What does a WMS system do?
Any activities flowing into and out of the warehouse, and those that ripple out to the extended supply chain, can be improved with a good WMS – from receiving and storage to picking, packing, and shipping. The core features of a warehouse management system support these activities in the following ways.
Receiving and put-away process
A WMS can help companies receive, process, and put away items in the most efficient way based on business rules and warehouse flow. Before warehouse management systems, a pen and paper were used to receive items and reconcile them against purchase orders and physical receipts – and some smaller warehouses still use that approach today. In fact, in a 2018 Peerless Research survey, 87% of respondents said they were handling materials manually during the receiving process.
A WMS system supports using RFID technology and integration with billing and other software so that items can be automatically received, validated, and reconciled against digital purchase orders with the scan of a barcode, and with labels printed for easier storage and retrieval.
Inventory management
Warehouse management software provides real-time visibility into an organisation’s inventory across any location, including items in transit and in stores. It provides tracking information using automatic identification and data capture (AIDC) technology such as barcodes or RFID. And many systems support cycle counting and demand forecasting using advanced analytics and insights into product and vendor performance. With these insights, companies can adjust inventory levels on the fly to ensure there’s just enough stock to satisfy customer demand, whether in-store or online.
Accurate inventory tracking and other practices are key to improving order rates – meaning orders that arrive complete, on time, undamaged, and with an accurate invoice. They can also help allocate inventory according to custom workflows and picking logic so that inventory can be moved faster, both into and out of the warehouse.
Order picking, packing, and fulfilment
The most commonly cited place for packing and fulfilment activities is in the warehouse, according to a Logistics Magazine survey. And ResearchGate estimates that the costs related to order picking make up 55% of the total cost of warehousing.
WMS systems can help lower these costs by guiding the most efficient way to store, retrieve, and pack products. They also support picking technologies that streamline the process, such as radio frequency (RF) with and without scanning verification, pick-to-light and pick-to-voice technology, robotics, and algorithms that can help optimise picking paths.
Some warehouse management solutions make it easier to fulfil orders using techniques such as single order picking, batch picking, zone picking, cross-docking, wave picking, “put” to order, put-wall systems, and more – all helping to streamline order fulfilment.
Shipping
Many warehouse systems integrate with transportation management and logistics software that allows for myriad ways to expedite the fulfilment process – generating bills of lading, packing lists, and invoices for shipments automatically, for example, as well as sending out automatic shipment notifications.
With real-time tracking features, companies can keep tabs on whether packages arrive on time and to the correct destination.
It pays to get this right. Best-in-class warehouse operations get the vast majority of shipments off the dock and in transit to the destination on time.
labour management
Getting insights into labour-related costs and productivity can help warehouses run leaner, more efficient operations. A WMS can provide real-time visibility into warehouse workers, labour costs, response times, productivity gaps, trends to plan, and more – so companies can react accordingly.
Besides providing key insights, many systems also support task interleaving based on factors such as priority or proximity to help minimise workers’ overall travel time as well as “deadheading” or wasted time. They can also help with planning and scheduling, either directly or through integration with other systems.
Yard and dock management
Features for yard and dock management can help truck drivers find the right loading docks quickly. Support for cross-docking, where goods arriving into the warehouse are immediately placed into outgoing shipments without interim storage, is ideal for fresh grocery products. The software helps with this by checking receiving scans against current sales orders, then notifying the receiver if the goods should be placed in a cross-docking location.
Warehouse metrics and analytics
Real-time data can be automatically collected through a WMS instead of relying on manual data collection methods, eliminating keying errors and drastically speeding up the process. This data can also be integrated with analytics to track important metrics, such as on-time shipping, inventory accuracy, distribution costs, order or line fill rate, order cycle time, and more. The system can then create visual reports that can be easily shared to stakeholders and be used to make adjustments.
Types of warehouse management systems
There are three main types of WMS software: standalone (on-premise and often a homegrown legacy system), cloud-based, and applications built into ERP or supply chain management platforms (either on-premise or hosted in the cloud). Each type of WMS has advantages and drawbacks, and the best type will differ from business to business:
Standalone WMS: These systems are usually deployed on the company’s own premises using their own hardware. They can generally support greater customisation (though these can be costly) and the organisation can maintain tighter control over their data and software. Although the initial cost of the system is substantially higher than other options, once a company owns it, they own it. At the same time, updates, maintenance, and the costs associated with them are the responsibility of the organisation. As the WMS ages, it becomes increasingly difficult to integrate with other platforms and to implement new technologies.
Cloud WMS: Cloud-based WMS systems can be rapidly deployed with lower up-front costs. Delivered as software-as-a-service (SaaS), they provide more flexibility to support seasonal and other changing market conditions – and they are easier to scale as companies grow. Through regular updates, warehouse management in the cloud offers a quicker path to innovation. And someone else takes on the burden of maintaining and updating the system. SaaS vendors also invest a lot of money and expertise into security measures and provide disaster recovery capabilities. Cloud warehouse management systems can also be more easily integrated with other solutions.
Integrated ERP and SCM-based WMS: Some warehouse management systems are built as modules or applications that integrate with ERP and supply chain platforms. The advantage of these is that they are able to play better with other solutions in overlapping areas, such as accounting and business intelligence. They provide a holistic view across the business and logistics chain to allow for end-to-end transparency and for warehousing and logistics processes to be orchestrated and executed together. Ultimately these capabilities can be used to optimise operations and provide fast, agile fulfilment experiences.
Workflow of a Warehouse Management System (WMS)
Process of Warehouse Management System are:
Step #1: Receiving
Step #2: Putaway
Step #3: Storage
Step #4: Picking and Packing
Step #5: Shipping and Quality Control
Step #6: Reporting
Inbound :
Purchase Order
ASN
Returns
Receipt Confirmtaions
Outbound :
Outbound Orders
Order Confirmtaions
Order Updates
Inventory Management :
SKu Creation
Stock Adjustment
Stock changes
Stock reconciellation
====================================================================
Warehouse :
940 - WareHouse Shipping Order 3PL<-
943 - Warehouse Stock Trans Shipment Advice 3PL ->
944 - Stock Transfer receipt Advice 3PL<-
945 - Warehouse Shipping Advice 3PL ->
947 - Warehouse Inventory Adjustment Advice 3PL ->
846 - Inventory Balance Notification 3PL<-
=======================================================================
SAP ERP -->IDOC MM-->SKU--> --> Miidleware-->WMS TMS - Carrier
IDOC Inventory <--Inventory Adjustment
IDOC Inventory <--Inventory Status Change
IDOC Inventory Report <-- Stock Receipt
--------------------------------------------
IDOC Inbound Receipt --> Pre Advice -->
IDOC Acknolwedge Receipt<--Receipt <-- Putaway
---------------------------------------------
IDOC Outbound Order --> Orders -->
IDOC Order Update/Cancel <-- Order Cancellation <--Pick and Pack<--
--Pick and Pack--> Label request -->
<-- Label response <--
IDOC Order Update <-- Notification<-- Shipped Goods<--
--> Manifest sent to Carrier
============================================================
What Happens Within a Typical 3PL Integration
Suppose you’re a manufacturer taking orders from customers online. Your website will pass orders into your ERP, or system of record, which will then communicate via EDI with your 3PL provider’s system so that the order can be sent to the customer.
The transaction begins when a customer sends you an 850 (purchase order). You will then send a 940 (warehouse shipping order) to your 3PL asking for the order to be fulfilled.
Once your 3PL fulfills the order, they send an 856 (advanced shipping notice) on your behalf to the customer and then communicate back to you via a 945 (warehouse shipment confirmation) that the shipment has left the warehouse. The 945 can include information like the shipment identification, item, quantity, where it’s shipping, the transportation method and shipping service level.
Once you receive the 945, you can invoice your customer with an 810 (invoice), because you have confirmation that the product has been shipped.
This covers most of our diagram, but how do the 943 (warehouse stock transfer shipment advice) and 944 (warehouse stock transfer receipt advice) transactions fit into a 3PL integration?
To meet customer demands, you need to ensure that your 3PL is stocked with your product. You must order directly from your supplier and instruct them to send product to your 3PL, by sending them an 850. In the meantime, you send a 943 to your 3PL to let them know goods are coming into their warehouse and when product is going to be delivered. Once your supplier prepares the shipment, they send the 3PL an 856 to confirm the contents of the shipment. The supplier can then send you an 810 (invoice).
Once your 3PL receives the product from your supplier, it will send you a 944 to notify you that they received the product. The 944 serves as a receipt of your order and includes any adjustments that need to be made to the original 943 due to potentially damaged or missing products.
==================
Warehouse :
940 - Ware House Shipping Order 3PL<-
943 - Warehouse Stock Trans Shipment Advice 3PL ->
944 - Stock Transfer receipt Advice 3PL<-
945 - Warehouse Shipping Advice 3PL ->
947 - Warehouse Inventory Adjustment Advice 3PL ->
846 - Inventory Balance Notification 3PL<-
----------------------------------------------------------------------------------------After 855
940 : Ware House Shipping Order 3PL<-
The EDI 940 Warehouse Shipping Order transaction set is used to instruct remote warehouses to ship orders.
It is commonly used by a seller, such as a manufacturer or wholesaler, to authorize a warehouse to make a shipment to a buyer, such as a retailer.
The 940 may also be used to confirm a shipment, modify a shipment or cancel a previous shipping order.
The 940 transaction essentially instructs the warehouse on what to ship, how much and when. Specific information provided in this transaction set
PO number
Party ID (seller / supplier and buyer)
Equipment and temperature information
Shipment transport instructions
Special handling information
Shipment details (product ID, quantity, etc.)
Delivery date
Item descriptions and quantities
Ship-to information (location name and address, contact, etc.)
Bill-to information
Shipment method information
Manufacturer information
----------------------------------------------------------------------------------------
943:Warehouse Stock Trans Shipment Advice 3PL ->
The EDI 943 Warehouse Stock Transfer Shipment Advice transaction set is an advance ship notice to a remote warehouse that a transfer shipment has been made from the manufacturer.
The 943 transaction may also be used by manufacturers to authorize a warehouse to accept a return from a customer.
Unlike the 856 Advance Ship Notice, which is used to notify customers of shipments, the 943 is specifically for shipments to third-party warehouse locations.
The 943 typically provides the receiving location with detailed information regarding the product being shipped.
Date of shipment
Manufacturer of goods
Receiving warehouse identification and location
Ship-from location address
Carrier information
Item information including item number, quantity, unit of measure, etc.
----------------------------------------------------------------------------------------
944 - Stock Transfer receipt Advice 3PL<-
944 Warehouse Stock Transfer Receipt Advice transaction set is an acknowledgement to a manufacturer that its transfer shipment has been received.
This transaction is typically used by third-party logistics providers or warehouses – communications regarding shipments from a manufacturer to its own warehouses can typically
be handled within the company’s own business or warehouse management system.
In general, third-party warehouses store products for manufacturers who then instruct the warehouse to ship to other locations.
This process, utilizing EDI, generally follows this sequence:
Prior to shipping product to the warehouse, the manufacturer sends a shipment notification to indicate to the warehouse that an order is on its way.
This is done using the 943 Warehouse Stock Transfer Shipment Advice transaction.
When the shipment arrives, the warehouse confirms this by transmitting an EDI 944 receipt transaction.
The manufacturer periodically submits an EDI 940 Warehouse Shipping Order to the warehouse.
This transaction directs the warehouse to ship product from its stock, usually to customer locations such as retailers or other manufacturers.
The warehouse confirms shipment of the order using a 945 Warehouse Shipping Advice transaction.
With the information from the 945 document, the manufacturer can prepare and submit an Advance Ship Notice (EDI 856) to the customer, along with an invoice (810 transaction).
----------------------------------------------------------------------------------------
945 - Warehouse Shipping Advice 3PL ->
This transaction is used by a warehouse to notify a trading partner that a shipment was made.
Shipment identification
Ship-from and ship-to information
Date shipment was made
Shipment payment type information
Transportation method (e.g., air freight, ground, etc.)
Shipping service level (e.g., overnight, 2-day delivery, etc.)
Item and quantity shipped, including variance from order quantity
Consignee address.
Carrier details.
Shipment tracking id and date of departure.
Transportation method.
Item code, description, and quantity ordered.
Delivery payment method.
Inventory serial numbers.
---------------------------------------------------------------------------------------- After 810 and before 846
947 - Warehouse Inventory Adjustment Advice 3PL ->
947 x12 is an electronic data interchange (EDI) document commonly used among third-party logistics (3PL) providers and their suppliers / sellers.
A 3PL or remote warehouse uses EDI 947 to communicate changes in inventory levels to suppliers / sellers (also referred to as depositors or manufacturers).
Warehouse adjustment item detail (quantity, reason for adjustment)
Party ID (warehouse identifier)
Adjustment number and date
Contact information
Special instructions
Contract summary (between warehouse, depositor)
Warehouse identification information
Product identifying information, such as SKU or UPC
Adjustment details, including the quantity change and reason for change
----------------------------------------------------------------------------------------
846 - Inventory Balance Notification 3PL<-
EDI 846 (Inventory Inquiry/Advice) message is used to send inventory information between customers and suppliers, .
This is used by customers to inform their suppliers of their held inventory and stock levels.
Name and address of both the supplier and customer
Item reference numbers and descriptions
Quantity or goods (both on hand and in float)
Current ordered quantity and future order commitments
Warehousing and delivery location
Returns
By sellers of goods and services to provide inventory information to a potential customer
By a seller’s representatives to supply the seller with inventory information
By one seller’s location to supply another location with inventory information
By a seller to inquire on the availability of inventory
Quantity in float
Quantity on hand
Committed quantity
On order quantity
Returns
Backorder quantity
Quantity in transit
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