How to Create a Warehouse Inventory Management System

Efficient warehouse management allows you to manage your supply chain, storage, goods, and materials in real-time. The warehouse inventory management system (WMS) reduces picking times by a third, improves accuracy by two-thirds, and doubles the efficiency of operations. This is why automated solutions have soared by 80% in the past five years. And in two years, this market will exceed $9 billion globally!

Why fight with cumbersome warehouse operations when there are excellent solutions? You can either buy them or create them yourself. In this article, we will tell you how to do it so your business becomes a modern competitor.

What is the Warehouse Management Inventory System?

Warehouse Management Inventory System is a real-time inventory management software. It may stand alone or be a part of an enterprise system.

A WMS allows you to track the placement, storage, and movement of goods to the customer. The system captures characteristics such as dimensions, weight, serial number, box, batch, etc. Since the software stores information on all stocks, it can pinpoint the location of goods in the warehouse and their intended use.

WMS types

Warehouse automation systems come in three different levels, depending on functionality:

• Boxed ─ simple to implement, requiring no rework or adaptation, but limited in functionality.
• Adaptive with advanced features, which utilize fairly in-depth business processes, but without much specificity. Most are based on a central module that automates core and additional functions.
• Customized, fully tailored to existing business processes and requirements. The functionality is built from the ground up. The system can support multiple platforms, and high-end DBMS is used for database management.

Implementing automation can solve several tasks and problems that manual labor cannot solve. The result is shorter turnaround times and improved customer loyalty.

Benefits of WMS

WMS can tell whether the stock is destined for picking or reservation. The system can also track information such as the location of the loading dock door and the speed at which staff pick and pack goods.

It has many other advantages:

• Reduced logistics costs;
• Optimization of storage space;
• Increased partner confidence;
• Increased customer and worker satisfaction

With a WMS, your warehouse operations, planning, and supply chain management become seamless. The Warehouse management inventory system also offers staff training, performance tracking, and workflow design options. Thanks to it, you can take corrective action on the go without affecting your core business.

Identifying Warehouse Management Needs

Despite some product-specific differences, warehouse management has common goals.

Inventory visibility

Complete visibility of stock status ensures that staff knows the exact status of specific products. It is essential for monitoring deliveries and moving goods through the warehouse. This way, it is possible to determine how much product is available for orders quickly, when, and which items need to be renewed. It also helps you predict demand.

Receiving and stacking

Efficient recording, storage, and distribution of goods must be ensured. The system can track stock movement from trucks at loading bays, where it is scanned, to pallets, racks, or freezers, where it will be stored. As a result, companies can store goods based on FIFO or ABC tactics, and warehouse staff can receive clear instructions on receiving, unpacking, and storing goods on time.

Kitting and packing

When orders come in, your employees will be responsible for receiving the goods. Several tactics can be used here:

• Zone selection;
• Discrete picking;
• Wave selection;
• Batch picking

Packing can be simple or complex. But the dimensions must be at most required. In addition, the packaging must consider the nature of the goods - for example, wet should be in waterproof packaging, and frozen should be in cool packaging. WMS "knows" their physical parameters and can help you choose the right size and type of packaging.

Reporting

A warehouse inventory management system allows you to define KPIs. For example, it will record returns due to incorrect selection, packaging, stacking, or damage to goods and help determine how these errors occurred.

The Architecture of a WMS

The trend is away from manual work and towards automated plant management. Equipping warehouses with all the necessary tools allows goods to be correctly grouped, quickly retrieved, and despatched. The WMS system's three-component structure helps manage all these processes efficiently.

Core components of a WMS

The first component is a man-machine interface - a special client application. With it, a user enters, changes, or deletes data, makes requests for warehouse operations, and receives reports on activities.

The second one is the database server which stores all information about the goods, operations with them, and storage periods. The client application can request the appropriate data selection and modify or delete the data from the database. The third is the business logic, which contains all activities 'tasks' and 'processes.'

Together they are specialized data processing programs that execute employee-initiated queries, return the changed data to the database, and report the completion of the query.

Warehouse facilities are divided into zones characterized by their types of technological operations. This approach allows the staff to organize their activities and efficiently allocate responsibility.

The system enters all the physical characteristics of the storage area, the loading equipment, the requirements for storage conditions, space allocation, and the shelf life of the goods. They can be sorted by manufacturer or sell-by date, considering storage compatibility and other parameters.

Choosing the Right Technology Stack for WMS Development

You must select tools that support open architecture, a user-friendly interface, and efficient data management.

Considerations for cloud-based WMS

A cost-effective solution that delivers:

• Remote access, easily scalable resources, flexible business processes, and information sharing;
• Reducing TCO;
• Optimized development costs;
• Real-time analytics;
• Greater data security

And most importantly, you'll get advanced capabilities that won't be affected by natural disasters or the damaging activities of your competitors.

Implementation of the WMS

When deciding how to build an inventory management system, define its objectives. Recognizing the goals will help you choose the type of software. You can identify the proper set of features by selecting the right architecture.

Phased approach vs. Big Bang approach

The Big Bang approach requires extensive changes. You'll need to spend a lot of time converting and migrating data, testing, training, and configuring the software. With a phased implementation, you will have more time to adapt.

Data Migration Strategy

The final stability and accuracy of future system upgrades depend on it. Timely planning and high-quality data are essential for this task. Testing processes should be straightforward. But the more parameters you apply, the better results you get.

User training and change management

Hands-on training will enable you to adapt to the system and perform better. Training should cover all functions, including reporting. Manuals and other supporting training materials can be created for this purpose.

Testing and Quality Assurance

You need to ensure that the warehouse inventory control system works without errors. It is possible by carrying out tests:

• Functionality;
• Performance testing;
• Integration, which ensures that the program elements work together optimally;
• Security, which should answer the question of whether the protection of personal data is sufficiently ensured

Testing plans should include all aspects of system operation, including billing.

Key Features to Enhance a WMS

Ensure that your warehouse has an optimal layout and works in real-time. Each area should be carefully laid out. The warehouse space must obey the logic of smooth and fast workflows for your sales to grow.

Use of SKUs

Using item IDs makes it easier to find items by their unique characteristics. This reduces the time spent on sorting and shipping. You can use a lot of parameters to do this. Space zoning based on picking methods also makes order preparation and reordering easier.

Even a basic warehouse management system must ensure seamless integration of the equipment used for warehousing and logistics. To achieve this, the system must have links to these elements:

• Barcode readers;
• RFID readers;
• Digital scales and similar devices

Invest in automation

Large projects require more automation, so they need:

• Automated retrieval systems and sorters;
• Packaging equipment;
• Palletizing equipment;
• Conveyor belts;
• Automated controlled transport

Advanced systems extensively use virtual and augmented reality, the Internet of Things, artificial intelligence, voice assistants, and robots. The WMS must be able to synchronize with these and manage all the technologies and devices included.

Seamless workflow

Establish strict security measures and a clear plan of tasks and responsibilities. It will make work easier and increase employee satisfaction.

Also, high-tech warehouses are easier to maintain. Artificial intelligence, robotics, and machine learning automation improve employee productivity. If you decide to innovate, your staff must be sufficiently trained.

Integration with other systems

A WMS implementation needs integration into a general information system to allow for interoperability and correct data exchange between structural divisions and ERP, TMS, and other systems.

Determine what data need to be synchronized. Usually, it is:

1. Catalog
2. Information about counterparties and employees

Make a list of reference information for each of the subsystems. Determine which events should be reflected in each system. Mark the transactions that trigger a response and identify the interaction points. At the same time, each receiving party must process and interpret them unambiguously. Frequent order corrections significantly complicate warehouse processes, including order processing. In this case, all deviations must be handled.

It is essential to understand that not all events occurring in the business process have to be considered and synchronized. As a result, the point of contact stage defines the range of events or documents, their status, the processing time, and other relevant parameters that define unambiguously when data is or is not transmitted.

Building an inventory management system, be aware that striving for full automation is not always justified in practice. A program will automatically act if the conditions are unambiguous, which may not always be accurate. Often, all the circumstances need to be clarified, and the order is sent to the corporate system when a signal is received from the user. It would help if you worked out a mechanism to trigger the communication procedure between the systems at every point.

Technical challenges

WMS integration with external systems can be implemented in different ways. You can use the following:

• Data reception response systems;
• Trouble signal systems;
• Event logs

These are used to generate a list of processing and storage requirements and to develop a mechanism for controlling data exchange.

When enterprise and warehouse systems are implemented in parallel, a high level of communication is required. Integration with off-the-shelf products (e.g., 1C) is possible before essential functions are agreed upon and implemented. Integration with ERP requires greater granularity. In this case, there are no standard solutions.

AI and Machine Learning for Predictive Analytics

Implementing innovations will help you optimize your operations. Your WMS will be able to 'learn' and identify patterns, making predictions and recommendations based on historical data. And the intelligence function is essential for strategic planning.

The system will be able to collect data in accessible formats, making it easier to process and analyze. The automatic generation of more accurate and timely reports will help to improve critical processes.

Ensuring Security and Compliance in WMS

It is the most important thing. For this, you need to ensure:

• Data security
• Regulatory compliance
• Regular audits and updates
• Maintenance, updates, and continuous improvement of the system

It is complex, so a warehouse inventory system provider can play a significant role. Incidentally, the type of system you choose depends on your business objectives and other factors.

Off-the-shelf solutions most often offer a fixed set of features with simple customization. But you will never need some of them. They provide minimal scalability, but they are cheaper.

Developing a bespoke system may be more expensive. But you can integrate your WMS with CRM, website, and other systems. Moreover, you can change the list of features during the development process. This will save you money in the long run.

We recommend building a system from scratch, as the support role of a professional vendor team can be invaluable.

Conclusion

The WMS is the backbone of many companies, so it is essential to know how to strengthen it. Evaluate your operations to see what the optimum solution is. Examine the inventory management methods available. Choose what works best for you. Ensure a smooth workflow. Implement automation and new technology more widely. And remember to work with professionals to minimize your risks.

Contact our experts to get the best warehouse management system to develop a new or upgrade an existing solution.