In this article, learn about:
What Warehouse Management Systems consist of
How WMS solutions help to manage seasonal demand shifts
How to best leverage WMS solutions for supplier benefit
Certain times of year, such as during holidays, back-to-school periods, and promotions, put a heavy strain on suppliers, as increased demand can push vendor supply to capacity. Suppliers should be prepared for these periods with strategies and systems in place to provide increased agility and visibility.
Warehouse management systems (WMS) can help suppliers better prepare, execute, and recover from spikes in seasonal demand. This article explores how vendors can use their WMS to decrease the load that seasonal shifts in demand place on them.
What Is a Warehouse Management System (WMS)?
Warehouse management systems are software designed to optimize and manage the day-to-day operations of a warehouse. Core functions of WMSs include:
Inventory tracking: Real-time visibility of stock levels, locations, and movements throughout the warehouse
Receiving and putaway: Managing incoming shipments and directing where items should be stored
Picking and packing: Guiding workers to collect items for orders and prepare them for shipment
Shipping: Coordinating outbound logistics and generating shipping documentation
Labor management: Tracking worker productivity and optimizing workforce allocation
A WMS reduces human error, increases efficiency by optimizing routes and storage locations, and provides better visibility into inventory levels. Modern systems often integrate with other business software like enterprise resource planning (ERP) systems, transportation management systems, and e-commerce platforms. They may also incorporate technologies like barcode scanning, RFID tracking, or even robotics and automation. Basically, a WMS ensures that products flow smoothly from production to the retailer or customer with minimal interruptions.
WMS solutions can generally fall into one of three “buckets” of increasing complexity:
A basic WMS allows for inventory management at a distribution center or warehouse. There is not much performance data that can be gleaned at this level of complexity; generally, suppliers with a basic WMS can expect to be able to analyze the warehouse’s “throughput,” or how much stock moves through the warehouse during a specific period of time.
An advanced WMS contains software to help analyze capacity and stock levels, as well as track employee time and labor. These sorts of systems generate data to help measure and improve complexity.
A controlled WMS contains capacity, stock level, and employee tracking functionality, and can also exchange data with other systems, in order to take outside information into account, such as manufacturing necessities, seasonality, or fleet digitalization. Controlled WMS solutions offer the highest amount of data-driven insights but require a larger initial investment in both time and money.
Why WMS Is Beneficial for Suppliers and Supply Chain Professionals
Investing in a WMS is generally a good idea for suppliers, as it can have a number of benefits compared to traditional warehousing methods, such as:
Inventory accuracy: A WMS helps suppliers fulfill orders correctly the first time, which strengthens relationships with buyers. Fewer shipping errors mean fewer returns, complaints, and chargebacks that can damage reputations and profit margins.
Faster fulfillment: Efficient picking, packing, and shipping processes mean you can turn orders around more quickly, which can give a competitive advantage over suppliers with slower operations.
Better inventory visibility: Suppliers with a WMS know exactly what they have in stock at any moment, which helps avoid overselling (promising products the supplier doesn’t have) or underselling (missing sales opportunities because the supplier thought they were out of stock). This real-time visibility also helps with planning and purchasing decisions.
Labor efficiency: A WMS can prioritize tasks based on urgency, balance workloads across the warehouse team, and track individual and team productivity. This means suppliers can handle higher order volumes with the same number of employees or maintain current volumes with fewer staff.
Data-driven decision-making: A WMS provides insights into which products move fastest, seasonal trends, and operational bottlenecks. This information helps suppliers make smarter business decisions about what to stock, when to reorder, and where to focus improvement efforts.
Scalability: As a supplier’s business grows and order volumes increase, a WMS helps them handle the complexity without proportionally increasing errors or labor costs.
Related Reading: What Is Supply Chain Resilience?
Types of WMS in the Market
There are several types of WMS on the market, each designed for different operational needs and scales:
Standalone WMS
A standalone WMS focuses solely on warehouse operations. These systems offer deep functionality for inventory management, picking, packing, and shipping. However, they require integration with other business systems, like ERP or accounting software. This can be done through Application Programming Interfaces (APIs), Electronic Data Interchanges (EDIs), or other platforms, but requires careful planning and ongoing IT support.
ERP-integrated WMS
ERP-integrated WMS consists of WMS modules built into Enterprise Resource Planning software, like SAP, Oracle, or Microsoft Dynamics. Building WMS modules into existing ERP software allows for a seamless data flow across the organization. However, these systems tend to have less specialized warehouse functionality compared to a standalone system. Additionally, the cost of these integrated systems is typically higher than standalone systems, which might make them impractical for smaller businesses with less intensive warehouse operations.
Cloud-based WMS
Cloud-based WMS consists of WMS software hosted on remote servers and accessed over the internet. Online services such as these are associated with reduced implementation costs, increased accessibility, and real-time data visibility, which makes them attractive for fast-growing suppliers with variable demand. However, as with any system hosted online, data breaches are a potential risk, and always-online systems are more vulnerable to potential attacks. Additionally, it may be difficult to integrate a cloud-based WMS solution with existing warehousing systems.
Third-party Logistics (3PL) WMS
3PL WMS consists of specialized systems fully integrated with other types of logistics software, often providing client portal access, billing solutions, and EDI. This type of WMS is ideal for suppliers with complex supply chain needs, as its integrations allow for data sharing and real-time visibility into warehouse operations. One potential drawback of this type of WMS is the initial investment, as 3PL WMS solutions often require extensive customization to function in the most efficient way possible.
What Data Does a WMS Use and Provide?
An advanced or controlled WMS provides suppliers with multiple types of data to help with insights and business decisions, including:
Inventory data: Current on-hand inventory levels by SKU; available vs allocated on-hand inventory; location-specific inventory; inventory by status (i.e., available, quarantined, damaged, etc.); total inventory value; average cost per unit
Order data: Order status and tracking; order metrics (order volume, lines by order, on-time shipment rates, etc.); pick performance; shipping data
Receiving and inbound data: Purchase orders received; receiving performance metrics; on-time delivery rates; supplier performance metrics
Location data: Capacity by zone or warehouse area; slotting analysis; warehouse map data
Labor data: Worker performance; task management analysis; labor cost analysis
Returns data: Returns by SKU, customer, and reason code; restocking costs; net recovery value
Financial and billing data: Storage and freight costs; client invoices; storage cost per SKU
Compliance and audit data: Traceability records; regulatory compliance records; transaction history with timestamps
Forecasting and planning data: Seasonal fluctuation analysis; SKU velocity; inventory planning support
Scenarios Where WMS Solves Supplier Problems
Though advanced or controlled WMS solutions require an up-front investment, most suppliers feel the benefits that WMS brings are worth the cost. Here are some scenarios where WMS solves vendor problems:
Holiday rush or seasonal sales events
Suppliers with seasonal products (such toys before holidays, outdoor goods in summer, etc.) struggle during peak periods with temporary labor, increased order volumes, and pressure to ship quickly. WMS solutions help to optimize labor and order flow to prevent bottlenecks. Additionally, real-time product visibility helps suppliers allocate resources as necessary to mitigate the demand increase.
Retailer compliance
WMS helps to avoid compliance-related deductions and fines. WMS solutions often contain automatic compliance checking, helping to validate carton labels, pallet configurations, and shipment documentation before release. Additionally, EDI-integrated WMS generates and transmits required Advanced Shipping Notices (ASN, EDI 856) with accurate content.
Inventory accuracy and stockouts
Suppliers with poor inventory visibility experience frequent stockouts, leading to lost sales, expedited freight costs, and disappointed customers. WMS solutions provide real-time inventory tracking, automatic replenishment, cycle counting programs, and lot and serial tracking—all of which help to increase inventory accuracy and decrease costly stocking errors.
Omnichannel fulfillment
It can be difficult for suppliers that sell through multiple channels to manage inventory, with challenges including overselling, channel conflicts, and difficulty prioritizing orders. Advanced or controlled WMS solutions offer a centralized inventory pool, channel-specific rules, and integrated shipping, to help mitigate the difficulties of omnichannel fulfillment.
Returns management
Managing returns can be both costly and complex for suppliers. WMS software typically includes return merchandise authorization (RMA) management, inspection workflows, reason code tracking, and analytics. Using these tools, suppliers can recover more value from returns, identify quality issues earlier, and reduce return rates through root cause analysis.
Best Practices for Suppliers Leveraging WMS During Seasonal Peaks
Seasonal shifts in demand can hit suppliers hard. However, leveraging WMS software functionality can help to weaken its worst impacts. Suppliers should make sure that they’re familiar with the full functionality of the WMS software they’re using. For instance, forecasting tools can help suppliers mitigate the impacts of regular changes in demand.
Seasonal shifts often require a labor increase to fulfill the higher number of orders. WMS software can help to mitigate this, as well, as the labor management features of this software help to scale workforce effectively. Additionally, integrated WMS solutions provide real-time visibility into both suppliers and their downstream retailers. It’s recommended that suppliers continuously monitor Key Performance Indicators (KPIs) during peaks to adjust inventory flows mid-season and effectively implement WMS solutions.
Conclusion
WMS software helps suppliers handle seasonal demand shifts with confidence, helping to fulfill orders precisely and quickly. An advanced or controlled WMS helps suppliers to be as efficient and accurate as possible, while also allowing for scalable operations. Suppliers should assess current warehousing capabilities to determine whether WMS solutions can help prepare for the next seasonal surge.
WMS Solutions with SPS Commerce!
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