A warehouse management system (WMS) is software that tracks inventory and controls the daily work in a warehouse: receiving goods, storing them, picking orders, packing and shipping. This tutorial explains how a WMS works step by step, what the key terms mean and how to start using one.
Contents
What does a WMS do?How a WMS works: the basic flowKey WMS termsMain features to look forHow to start using a WMSMeasure successChoosing the right WMSRelated readingFrequently asked questionsIs a WMS the same as inventory management software?Do small businesses need a WMS?How long does a WMS take to set up?Does a WMS need barcode scanners?Summary
What does a WMS do?
- Tracks stock in real time: shows what you have, how many and exactly where it is.
- Directs staff: tells workers where to put items away and which items to pick next.
- Reduces errors: barcode scanning checks that the right item and quantity are moved.
- Speeds up orders: plans pick routes and groups orders efficiently.
- Gives reports: stock levels, order accuracy and productivity.
How a WMS works: the basic flow
- Receiving. A delivery arrives. Staff scan the items, and the system checks them against the purchase order or advance shipping notice (ASN).
- Put-away. The system suggests a storage location, called a bin, based on item size, how fast it sells and available space.
- Inventory tracking. Every movement is scanned, so the system always knows quantity and location.
- Order processing. A customer order arrives from your website or ERP and the WMS reserves the stock.
- Picking. Workers receive a pick list on a scanner or tablet, and scan each item as they pick it.
- Packing and shipping. Items are checked, packed and labelled, and the carrier and tracking details are recorded.
- Cycle counting. Small counts of stock are done regularly to keep records accurate without closing the whole warehouse.
- Reporting. You review performance and plan improvements.
Key WMS terms
| Term | Meaning |
|---|---|
| SKU | Stock keeping unit, a unique code for each product |
| Bin or location | The exact place where stock is stored, such as aisle, rack and shelf |
| ASN | Advance shipping notice, a supplier’s notice of what is arriving |
| Put-away | Moving received goods to their storage location |
| Wave, batch and zone picking | Ways to group orders and split picking work |
| FIFO and FEFO | First in first out, and first expired first out, rules for using older stock first |
| Cycle count | A regular partial stock count |
| Slotting | Choosing the best location for each item |
Main features to look for
- Barcode scanning (and RFID in some systems)
- Multiple locations and warehouses
- Lot, batch and expiry tracking
- Integrations with ecommerce platforms, ERP, accounting and shipping carriers
- Pick, pack and ship workflows
- Reporting and dashboards
- Mobile devices for staff
How to start using a WMS
- Map your current process. Write down how goods flow through your warehouse today.
- Clean your data. Make sure every SKU has a clear code, description and dimensions.
- Label your locations. Give each bin a unique code and barcode.
- Set up the system. Configure products, locations, suppliers and users.
- Connect your other systems. Link your online store, ERP or accounting software.
- Train your team. Run practice sessions with scanners before going live.
- Start small. Pilot with one area or product group, then expand.
- Review the numbers. Check accuracy and speed and fix problems early.
Measure success
- Inventory accuracy: how closely system stock matches physical stock.
- Order accuracy: the percentage of orders sent without errors.
- Dock-to-stock time: how long goods take to be available after they arrive.
- Pick rate: lines or items picked per hour.
- On-time shipping: the share of orders shipped when promised.
Choosing the right WMS
- Count your SKUs, orders per day and number of locations.
- Decide between cloud-based software and an on-site system.
- Check that it integrates with the tools you already use.
- Ask for a demo using your own workflow.
- Compare total cost, including setup, hardware, training and support.
Related reading
- How a Warehouse Management System (WMS) Enables Agile Response to Seasonal Supply Chain Demands
- Starting a Business: How Warehouse Management Software Can Boost Your Sales
- Our Step-By-Step Guide to WMS Implementation
Frequently asked questions
Is a WMS the same as inventory management software?
Inventory software tracks quantities. A WMS goes further by controlling the work inside the warehouse, such as put-away and picking routes.
Do small businesses need a WMS?
Not always. A small business with a few products can use inventory software or spreadsheets, and move to a WMS when errors and delays grow.
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How long does a WMS take to set up?
It depends on the system and your complexity. Simple cloud systems can be running in weeks, and large implementations can take months.
Does a WMS need barcode scanners?
Scanners greatly improve accuracy, although some systems can work with tablets or phones.
Summary
A WMS tracks your stock and guides each step of warehouse work, from receiving to shipping. Learn the basic flow and key terms, prepare clean data and labelled locations, pilot the system in one area and track accuracy and speed.
