What is Warehouse Management? How to Get the Most From a Warehouse Management System

If your business sells goods, you need a place to store them. Most often, this is in a fulfillment center, distribution center, or warehouse.

You can purchase land, lease a facility, hire staff, buy equipment, and get customers to buy from you — but it doesn’t stop there. Proper warehouse management is what will determine how successful a business will be.

It won’t matter if you have the most modern state-of-the-art warehouse if it’s not operating efficiently. You will be stuck with poor performing staff, a low-profit margin, high operating and logistics costs, ineffective leadership, and damaged relationships with customers.

Inbound and outbound logistics are some of the most complex functions of running a business with many literal moving pieces. Learn how warehouse operations affect supply chain management and how to set your business up for success.

What is warehouse management?

Warehouse management refers to the oversight of operations in a warehouse. This includes receiving, tracking, and storing inventory, as well as training staff, managing shipping, workload planning, and monitoring the movement of goods.

What is a warehouse management system?

A warehouse management system (WMS) is software designed to optimize operational processes in a warehouse. By implementing a WMS you have full visibility into real-time inventory levels and storage, staff productivity, demand forecasting, and order fulfillment workflows within a warehouse.

Warehouse management systems are important as they eliminate manual processes and guesswork and instead streamline processes that, save time and provide a more accurate snapshot of what’s going on inside a facility without needing to conduct continuous warehouse audits.

This information helps warehouse managers identify areas of improvement and track progress to drive optimizations throughout the supply chain, from when inventory hits the loading docks to when it’s shipped out to its next destination.

Warehouse management software provides the tools to drive strategic big picture improvements as well as those to monitor the day-to-day. What a management team sees in the warehouse management system will be different from a picker or packer who relies on the system to know what to pick or pack next on the warehouse floor.

Each warehouse management system may have different functionality deployed depending on the business it serves (e.g., what a direct-to-consumer ecommerce seller needs isn’t the same as a large brick and mortar store chain).

5 essential warehouse management processes

Warehouse management is one facet of supply chain management. It affects retail order fulfillment, storage, inventory management, shipping, and distribution. Having an all-in-one solution lets you see what’s happening across different functions of the warehouse in real-time such as inventory being received, orders being packed, shipments being labeled, and any other movement of goods.

1.  Inventory tracking

Inventory tracking is monitoring stock levels so you know which SKUs you have in your warehouse and the exact locations in which you store them, or if they are in transit from a manufacturer or en route to a store.

Inventory management lets you know how much product is ready to be shipped if a customer ordered an item now, as well as when you should order more based on projected volume.

As you grow, you will likely turn inventory over quicker, expand into new locations, and increase your product lines. This makes inventory accuracy and tracking all the more important.

2.  Picking and packing

Picking and packing are two core functions performed in a warehouse. A warehouse management system should generate pick lists for each picker to retrieve items in the most efficient way. This may include zone picking, wave picking, or batch picking.

For each new order, the picker will receive a packing slip of the items ordered and storage locations at the warehouse. The picker will collect the ordered products from their respective locations.

Once an order is picked, it is handed off to a packer, who is responsible for securely placing the items in a box or poly mailer, adding in any needed packing materials, and putting a shipping label on it.

3.  Receiving and stowing

Any warehousing operation must be able to receive inventory or freight from trucks at loading docks and then stow them away in a storage location. A warehouse management system will need to be able to scan in each new box received with the inventory quantities it has.

Then, it will be brought to its short-term or long-term inventory storage location, where it will be scanned again. Warehouse management software should provide clear instructions for each user so they know how to receive, unpack, retrieve, pick, pack, and ship inventory.

4.  Shipping

Based on the delivery options and shipping services you offer to customers, shipping carriers like DHL, USPS, FedEx, and UPS will pick up orders from the warehouse to ship packages to their next destination.

Once the order ships, your warehouse management system should be able to automatically send ecommerce order tracking information back to your store so your customers can track their shipments.

5.  Reporting

A warehouse management system should provide out-of-the-box operational and inventory reports across the warehouse. This may include accuracy in fulfilling orders (total mis-picks, mis-packs, etc.), total orders fulfilled by the hour to measure efficiency of staff, orders shipped on time, and much more.

There are also reports relating to people’s operations including inventory forecasting to understand labor management and staffing needs. With a warehouse management tracking system you can quickly find out which employees have completed safety training, and those who have licenses and certifications to operate certain equipment, and other regulatory requirements you must meet to operate a safe warehouse.

3 ways growing ecommerce stores rely on warehouse management

If you’re experiencing growth and fulfilling orders in an ecommerce warehouse, you need proper warehouse management and oversight in place. This requires experienced experts to manage the warehouse along with the tools and facilities to support not only your volume today but projected growth as well.

1.  Enable logistical growth

With growth comes new challenges related to fulfillment logistics. Fast-growing brands understand the impact of warehouse efficiencies, from the number of dock doors that can be used at once and the use of space in the facility, to the number of pickers and packers you have on the floor each hour of the day.

Warehouse management should choose the right technology, shipping carriers, and delivery options to use as well as secure the best warehouse that will meet your future growth without you outgrowing the space immediately. Together, these things help you receive inventory more efficiently, pack boxes quicker, and deliver more orders on time.

2.  Packages are processed and shipped faster

Warehouse management makes operations leaner and improves supply chain efficiency. Stations are designated in each area of the warehouse for each step of the fulfillment process (e.g., separate areas for warehouse picking, packing, labeling, returns, etc.). Each fulfillment associate is focused on one task per shift to maximize their output.

Setting up each functional area for success also means reducing the physical steps needed to get from one place to the next and routing everything in a streamlined way. The faster all of this work is done, the sooner packages are ready to go out the door.

3.  Better storage allocation

Warehouse management helps you store each SKU in a separate dedicated storage location (e.g., in a shelf, bin, or on a pallet) that makes the most sense for the layout of the warehouse and item in question. Once the inventory is in its place, a warehouse management system helps pinpoint the exact location of any SKU so it can be retrieved quickly.

Accurate warehouse management also helps you keep tabs on real-time inventory levels, so you never run out of stock or run out of space. If you sell products that have expiration dates or are subject to recall, you can also store them by lot number and ship the oldest goods out first.

Warehouse management with a 3PL: 5 advantages

Because warehouse processes are so complicated and expensive, many brands choose to outsource the entire fulfillment process to a third-party logistics (3PL) company. Unlike an on-demand warehousing company that finds warehouses with excess space, 3PLs run their own fulfillment centers and should have standardized warehouse management across all of them.

Here are some of the advantages of working with a professional logistics company to store inventory and ship orders.

1.  Logistical optimizations

3PLs work with thousands of companies — including seasonal brands, high growth brands, and everyone in between — so they have a lot of data and can do everything from analyzing shipping zones to forecast demand and inventory. Continuously aggregating and learning from data helps optimize each warehouse for greater efficiency as well as provide reduced shipping costs and transit times for your customers, all of which help you grow.

“ShipBob really allow us to scale in ways that a company of our size would not be able to if we tried to own and operate the logistics and shipping components ourselves.”

Francesca Cavallo, Co-Author of Rebel Girls

2.  Multiple warehouses and larger geographic footprint

When you run your own warehouse, you are only shipping from that one location. Partnering with a 3PL means you can store inventory in several of their fulfillment centers to keep inventory closer to more customers. If you ship nationwide, it’s a must that you have warehouses coast-to-coast.

For example, ShipBob has a presence in the largest US cities and regions all over the United States, so you can ship orders via ground to large populations very quickly. This helps meet customer expectations around 2-day shipping by reducing the distance traveled and delivery timelines.

“Touchland sells flammable goods that need to be shipped via ground, so ShipBob has been a great ally as they have fulfillment centers all over the US, facilitating a 2-3 day delivery time for any customer in the US.”

Andrea Lisbona, Founder & CEO of Touchland

3.  Huge time savings

Ecommerce order fulfillment services from a 3PL eliminate the most time-consuming logistics tasks (inventory storage, picking, packing, shipping, order tracking, replenishing supplies, returns, kitting, etc.) and the stress of managing a warehouse. While they take care of these tasks for you, you can monitor their performance and use the data they provide to grow and make better business decisions.

“We never wanted to be a logistics company, so we found a really good partner in ShipBob to offer the fulfillment services, technology, and other tools needed to stay competitive. With everything that ShipBob does for us, we can focus on the brand itself, develop content, evolve our existing products, and expand our product lines.”

Matt Dryfhout, Founder & CEO of BAKblade

4.  Better uses of warehouse space

If you’re on the verge of outgrowing your warehouse space, working with a 3PL can make your life a lot easier. Even once you’ve outsourced fulfillment to a 3PL, you can either repurpose your old warehouse space to focus on a different aspect of your business (e.g., growing your B2B ecommerce or wholesale fulfillment channels in-house), or let the lease end.

A 3PL can help you pay for only the space you need — even if that’s by the bin, shelf, pallet, or any combination of those for your products. That way, you’ll never have to worry about outgrowing (or never growing into) the space you’re paying for.

“I knew I had to make a transition in order to scale. I could lease a warehouse and grow into the new space, but with how cyclical our business is, I would have to hire people to scale up over the summer and let them go in the fall. Having to do that every single year didn’t appeal to me. I knew I had to find a 3PL partner. I kept hearing very good things about ShipBob and decided to go with them.”

Noel Churchill, Owner and CEO of Rainbow OPTX

5.  Real-time insights

Just because you’re not working inside the 3PL’s warehouse doesn’t mean you won’t know what’s happening. Through their technology, you should be able to see your inventory flow, including when inventory is being received, stowed or put away, picked, packed, shipped, and any other movement.

With ShipBob’s proprietary warehouse management software, you can search orders by tracking number, destination country, the number of items it contains, filter by sales channel, fulfillment center location, as well as get full transparency into performance such as fulfillment speed, orders fulfilled on time, accurately, claim-free, and much more.

“The technology ShipBob offers is the real differentiator, and the selling point is the visibility and transparency of the dashboard.”

Brett Miller, CEO, BRIK

3 things to look for in your next warehouse management system

If you are set on managing your own warehouse, make sure you do your due diligence and get a warehouse management system that works for your business’s unique needs.

1.  Software that connects to your store(s)

Integrations with your online stores will make everything go smoothly, from sending individual tracking info back to customers to monitoring sales trends to be able to support demand. By feeding in your sales channels, the warehouse management system will generate pick lists that optimize each picker’s workflow based on the logic that matches your warehouse design and items ordered.

In addition to picking similar orders that take inventory in the same area or rows, it should make sure orders that were placed first or request expedited shipping are prioritized, so you can keep promises you make to customers (e.g., “Any orders placed before noon local time are guaranteed to ship the same day”).

Pro-tip: use a warehouse management system together with a project management platform to boost overall integration and execution of your retail supply chain operations.

2.  Software that’s compatible with your warehouse equipment

Based on how your warehouse is set up and operates, you’ll want to make sure any warehouse management system you use is compatible with inventory scanners, terminals, labels and printers, scales, handheld or wearable devices, and other physical equipment or hardware you use. If not, be sure to factor in any additional purchases you’ll have to make.

3.  Demonstrated ROI

In addition to hearing how other businesses have had success with a specific warehouse management system, including those similar in size and industry, look for examples of time and money savings demonstrated through the software such as:

  • X time saved per hour
  • X percent improvement in accuracy or reduction in errors
  • X dollars saved or recovered
  • X increase in order processing speed or throughput

If you can’t understand how the warehouse management system can positively impact warehouse operations, then you can’t justify the investment.

Outsource your warehouse management with ShipBob today!

If you aren’t looking to manage your own fulfillment warehouse and license a warehouse management system, but you are interested in outsourcing inventory storage and ecommerce fulfillment to a 3PL, check out ShipBob.

“As our business grew, fulfilling orders quickly became very time-consuming, and warehouse operations became a challenge. We found ShipBob, who checked all our boxes for a 3PL. They have ended up being the perfect solution for us and we have never looked back!”

Waveform Lighting Team

With a network of fulfillment warehouses all over the United States and free proprietary warehouse management software that’s completely tailored to ShipBob’s processes (unlike other 3LPs that purchase their own warehouse management system from other companies), ecommerce business can leverage economies of scale, discounted shipping rates, fulfillment services, and support, all without having to invest in the individual pieces that comprise warehouse management.