

Also, utilising a WMS usually raises customer service quality. As mentioned earlier, it supports warehouse operations. This quality can be retained so that your business can keep existing customers. After all, customer satisfaction leads to customer retention.

This also can lead to new customers taking an interest in your quality fulfilment.

Types of WMS

There is a variety of WMS types and complexity. The implementation method can also differ depending on the software.

Some 3PLs will have an IT team and build their own WMS. However, it’s more common for companies to implement one from an established agency (or agent).

Here, we will go through the three main types of WMS.

Third-party WMS

As the name suggests, it is a warehouse management system that is developed by a third-party company. People also call it an ‘on-premise’ or a ‘standalone’ WMS. Most of the WMSs are of this type.

The main characteristic of a third-party WMS is that it includes proprietary hardware and software. This means that you must use the provided hardware in order to make the software work. After that, they must be integrated with the business management software.


The main benefit of using a third-party warehouse management software is their functionality. Third-parties develop these systems so that it solely focuses on warehouse management operations. Therefore, you can expect it to perform with the value that you or your 3PL is looking for in a solution.

Another benefit lies in its proprietary nature. The provider of the software will ensure support so that you can utilise their solution to its fullest capacity. It will be easier to ask for help when the system is not smoothly working.


On the other hand, third-party software has some inconveniences.

  • Updating software and hardware as time goes on,
    • Adds to the total cost of ownership;
  • Integration brings up more challenges,
    • Duplicate data entries;
    • Information delays;
    • Interface issues;
    • Customisation expenses; and so on.

Cloud-based WMS

Cloud-based WMSs are the recent trend. They operate through the SaaS (Software as a Service) model. Also utilising the enterprise cloud technology. You won’t need proprietary hardware like the third-party one. This type also makes it easier to access from any modern device.


The benefits of using a cloud-based WMS includes great flexibility, easier disaster recovery, scalability and security.

For example, when your business needs to scale up, you can easily upgrade your system to a more robust service. All you need to do is to pay for it. There’s no need for upgrading hardware or any other steps.

Another benefit is that you can get automatic software updates without any additional expenses. Providers will conduct this on a regular and frequent basis. That way, you can always perform with better technology. This also means there’s less worry about bugs, glitches and security-related risks.


Some problems do exist when using cloud-based warehouse management software.

  • Poor system response time (dependant on internet connection)
  • Compatibility with existing systems
  • A lack of access to IT resources (harder to reach out to providers)
    • Accompanied by limited functionality

ERP software integrated WMS

Enterprise resource planning (ERP) is a system of integrated software applications. It standardises business procedures across different departments. Many of them offer WMS services within their software package.


What this brings to you is easy synchronisation. As in, your data will be in sync between all tools in your warehouse and office. You don’t have to spend time inputting the same data into separate platforms. Just once on one platform, and done.

It also means consistency across the board. The information will always be up-to-date. This raises accuracy and efficiency. Which is great for ecommerce fulfilment.

Have we also mentioned the embedded management systems? An ERP will usually provide the systems below.

  • Electronic data interchange (EDI);
  • Accounting;
  • Sales and orders;
  • Material requirements planning (MRP);
  • Marketing;
  • and Shipping management.

These are all provided in a tidy, real-time interface.


The downfall is that it’s not dedicated to warehouse management. It’s more of a jack-of-all-trades. In other words, this provides a limited amount of functions related to warehousing.

A dedicated warehouse management software can provide more. Generally, the services mentioned under ‘What does a WMS do?’

Additionally, it can be quite expensive because of its broad scope.

How does a WMS fit into your supply chain?

So, how might things look like when you or your 3PL has a fully integrated WMS? The first step can slightly differ depending on companies.

If your business produces your own products, then it starts by getting the raw materials.

Your WMS will record the number of materials you get. Then, the MRP will decide what and how much material you need for production. After the products are made, the number of stock will be recorded on the system.

For 3PLs or retails, this would occur after receiving or restocking inventory.

Next, is the movement of inventory. Your system will provide an optimised strategy for storing the items. If you store according to the model, the system will store the information on where products are stored.

More movement occurs. Your operations team will pick and pack. You might need to arrange the inventory according to the season. However, the WMS will remember all of those movements for you.

Plus, the system will support the team in picking the correct products.

Then, shipping. After picking and packing, your operations will need to ship them. So, they can book a shipment through the system. They can also generate bills-of-lading when needed.

The courier truck will come to pick the packages up. Then the products will be sent to the corresponding addresses. If the system has implemented a Transport Management System, you can freely route your transport method.

In the case you are using an ERP system, the system will track ALL of the inventory movement, stocks, orders, sales and invoices.

What’s the best part? ALL of this is automatic!

What to look for in a WMS

You may decide to use a WMS for in-housing. Choosing a WMS will depend on your business’s situation. First, take a moment to understand your business’s current situation. Now, here are the factors that you should consider.


A WMS will provide different functions depending on the system itself. This is because systems are built for various industries. However, focus on choosing a system based on your required functions. Not by your industry type.

So, what functions does your business need?

Do you just need an inventory management function? Do you need more such as shipping arrangement, accounting, and more? If you’re not sure, try answering the next question. “What functions does my business need in order to meet the needs of my customers?

Here are some examples of great functions to have in your system:

  • Support for multiple picking methods
  • Back-office integration
  • Ease of use/accessibility
  • Open-source technology platform
  • Automated inventory process
  • Advanced reporting capability
  • Ecommerce capability (for ecommerce businesses)
  • Real-time updates, and more.

Also, look for a WMS that is configurable. This means it will help you scale up your business. First, try to visualise your business in five years time. Make sure that the system will help your business achieve that ideal future.

Warehouse size

Larger warehouses require more detailed systems than smaller ones.

This is because more activities are carried out in a large warehouse. The warehouse manager needs to simultaneously comprehend everything that is occurring in the warehouse. Therefore, the system has to be capable of such complex management.

Also, a large warehouse means a higher cost of inventory movement. This means the slightest mistake in detail can cause a tremendous loss. Hence why detailed tracking is significant.

Here, you need to think, “How detailed should the system be?


Using a WMS can provide improved operations and drive measurable ROI (Return On Investment). However, if the overall cost exceeds your budget, it can diminish those benefits.

While you are deciding on the functions you need, try to consider the cost implications as well. The best choice should have the right balance between costs and functions.

If you choose an expensive system, you can ultimately end up compromising quality and efficiency. That’s irony, as you thought of improving on those aspects.

On the other hand, a cheap and basic system may not help you at all. Why? Because you have so many activities going on in the warehouse. So many that the system cannot cover.

Now, we know why balance is important. Let’s briefly go through the core elements that make up the cost of a WMS.

Purchase costs

Purchase costs are fairly straightforward. They differ depending on the complexity of the system and the system vendor.

The purchase cost will be higher when there are more functions. On the other hand, the basic systems will be cheap. Either way, the ultimate selling price will depend on the vendor.

This is the very first cost you will likely consider.

Licensing fees

Licensing fees depend on the vendor’s subscription method.

There are two general ways. One is an upfront payment before installation. The other is a subscription-based payment when the system is a SaaS (Software as a Service).

The software licensing fees are based on the total number of modules, users per site and total users in your warehouse.

Implementation costs

Implementation costs will vary based on many factors. Here are some examples.

  • Number of modules to be deployed
  • Integration of functions and material handling equipment
  • Scale and complexity of operations
  • Technological systems in the business
  • Other business requirements

Hardware/hosting fees

You will be charged with hardware fees when you choose a third-party WMS. As mentioned earlier, the hardware is proprietary. Therefore, you need to obtain it. You will also be responsible for other infrastructure.

On the other hand, you may be charged with hosting fees when you choose a cloud-based one. This is in order to ensure sufficient bandwidth.

Annual maintenance fees

The last fee comes from annual maintenance. Some examples can be:

  • Hardware/infrastructure maintenance
  • Software maintenance (for third-party WMS)
  • Security software subscription/renewal, and so on.

Examples of WMSs

Here are some examples of a WMS that either your business or a 3PL can use.

Fishbowl Warehouse

Fishbowl Warehouse is a cloud-based WMS that is suited for small to medium-sized businesses. Its strength is in its automatic process and tracking for everyday operations. Plus, available in mobile!

On the right is its dashboard where you can see the various information about your performance. (Click on it to see a larger image.)

Manhattan Active Supply Chain

Manhattan‘s WMS is available in a wide variety of deployment options. This includes public/private cloud, multi-tenant and on-premise. They also provide annual updates for both on-premise and cloud.

Businesses of all size can use it. They also provide a smartphone application version for your convenience.

Oracle NetSuite

Oracle NetSuite is an ERP system with a WMS integration that is cloud-based. It works with businesses of all size and is used globally by over 22,000 clients.

The software includes a wide range of functions which support ecommerce, logistics and distribution. (Click to see a larger image of the dashboard.)

TradeGecko Warehouse Management

TradeGecko Warehouse Management is for small to medium-sized businesses. It allows integration with many popular ecommerce sites. Examples include Amazon, Ebay, Shopify and WooCommerce.

It also supports many industries. Therefore, whatever industry you are in, TradeGecko is a good place to start. (Click image to make it bigger.)

Bonus: Datapel System's WMSs

Datapel Systems is a company based in Perth. It provides four types of software that specialises in different sections. Their solutions are for small to medium-sized businesses that use MYOB accounting software.

Another characteristic of Datapel is that they provide a Partners Program. There are three levels, Gold, Silver and Bronze. They offer exclusive online access to various resources to help your business grow.


We have looked at what a Warehouse Management Software (WMS) is and what it does.

Below are brief dot points for each main section.

1. Overall benefits of using a WMS:

  • Fast fulfilment time
  • Increased inventory accuracy
  • Improved customer service
  • Greater space utilisation
  • More warehouse productivity
  • Reduced labour cost

2. Three main types of WMSs:

  • Third-party WMS
  • Cloud-based WMS
  • and ERP integrated WMS

3. Factors to consider when choosing a WMS:

  • Required functions
  • Warehouse size
  • Cost (frontend and ownership)

We can assist your inventory management.

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