Warehouse management means all the operations involved in running a warehouse. This mainly includes the oversight of goods: shipping, receiving, storing, and monitoring inventory. Warehouse management also includes efficiently organizing warehouse space and labor (worker roles and hours).
Ideally, warehouse management is one facet of your enterprise resource planning (ERP)—part of a broader, well-tuned machine. Or, it complements your other supply chain management operations.
In this article, we'll discuss what goes into efficiently managing a warehouse using modern remote access software (RAS) and technology. By the end of the article, you should have a solid grasp of the following:
- What a warehouse is
- Types of warehouses
- Processes that happen in a warehouse
- Principles of warehouse management
- What a warehouse management system (WMS) is
- How to select a WMS
What is a Warehouse?
When you hear the word "warehouse," you may think of a dark, dank, empty place full of cobwebs and mysterious boxes. In reality, warehouses tend to be bright, clean, well-lit buildings full of sounds and people. Warehouses keep our economy moving—literally—moving items from point A to B and beyond.
A warehouse itself is a commercial storage space used to store a range of different goods. These goods can include raw materials, finished products ready for consumer purchase, and other materials needed during the manufacturing process.
Warehouses are vital to the supply chain process. Quickly and efficiently moving goods through warehouses—to retailers, wholesalers, or directly to consumers—is crucial to maintaining your business's reputation and bottom line.
The right people, processes, and technology can enhance all warehouse operations, making inventory management, order fulfillment, and other warehouse logistics a breeze. Compared to the old days of pen and pad, what used to take hundreds of hours of manual counting and recounting can now be accomplished within seconds.
Warehouses are also referred to as distribution centers. The terms warehouse and distribution center are used interchangeably, but there are some differences. Warehouses are storage management facilities for raw materials and end products. A distribution center, however, stores finished products and fulfills end-stage services needed to get the final goods to customers. This can include order fulfillment (like pickers at Amazon), packing orders, and managing returns.
What Happens in a Warehouse?
A warehouse is a literal hive of activity, working to efficiently move goods through the supply chain to their final destination—whether it's vehicle tracking devices for your business fleet or new bedding for your home.
The activities that happen in a warehouse can vary by industry or by business, but there are some key warehouse management processes that remain the same in any warehouse.
- Inventory tracking
- Picking and packing
- Receiving
- Putaway
- Shipping
- Reporting
1. Inventory tracking
Inventory tracking means keeping track of your inventory. This means knowing the exact count you have of any given product, and where precisely they are stored within the warehouse layout or during the transit process (i.e., on a semi-truck headed for Walmart).
Barcodes, SKUs, and handheld technology are invaluable tools for inventory management.
Keeping track of product turnover, breakage (products literally breaking) or returns can help you project future volume of sales or returns and be prepared to offset any known challenges.
2. Picking and Packing
Picking and packing are terms almost everyone is familiar with these days, due to the proliferation of Amazon distribution centers filled with workers picking and packing our 3:00 a.m. orders for tube socks and cheese doodles.
Picking is a core function in any warehouse. Pickers retrieve or pick items needed to fulfill orders. Speed and accuracy are the name of the game. Solid inventory management software can generate optimized pick lists so that each picker can retrieve items spread throughout a large warehouse in the most efficient way possible. This can include robotic assistance, picking zones, or batch picking to fulfill multiple orders at once.
After the picker has fulfilled the order, it gets handed off to the packer. The packer is responsible for securely packaging the item(s) in a box, poly mailer, or another shipping container—and adding any needed padding or protective materials. Pickers are the ones responsible for sending you your stapler wrapped in egg crate foam in a 4-foot box.
Because, in the end, pickers and packers are concerned with speed. Pickers pick your order for packers to package and label it for shipping.
3. Receiving
Warehouses receive freight and inventory at loading docks. The goods may be trucked in from seaports, factories, or other storage locations.
There must be effective warehouse management systems in place to safely receive and keep track of all goods a warehouse receives. All inventory must be unloaded and stowed away within the warehouse, with warehouse managers able to keep exact tabs on the quantity and storage location of all items.
With receiving, as with picking and packing, warehouse management software (WMS) plays a vital role. In addition to keeping a record of all goods, WMS also advises warehouse employees on how to receive, unpack, pick, pack, and ship all goods.
4. Shipping
Packers will manage the shipping of orders they have packed. Common carriers used for shipping include USPS, UPS, FedEx, DHL, or couriers (gig economy workers who will collect and deliver local orders from distribution centers).
As with other warehouse processes, efficient warehouse management software can make the shipping process go smoothly. This software should be able to send your business and your customer real-time tracking information to keep tabs on exactly where the order is and when it's due to arrive.
5. Reporting
Good, solid data underpins everything that goes on in your entire supply chain management. With all the moving parts in a storage facility, reporting is especially clutch for efficient warehouse management.
Warehouse inventory management systems (people empowered with WMS software and handheld technology) can accurately and effortlessly track all inventory, orders, and order fulfillment.
These warehouse systems can monitor and generate automatic reports related to equipment maintenance, inventory control, order fulfillment accuracy, inventory forecasting, and worker training and productivity.
This reporting can quickly spot unusual spikes or dips in product demand, employees lacking in any training or certifications, or shifts in staffing needs.
What Are the Different Types of Warehouses?
Broadly speaking, we've discussed that a warehouse is a building or facility used to store goods. When other people speak of warehouses, they may be referring to any or all of these different types of warehouses.
- Distribution center
- Smart warehouse
- Cold storage
- On-Demand storage
- Bonded warehouse
1. Distribution Center
A warehouse is a place where goods are stored for a period of time before they are shipped to their final destination, but a distribution center is a more specific type of warehouse that's focused on processing orders. Specifically, a warehouse is where goods are picked, packed, and shipped to their final destination be it a retail store or an end customer.
Distribution centers tend to have a higher volume of goods going in and out than a warehouse and are commonly located close to major transportation hubs (i.e., the first-ring suburbs of large cities).
Due to the high volume of goods churning through, distribution centers tend to have more advanced technology than other warehouses, including fast-paced conveyor belts, automated sorting systems, and high-speed picking systems.
Briefly put, warehouses are places where goods are stored whereas a distribution center is where goods are processed (order fulfillment) and sent out. This is where the pick, pack, and ship happen. Also, distribution centers tend to store goods for much shorter periods of time.
2. Smart Warehouse
Smart warehouses may well be the future of warehouse management. Smart warehouses use automated systems and interconnected technology (devices) to receive goods, stow goods and then pick and pack goods for orders—all while maintaining an accurate count of inventory.
Many distributions and existing warehouses operate, at least in part, as smart warehouses.
Smart warehouses use the latest warehouse management systems to increase speed and production and minimize human error—as well as the headcount needed to run an efficient warehouse.
The benefits of a smart warehouse include reduced errors, increased accuracy in counting and keeping track of inventory, faster order fulfillment, increased customer satisfaction (more details about the order and faster shipment), and reduced costs.
Technology and software used in smart warehouses can include:
- Automated storage and retrieval systems (AS/RS). Computer or robot systems to retrieve or store items in specific locations.
- Automated guided vehicles (AGV). Robotic vehicles to assist with stowing and moving goods.
- Radiofrequency identification (RFID). This technology uses radio waves to track and identify objects in a warehouse. This is an improvement upon barcode-scanning technology as you don't need a clear line of numbers to scan. A handheld reader and antenna can pick up RFID tags with no line-of-sight required.
- Computer vision or Artificial Intelligence (AI) vision. AI vision can quickly scan, identify and create a storage record for items it has viewed. Over time, AI vision can become smarter and more accurate, enabling you to build in rule-based actions.
- Warehouse management systems (WMS): As the name implies, WMS software is a program used to manage a warehouse. This includes inventory, stowage, picking, packing, and shipping.
3. Cold Storage
As the name implies, a cold storage warehouse is a warehouse facility used for storing goods at cold temperatures. Items requiring cold storage may include prescription drugs, perishable, or other temperature-sensitive goods.
Using cold storage can prevent spoilage, extend a product's shelf-life, and ensure a product's efficacy. Some prescription drugs, for example, must be stored in a temperature-controlled environment.
Cold storage warehouses can utilize a variety of climate-control features including cold storage lockers, refrigeration, air condition units, fans, and temperature monitoring systems.
4. On-Demand Storage
On-demand storage warehouses have grown in popularity in recent years. As the name implies, these warehouse facilities provide businesses with storage on an on-demand basis. On-demand storage can accommodate your temporary (i.e., seasonal) needs for additional storage capacity.
Traditional warehouse buildings with surplus capacity may rent it out to other businesses that have short-term storage needs.
In addition to being a cost-efficient storage solution for the holidays, on-demand storage can also be a good option for businesses not ready or willing to commit to a long-term storage lease.
On-demand storage can reduce costs, increase business operations flexibility, and help your company better flex to accommodate periods of increased customer demand.
5. Bonded Warehouse
Bonded warehouses are also called "customs" warehouses. These are warehouses storing imported goods, with no duty or taxes imposed on the imports until they are first sold.
Since import duties can be paid from a portion of the goods' sale, this is a very cost-effective way to store and distribute foreign-made products.
Overall, there are a number of different kinds of warehouses. Each one is designed to perform unique functions to meet your warehouse management needs. If you need help optimizing your warehouse management systems, Epicor can help.
We provided businesses with a tailor-made warehouse management solution to meet your complex and continually evolving business needs. Every day, Epicor helps retailers, manufacturers, and distributors all around the globe do business smarter and leaner. Talk to an Epicor rep now.
What is warehouse management?
We've talked a lot about warehouses and a little bit about warehouse management, but what exactly is meant by the term warehouse management?
In essence, warehouse management means the oversight of all operations in a warehouse. This can include:
- Receiving goods
- Tracking and storing inventory
- Training and managing staff, including ensuring necessary licenses or certifications
- Picking and packing orders
- Managing the movement of goods (including their delivery to the final end customer)
- Processing returns
- Maintaining the safety, security, and cleanliness of the facilities
Warehouse management vs inventory management?
Although the two terms are often used interchangeably, warehouse management and inventory management are not the same thing.
Inventory management refers to the process of managing your inventory as efficiently as possible to increase efficiency, reduce risk, lower costs, and improve customer satisfaction. Inventory management helps you determine how many goods your business should keep on hand, along with what to order, when to order, how much to order, and where to store your goods.
You'll find a number of different inventory management system options. Talk to the experts at Epicor for a free consultation to determine the best system for your company based on size, budget, industry, and any specific needs.
Warehouse management, as detailed in earlier sections of this article, is much broader. Warehouse management is about managing the movement and processes of people and products within a warehouse. The right WMS program can help you best streamline warehouse operations for increased efficiencies and reduced costs.
What is a Warehouse Management System?
We've referenced the term warehouse management system in a few earlier sections, but let's go a little bit more in-depth explaining what a warehouse management system is.
A warehouse management system (WMS) is the software and processes that enable you to manage all operations in your own warehouse—from the time any materials or goods enter your warehouse until they leave and reach the end customer or next distribution center in your supply chain process.
The purpose of WMS is to move goods through your supply chain as quickly and cost-efficiently as possible. It can provide real-time visibility into your inventory and warehouse processes at any time, including periods when goods are in transit.
Key features of WMS Software
WMS software has key features or benefits to support warehouse efficiencies.
- Workflow design: customize a workflow set-up for maximized picking speed, accounting for demand variance based on seasonality or sales trends.
- Inventory accuracy: keeping accurate, up-to-date tabs on all inventory in your warehouse through RFID, barcode scanner, and automatic identification and data capture (AIDC).
- Efficient storage: organized and methodical retrieval and storage of inventory, often used with special pick-to-light or pick-to-voice technologies enabling warehouse workers to quickly locate goods.
- Picking and packing: warehouse workers can pick and pack storage in the most time-efficient way, utilizing wave picking, zone picking, and batch picking.
- Shipping: WMS can create packing lists, send shipping updates, send bills of lading (B/L) in advance of shipment, and generate invoices.
- Labor management: monitoring worker productivity, benchmarking individual performance against quotas or key performance indicators (KPIs).
- Loading dock management: WMS can assist drivers, providing fleet-friendly routes (for wider or taller trucks) to reach the loading yard, guiding vehicles to the right loading docks, and providing guidance for the most optimal way to load and unload goods.
- Automated reporting: enable managers (on-site or remote) to quickly and easily analyze all warehouse operations, identifying potential bottlenecks and areas for improved efficiency.
What are the Different Kinds of Warehouse Management System Software?
There are a few common, different types of WMS software to help manage warehouse operations and logistics.
- Standalone
- Supply chain modules
- Integrated with ERP
- Cloud-based
Standalone
Standalone WMSs are a good option for businesses that just need basic warehouse management features. Standalone systems are relatively affordable and easy to set up, which is why they are a popular choice.
However, there are some drawbacks. Standalone WMSs don't come with the customization options and time-saving bells and whistles you'll find on more comprehensive WMSs. Additionally, a standalone system is not designed to be integrated into your other software or handle other functions of your supply chain like order fulfillment or fleet management. Managing data analytics may also be more challenging.
If you just need basic software to manage inventory and day-to-day warehouse operations, a standalone WMS could be the right solution now. With business growth, however, you will likely need to upgrade to a more sophisticated WMS down the road.
Supply Chain Modules
Many businesses think of their WMS as a subcategory within their supply chain management (SCM).
Supply chain management software can help you with the broader scope of business, managing vendor relationships, material sourcing, product development cycles, and inventory management.
You can choose an SCM software that includes warehouse management and other aspects of your supply chain. This will enable more seamless management for the creation, distribution, and movement of products.
Integrated with ERP
A WMS that's integrated with your Enterprise Resource Planning (ERP) system will enable you to integrate and manage all aspects of your business within one system. This can include:
- Accounting
- Finance
- Human resources
- Procurement
- Manufacturing
- Supply chain management
- Warehouse management
There are many benefits to integrating your WMS with an ERP, including:
- Increased efficiency—multiple services are streamlined within one platform.
- Improved task automation.
- Enhanced reporting and data visualization.
- Reduced costs.
- Outstanding customer service. With the two systems integrated, you can provide customers with more accurate status updates.
There are also drawbacks to this approach, notably the cost of integrating these two systems, the backend integration can be long and complex, and at the front end, you will need to train employees with varying degrees of enthusiasm on how to use the new integrated system.
Cloud-based
Lastly, your business could consider going with a cloud-based warehouse management system. This means the system would be accessed through the Internet and not directly installed on your business' servers. There are many benefits to adopting a cloud-based WMS, including:
- Affordability: cloud-based WMS software is typically much cheaper to implement and maintain (fixes, updates).
- Scalable: as your teams change, you can easily add or remove users and user roles.
- Security: cloud-based WMS is generally a more secure option than on-site WMS. Requiring employees to access the cloud-based WMS through a virtual private network (VPN) can add an additional layer of security.
- Ease of accessibility: you can access your cloud-based WMS from anywhere in the world (where you have WiFi).
- Accessibility: Cloud-based WMS can be accessed from anywhere, so you can manage your warehouse from anywhere in the world.
As with its advantages, there are also disadvantages to using a cloud-based WMS. Some of these drawbacks include:
- Security: while cloud-based WMS is generally more secure (as listed in the benefits above), some business IT departments feel that cloud-based WMS is a less secure option because it's not stored in your own data center. Strong passwords, regular user updates, password authenticators, and VPNs are all ways to mitigate security risks.
- Provider dependency: using a cloud-based system means giving up control of data management to your cloud provider. If that provider goes out of business or wants to switch to a different provider, you may lose access to your data. Using a reputable provider like Epicor Eagle Cloud or Amazon Web Services can help you manage those risks. Amazon is a well-known provider and Epicor has provided world-class, enterprise software solutions for over 50 years.
How Do I Pick the Best WMS?
Epicor warehouse management solutions may be the best fit for your organization—or not. We want every business to be successful, and that means finding the right fit for your unique business needs.
In determining the best WMS for your business, here are some questions to ask yourself:
- Why do I need a WMS? If you don't need one now, ask yourself, "When will I need a WMS?"
- What capabilities does our WMS have to have? Do I need it to manage non-warehouse operations as well?
- What are our business needs when it comes to warehouse management? Consider what you're storing, where, and any drivers that can spike or drop demand.
- What is our budget? What is this figure based on, and is it flexible? If your answer is "As little as possible," this is an indication you may need to educate other leaders on the benefits of a WMS and do some research on WMS pricing.
- What is the "time to value?" This is an important question to ask internal stakeholders. What sort of timeline is acceptable for integrating your (new) WMS?
Questions to Ask WMS Vendor Partners
When vetting potential WMS solutions, here are just a few of the questions you should be asking vendors.
- What is the "time to value?"
- How will the WMS be integrated with our BI and other departments?
- Do you have expertise in our industry?
- How will you customize the WMS to our specific business needs?
- What is your record of results and customer satisfaction?
- How many WMS clients do you have?
- How long have you been in business?
Final thoughts
Warehouse management may seem complex, but in reality, warehouse management is all about making it easier for you to manage your warehouse's day-to-day operations including staffing, equipment maintenance, storage, inventory management, picking, packing, and moving goods through the supply chain toward the final end customer.
Warehouse management system (WMS) software can make the process a little easier, automating manual processes and making life easier for workers and customers. The right WMS can dramatically cut costs, scale growth, and enable more hands-off, hands-on management from anywhere around the globe.
Finally, you can talk to an Epicor rep today to learn more about the many warehouse automation and logistics management solutions. We're happy to connect with other business leaders and share our 50+ years of expertise in manufacturing, distribution, and retail. Let's connect now.
