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Issue of December 2004 

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Warehouse Management Systems

Evolving Supply Chain Strategy

In today's interconnected, interdependent supply chain networks, successful warehouse management takes a lot more than directing pick, pack, and ship activities within the four walls of a distribution, fulfillment, or storage facility. And ‘a lot more’ could just be a Warehouse Management System (WMS). by Sunil Kumar

Supply chain networks today require understanding about how basic warehouse management functions impact your extended supply chain, ensuring that fulfillment transactions are seamless and transparent to your customers, and producing the right products, at the right price, in the right quantity, at the right time.

A critical link in the supply chain, the warehouse serves as the source of order status information for customers, inventory visibility for supply chain partners, and for the enterprise as a whole. It is a means for senior management and distribution professionals to scan through warehouse operations and their impact on overall supply chain performance. What's more, the warehouse requires increased flexibility to respond to customer service and marketing initiatives

Evolution of WMS

Initially, Warehouse Management Systems (WMSs) used to be a system to control movement and storage of materials within a warehouse. Its role now, includes transportation management, order management, and complete accounting systems.

Nevertheless, despite the added functions, the core utility of a WMS has not really changed. It is still meant to control the movement and storage of materials within an operation, such as directed picking, directed replenishment, and directed putaway.

Does One Really Need a WMS?

The implementation of a WMS allows increase in accuracy, reduction in labor costs, and a greater ability to service the customer by reducing cycle times. The increased accuracy and efficiencies in the receiving process reduce the level of safety stock required.

The need to create support for formerly unseen functions like first-in-first-out, cross-docking, automated pick replenishment, wave picking, lot tracking, yard management, automated data collection, and automated material handling equipment is what governs the final decision of whether or not to implement a WMS.

Major Functionalities of WMSs

A WMS manages warehouses/distribution centers for a variety of industries like third party logistics providers, manufacturers, pharmaceutical and health care facilities and high tech distributors. It is designed to manage the day-to-day operations of the warehouse and integrates

easily with the host systems. It thus promotes efficiency and accuracy while managing the following warehousing activities:


  • Adding a new Purchase Order
  • Creating an Advance Shipping Notice / Receipt
  • Palletizing the loads and printing labels
  • Receiving goods
  • Finding appropriate locations for the products
  • Putting away received goods Inventory Management
  • Transferring inventory
  • Adjusting inventory
  • Putting inventory on hold
  • Counting the Physical inventory
  • Viewing inventory balances
  • Viewing inventory transactions


  • Creating a Shipment Order
  • Allocating/Unallocating an order
  • Shipping multiple orders
  • Creating, viewing, or modifying a pick detail line
  • Shipping orders
  • Viewing a Shipment Order's status Billing

The billing function is primarily designed for third-party logistics operators. Activity-based billing allows operators to calculate billable fees based upon specific activities.

The different types of charges are:

  • Charge by document
  • Transportation charge
  • Additional Charges
  • Accessorial Charges
  • Special Charges
  • Storage Calculation

Setting up a WMS

The setup requirements of a WMS need to be detailed. For example, the characteristics of each item and location must be maintained either at the detail level or by grouping similar items and locations into categories. Although some operations will need to set up each item this way, most operations will benefit by creating groups of similar products.

To install a WMS, sufficient information is required to allow the system to decide exactly where and how to put away, pick, replenish, and sequence data. Listed below is some of the logic used when determining actual locations and sequences.

Location Sequence: Defines a flow through the warehouse and assigns a sequence number to each location. This is used to sequence the picks to flow through the warehouse while it puts away the logic searches for the first location in the sequence in which the product would fit.

Zone Logic: By breaking down the storage locations into zones it directs picking and putting away, or replenishing to and from specific areas of the warehouse. Zone logic needs to be complemented with other types of logic to determine exact location within the zone.

Fixed Location: This logic uses

predetermined fixed locations per item in picking, putting away, and replenishing. Fixed locations are most often used as the primary

picking location in piece-pick and case-pick operations.

Random Location: Random locations generally refer to areas where products are not stored in designated fixed locations. Like zone logic, it would need some additional logic to determine exact locations.

Fewest Locations: This is used primarily for productivity. Pick-from-fewest logic uses quantity information to determine least number of locations needed to pick the entire pick quantity. Put-to-fewest logic attempts to put away the stock to the fewest number of locations needed for the entire quantity.

Reserved Locations: When predetermined specific locations to put away or pick goods are required, this logic is used. An application for reserved locations would be cross-docking where you specify certain quantities of an inbound shipment be moved to specific outbound staging locations or directly to an awaiting outbound trailer.

Nearest Location: Also called proximity picking/put away, this logic looks to the closest available location to that of the previous put away or pick.

Maximize Cube: Cube logic is found in most WMS systems however it is seldom used. Cube logic basically uses unit dimensions to calculate cube (cubic inches per unit) and then compares it to the cube capacity of the location to determine how much will fit.

Consolidate: It checks whether there is already a location with both space and a stock of the product to be stored. To consolidate products stored in multiple locations, this check may generate additional moves.

Lot Sequence: The Lot Sequence is used for picking or replenishing. It uses the lot number or lot date to determine locations to replenish or pick from.

The generation of the most suitable location, to place products, is done by a combination of the above logic.

Task Interleaving: Task interleaving describes functionality that mixes dissimilar tasks such as picking and putting away to obtain maximum productivity. Used primarily in full-pallet-load operations, task interleaving directs a lift truck operator to put away a pallet on his/her way to the next pick.

In large warehouses this can greatly reduce travel time. That will not only increase productivity, but also reduce wear on the lift trucks. Task interleaving is also used with cycle counting programs to coordinate a cycle count with a picking or putting away task.

Data Collection: While implementing WMS in a developed nation would necessarily require implementing automatic data collection, usually in the form of Radio Frequency (RF) portable terminals with bar code scanners.

However, for Asian markets (specifically India), companies like SSA Global have launched WMS which work both in RF and paper kind of environment. This way the companies investing in WMS don't have to invest too much on RF devices immediately and they can acquire a technology which is future-ready.

Cycle Counting: Most WMS will have some cycle counting functionality. Modifications to cycle counting systems are common to meet specific operational needs.

Cross Docking: Cross-docking is the action of unloading materials from an incoming trailer or rail car and immediately loading these materials in outbound trailers or rail cars thus eliminating the need for warehousing (storage) which can be handled by most WMS packages.

Yard Management: Yard management describes the function of managing the contents (inventory) of trailers parked outside the

warehouse, or the empty trailers themselves. Yard management is generally associated with cross docking operations and may include the management of both inbound and outbound trailers.


For manufacturers, distributors, and shippers of goods, WMSs offer the robust functionality needed to receive goods into the warehouse, pick customer orders, and pack them efficiently. Benefits include reduced operational costs, increased operational efficiency, and improved service.

The author Mr. Sunil Kumar is Sr. Consultant - Supply Chain & Logistics, SSA Global, India.

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