E-commerce Warehouse Management Questions You Should Ask Your WMS Vendor

What is Warehouse Management System (WMS)?

A traditional warehouse management system (WMS) is a software application, to manage warehouse or distribution center operations. With the rise of e-commerce business, inventory is now beyond 4-walls of the warehouse. As a result, the next generation warehouse management system manages the fulfillment operations beyond 4-walls (e.g drop shipment, off-site receiving, locker boxes etc.). Today, best of breed WMS systems manage the whole order fulfillment process from the consumer clicking the “buy” button to all the way through delivery.

What are the main challenges of traditional warehousing?

Accuracy

Inaccurate transactions end up in higher costs in supply chain operations. When an inventory transaction is completed inaccurately, it means that it will be done twice if noticed right away. If not noticed, it will have bigger losses for the company such as shipping the wrong item to the customer, locking down a location for counting. Doing transactions accurately for the first time brings cost efficiency to the supply chain transactions and obviously increases margins.

 

Productivity

Seamless processes play a key role in fulfillment productivity. Warehouse Management System brings productivity to fulfillment operations. Although workforce is crucial accomplishing the customer experience, smart logistics systems play a key role to enhance customer service and reduce costs by guiding the workforce efficiently.

Traceability

In the multi-channel model, many sales points and delivery options are offered to the customer in sync. Therefore, inventory and all processes should be shared and be in cooperation throughout all channels. At this point, especially correct figures, traceability and visibility of inventory is crucial.

 

What are the main functions of a traditional WMS?

All WMSs should perform certain basic functions. The basic warehouse management system functions have been considered to be as follows:

  • Arrivals
  • Receiving
  • Putaway
  • Returns
  • Picking
  • Packing
  • Shipment
  • Value Added Services

What are the challenges of an e-commerce warehouse?

 

 

Piece Delivery

A traditional warehouse usually ships products directly to another business – mostly in higher quantities and in bulk. Whereas B2C warehousing involves a higher number of individual orders and smaller quantities within the order. E-commerce warehousing is all about operational speed, accuracy and customer service.

Multiple Sales Channels

The most challenging and critical process in the omni-channel model is inventory sharing throughout all sales channels. Required priorities, allocations and reservations should be included in the system through this cooperative infrastructure.

Single Items

In e-commerce, the average number of single-item orders is around 30%-50%. A traditional warehouse management system is familiar with and good at picking pallets and boxes from the warehouse but not picking single items.

Cycle Time

Cycle time is the new KPI of retail and e-commerce logistics. Cycle time represents the average duration between 2 packed units “coming out of the packing stations consecutively”. The lower the cycle time, the faster the fulfillment operation is. Warehouse management system reduces your cycle time with adaptive and smart logistics functions.

Cost per Item

This KPI represents the average logistics cost to ship an individual item from the warehouse. While cycle time represents the operational speed, cost per item represents the operational productivity. Thus, achieving a low cycle time with a high cost per item is not acceptable.

Accuracy

Accuracy is the KPI that represents the operational quality. The expected accuracy is %100 which means: • All the deliveries are on time • All the deliveries are accurate The ideal e-commerce logistics operation is the balance of cycle time, cost and accuracy.

BackOrders

In e-commerce, the demand fluctuates on a daily basis. As a result, e-commerce warehouses face unpredictable backorders. Automatic allocation and packing of backorders during receiving are crucial in e-commerce.

What are the main benefits of an e-commerce WMS?

 

Accuracy

Barcode: Warehouse Management Systems use various technologies to achieve accuracy. The most common and affordable technology is barcode and voice technologies. By scanning the product barcode and location barcode, WMS ensures the right product is picked from or put away to the right location. 50%

Productivity

Finding The Right Product: The different SKUs in an e-commerce warehouse usually stated in thousands if not millions. It is very difficult for someone to find the right product in an affordable time without a system. A WMS guides pickers to the right location.

Walking Distance: In an e-commerce warehouse, a picker walks approximately 7 miles on average in a day. Most of this effort is caused by the multiple trips to pick a single order. By using batch picking and optimized routes, a WMS can reduce walking distance more than %30.

Handling Backorders: The average backorder ratio is %15 percent in an e-commerce warehouse. A next generation WMS easily identifies the backorders during receipt and allocates products to backorders. So that the products are transferred directly to packing stations without put-away.

Planning: Because of the fluctuations in demand and the scale of inventory, workforce planning is a time-consuming activity in an e-commerce warehouse. A warehouse management system is capable of planning the next shiti’s workload and resource requirement.

Others

It is possible to count many other benefits like preventingobsolete inventory, achieving traceability and visibility, managing drop shipments, integrating to multiple channels etc.

 

What are the new KPIs for e-commerce warehousing?

Cost per Item

This KPI represents the average logistics cost to ship an individual item from the warehouse. While cycle time represents the operational speed, cost per item represents the operational productivity. Thus, achieving a low cycle time with a high cost per item is not acceptable.

Cycle Time

Cycle time is the new KPI of retail and e-commerce logistics. Cycle time represents the average duration between 2 packed units “coming out of the packing stations consecutively”. The lower the cycle time, the faster the fulfillment operation is. Warehouse management system reduces your cycle time with adaptive and smart logistics functions.

Accuracy

Accuracy is the KPI that represents the operational quality. The expected accuracy is %100 which means: • All the deliveries are on time • All the deliveries are accurate The ideal e-commerce logistics operation is the balance of cycle time, cost and accuracy.

 

What are the outcomes for the owner?

 

Customer Loyalty

Customers trust us when we deliver on time and accurate. The ultimate contribution of the warehouse
management system is the customer loyalty.

%15 More Conversion

Higher conversion rate is the inevitable result of customer loyalty. Loyal customers are the most powerful marketers for us.

Higher Margins

Pricing is one of the most critical issues in ecommerce. Customers can access to a broad price range for the same product in seconds. We can easily state that the price is driven by the market. If you don’t have enough margins, you can’t achieve price flexibility. The simplest way to achieve higher margins is to reduce the operational costs of which WMS allows in various methods.

%30 more shipments

Do not fear selling more! Warehouse management system, by automating and planning your inventory, task and resources, allows you ship more with the same number of resources.

Innovations in Warehouse Management System Facilitate Multi-channel Sales

Mobile trade and social media trade channels are also used by customers as an alternative to traditional retail channels recently. Multi-channel model that enables management of all sales channels together, entered into companies’ strategic plans as new sales channels spread in the market.

In the multi-channel model, without geographic boundaries, the customer likes the product in any sales channel, orders through any sales channel and gets the product delivered anywhere within any time slot and return it through any sales channel.

Multi-channel model requires an efficient and proactive warehouse management infrastructure and technology for the companies to apply multi-channel model effectively and seamlessly.

There are 4 main needs and challenges of the supply chain that multi-channel model requires;

Velocity

With the multi-channel model, the customer receives the right product that he/she ordered from any sales channel anywhere. In order to do that seamlessly, fast and responsive system should be in place in all processes such as procurement, warehousing, order fulfillment and packing. After the order fulfillment process, shipment and delivery processes should be optimized in order to establish the balance between cost and customer service. This can be done through route optimization and new generation delivery planning technologies.

Trace-ability

In the Multi-channel model, many sales points and delivery options are offered to the customer in sync. Therefore, inventory and all processes should be shared and be in cooperation throughout all channels. At this point, especially correct figures, trace-ability and transparency of inventory is crucial. One of the KPIs of this model is inventory trace-ability not only in the warehouse but also within processes from procurement to delivery to the customer. Multi-channel can be applied successfully with feasible, flexible, real-time and integrated warehouse management technology.

Inventory Sharing

The most challenging and critical process in the multi-channel  warehousing is inventory sharing throughout all sales channels. Therefore, a feasible warehouse management system for multi-channel should be implemented for the inventory to be viewed, offered and demanded by all sales channels. Required priorities, allocations and reservations should be included in the system through this cooperative infrastructure. This process can be managed efficiently through accurate stock management, distribution and delivery solutions.

Innovation in Transportation

Multi-channel inventory model requires a perfect distribution and transportation system should be implemented between suppliers, plants, warehouses, transit centers, sales points and customers. Therefore, the process requires an effective and comprehensive transportation and distribution management system

Logiwa WMS, through its global experience and continuous R&D activities, is offering an extensive global warehouse management solution for the multi-channel model.

Logiwa splits up multi-channel supply chain management into 5 main processes and designed feasible solutions.

Procurement Management

In the process, suppliers’ stock, orders and operations can be traced effectively and provide them to deliver the purchase orders to the accurate location seamlessly through “Supplier Portal”

Inventory Management

This is one of the most critical processes of the model. Logiwa RouteArt ensures the accuracy, trace-ability, availability of the stock through “Supply Chain Planning”, “Inventory Sharing” and “Continuous Replenishment” Besides, processes such as inventory optimization, buffer stock management and stock replenishment management can be managed easily.

Warehouse Management

In this process, Logiwa enables management of warehousing, order fulfillment, picking, packing and reverse logistics processes through “Warehouse Management” and “E-Logistics Management”

Distribution Management

Through “Distribution Planning and Route Optimization” solutions, the distribution costs are minimized and customer service is enhanced.

Delivery Management

This process has critical value to complete the multi-channel model and crate competitive advantage. Logiwa RouteArt offers optional delivery options and time slots to the customer through “New Generation Home Delivery Planning” Thus, the customer is offered a good shopping experience not only at the sales points but also during delivery.

Logiwa WMS is designed as a warehouse management system for multi-channel inventory management with global partnerships. Logiwa’s multi-channel warehouse management system  is developed with most recent technologies as web based with the ability to integrate to all other ERP and automation systems.

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