We’ve covered how inventory management is one of the most critical components of running a retail operation—whether online, IRL, or omnichannel.
However, upstream of inventory management comes with warehouse and logistics management that controls the flow of products throughout a business’s supply chain. While workers are often key to an efficient and smooth logistics operation, warehouse management systems (WMS) are also critical to streamlining the supply chain and identifying operational errors and gaps.
What kind of WMS a retailer uses can vary depending on size, scale, and the nature of the business, but are not necessarily mutually exclusive. Some of the most commonly implemented WMSs are stand-alone, enterprise resource planning (ERP) modules, supply-chain modules, and cloud-based.
Stand-alone WMS: This is the most limited system that fulfills the most basic tasks needed to operate a warehouse and move products along the supply chain including shipping, packing, receiving, returns, and inventory tracking. It is a better fit for smaller operations or better coupled with other functions within the supply chain. Outdoor gearmaker Sea to Summit North America uses a standalone WMS. “Any company that has experienced an accelerated growth pattern, exponential growth pattern, from a small business to a medium-size business goes through the same growing pains that we went through,” Shaun Frazier, director of operations for North America, told TechTarget.
ERP systems: ERP software as it relates to supply-chain distribution automates operations and avoids the need for workers to manually update information in real time, which allows retailers to quickly respond to disruptions or changes in the market. They’re helpful for integrating new business models like subscription programs, or sectors where consumers are susceptible to varied buying patterns. Acutima, for example, is a cloud-based ERP software that provides its clients real-time data on inventory, inventory in transit, and reorders.
Supply-chain module: The supply-chain module provides basic warehouse management tasks but also often features other capabilities such as customer service, vendor management, transportation management, and inventory control. Third-party logistic firms are known for using supply-chain modules paired with other systems that handle more complicated processes.
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NetSuite’s supply-chain planning software helps businesses balance supply and demand with the right combination of cost controls, lead times, and service levels. It uses inventory management and demand planning techniques, combined with a scheduling engine.
Cloud-based: The benefit of cloud-based models is that they are entirely integrated online, allowing for insights to be monitored from mobile devices. The software provides real-time inventory data that keeps track of each SKU—online or offline—in addition to also monitoring that across multiple locations throughout the supply chain. Oracle is known for its cloud-based warehouse management system.
Who’s on top?
If you ask any company, they’ll say they’re a fit for your WMS, but as we mentioned before, there is a lot of variability, and no retailer is relegated to one model. US News & World Report put together a list of the best WMSs based on business function. They include:
- Retail: InventoryCloud
- E-commerce: Ordoro
- Small business: QuickBooks Online Inventory Tracking
- Midsize: Deposco
- Manufacturing: Katana
- Multiple warehouses: Zoho Inventory
- Distribution: Epicor for Distribution
Considerations in selecting the right WMS—outside of business model or size—include understanding budget constraints, what the minimum requirements needed for operations are, whether or not you plan on scaling those operations, and making sure you can train your employees to use a particular system, especially if pivoting to a new model.
Why it matters: Supply-chain executives are aggressively pushing to improve processes. In a 2023 survey from McKinsey & Co., 95% said they dealt with footprint challenges at their warehouses in the previous year. All respondents said they took some sort of action to address this.
- However, upgrading warehouse operations does come without challenges, particularly when it comes to tech: 92% of supply-chain leaders said they do not have the workers to operate “digitally enabled” components of their business.
- That 8% figure of those who had sufficient in-house talent is an increase from only 1% in 2022.