Cloud-Based vs On-premise Warehouse Management System for E-commerce

Many people are now using cloud environment for personal needs such as photos, videos, documents such as on iCloud, Google Cloud. Hence, people have been using emails on the cloud for a very long time with the invention of the internet with Yahoo, Hotmail. Having most of our personal items on the cloud avoids risks and saves costs for us. So why not having our business systems on the cloud? Companies can use inventory management software in 2 different models. On-premise systems that they can host on their own servers and purchase licenses by making a huge initial investment. Also, the companies worry about the maintenance, accessibility, disaster recovery issues. Cloud-based systems that are hosted on the provider’s cloud environment and get software-as-a-service by paying for monthly subscriptions. They don’t require any initial investment and they provide all tools to support your operations throughout your growth process. Therefore, cloud-based warehouse management systems offer many advantages that don’t consume any energy of the user company. They provide leverage without requiring any initial capital.

Cost Effectiveness
I prepared an example below to use a warehouse management software with 5 users both in cloud-based and on-premise model. As seen in below chart, the total budget for a cloud-based warehouse management system is less than an on-premise inventory management software even after 7 years.

In below example; the total subscription fees for 5 users is $1,500/month and there is a $3,000 setup fee in the cloud-based model.

Whereas, the licenses for an on-premise model can be purchased for $50,000 and the budget for the implementation will be $50,000.

Below graph doesn’t include the hardware costs that should be covered in the on-premise model. Still, a cloud-based model is much cost effective than the on-premise model.

Cloud vs On-premise costing

Cloud Technology
Cloud-based warehouse management software is more advanced from a technology perspective. They are all web-based applications and they offer the chance to work on any device anywhere on the planet. On the other hand, cloud-based warehouse management software providers are agiler when it comes to improving the software, making developments and automatically updating the marketplaces, shopping carts and warehouses. Cloud-based warehouse management system users always use the most recent versions of their systems.

Growing online retailers need systems that grow with them. They want to increase their use of the system as their warehouse operations grow. That’s why the subscription model and the option to add more users etc. is always more attractive.

Additionally, the technology of the inventory system should also allow for scaling the business. Not all cloud-based warehouse management system is capable of scaling all the way. Some of them can’t support operations eg. after 20 users. Even if you opt to go with a cloud-based inventory system, the online retailers should be careful to select a system that will support their growth for the next 5 – 6 years at least.

Fast Onboarding
Cloud-based systems are more advanced from a technology perspective and they are agiler when it comes to setup and configuration of the systems. Because these systems offer standardized fulfillment business models and processes. Within a standardized fulfillment model, they are considering all business cases that they will face and they build more flexible systems. The flexibility brings fast onboarding such as in 1-2 weeks. Whereas on-premise systems take 4-6 months to implement and start using.

What happens when you make an investment in an on-premise inventory management system and you are not happy at the end of 12 months. Either you will keep investing for extra development to customize it or you will change it. There is a high risk involved in the on-premise model.

However, when you start using a cloud-warehouse management system and if you are not happy at the end of 12 months, you just unsubscribe from the provider’s services. There is no risk involved.

5 Questions 3PL’s Need Answered Before Building an In-House WMS
5 Questions 3PL’s Need Answered Before Building an In-House WMS

So you’re a 3PL considering building your own warehouse management system (WMS). Where do you even start to figure out whether this choice is right for you? Developing in-house depends on your business requirements rather than the inherent qualities of a specific system. A commercial WMS system isn’t always a perfect fit for your needs, but in many cases systems developed in-house also fall short.

You can make an informed decision for your company only after careful research and think. There are a few key factors that should be considered making a WMS solution decision. Here are five questions you should ask yourself before building your own WMS:

How Much Will You Scale?
Major software companies have begun to develop WMS system over the past decade. Most of these programs focus on the needs of 3PL clients rather than 3PL companies themselves.

The WMS market is expected to grow by 20% over the next several years. As e-commerce grow and strive to keep up with the market, they also begin to support multiple distribution channels. The higher the scale, the more vital a flexible and powerful WMS becomes. While you could build your own WMS in-house, it takes a lot of time and resources to adopt an in-house program as your company scales. A major reason to consider a commercial WMS is their research and development resources. In the case of a commercial WMS, the solution providers maintain development teams that soak up the latest technology and can constantly iterate. This is a significant advantage over the typically much smaller staffs retained by 3PL’s who decide to build their own systems.

What Are Your Core Needs?
One of the first steps you should take as a 3PL is defining your current clients’ needs. You should also define how you expect a software tool to keep track of the business processes. By doing so, you will nail down exactly how you complete transactions within your company, what your key business metrics are, and what you want to provide to your clients as you scale. These factors are huge in determining whether a 3PL has the bandwidth to create an in-house WMS that will match their needs and the needs of their customers.

Who Are Your Target Clients?
You should also define your target client profile. If you are targeting to serve food companies in the near future even if you don’t have any today, the WMS functions specific to the food industry will play a key role.

For most 3PLs, things move so fast that they can sign a contract with a client in an industry that they have no experience with before. In this case, a commercial WMS would have a deeper knowledge base in how this industry works, and how to manage the warehouse efficiently. While you could build an in-house system despite limited experience in another industry, research and development would take up valuable time that could otherwise be spent elsewhere.

Additionally, commercial WMS providers typically offer multiple product types or business models (B2B, B2C, B2Store) that would be difficult to switch to with an in-house system. If your 3PL might venture into other industries, the added flexibility of commercial systems should be considered.

Can You Handle the Integrations?
As a 3PL, you will need to build integrations with your clients’ ERP software for a seamless service experience. Every WMS will need to be flexible and be able to handle multiple future integrations. Many commercial WMS solutions have already built in that infrastructure many years ago. Commercial WMS providers often have large development teams and have experienced hundreds of those integrations before.

This is especially important to consider if you are providing warehousing and order fulfillment services to online retailers. This is because you will have to connect to hundreds of sales channels such as marketplaces, shopping carts and also shipment carriers, and balance them all. Commercial WMS companies make huge investments to build strong connections with all these parties and continuously maintain these integrations. If you want to build your own in-house WMS, however, you will have to build these from scratch.

Is It Worth Your Time?
As a 3PL, your main priority is selling the idea of “outsourcing” to your clients. Your key pitch usually sounds something like, “Let us handle your warehousing and logistics so that you can focus on your business”. Why wouldn’t you apply the same logic to your software needs? If you are not a software company and developing software is not your core business, why spend the time and money developing something that already exists? Before venturing into software development, be sure to ask yourself the questions above. After all, the key is to focus on your business and sell more — not less.

How To Design Your Own Pick List

What is a Pick List?

A pick list is used to indicate which items should be taken from your warehouse to fulfill shipment orders. Generally, a pick list shows the shipment information, warehouse location and item information. Pick list is also known as pick ticket or picking list.

There are 2 options to start using a pick list: Paper-based or system based. If you are using an inventory management system or warehouse management system, you may use the mobile screens of your software instead of printing papers. Logiwa WMS provides you a variety of different picking screens such as order based picking, cluster picking, batch picking and wave picking. You can learn the benefits of each different picking method by reading this article.

If you do not have a system yet, you can use excel to print your pick list. Let’s see which information you need on your pick list.

Designing Your Own Pick List


Customer Information

Customer information such as name and address should be printed on the picking list. Usually, picking lists are used by the packers in small warehouses. It is better to show them the customer information.

Order Information

Order data such as order number, order date are crucial in the picking list. If you are using an inventory management system, you should also print the barcode of the order number. In some of the small warehouses, pickers do not use barcode scanners but the packers use. The barcode of the order will help the packers to process orders faster.

Warehouse Location and Pallet

You must print the location number which the items will be picked. The location code should include aisle, level and column information. For some of the operations, pallet information is also crucial.

SKU Code and Explanation

SKU code of the item must be printed on the list. You should also print item name or description.

Picking Quantity

There should be at least 2 quantity fields indicating the quantity to be picked and quantity picked by the picker.



Download your free pick list template in Excel!

What is a 3PL, and Is It Right for Your Fulfillment?

Imagine you’re cooking yourself breakfast right before work. You woke up an hour earlier than usual. It takes what feels like forever to make the meal. Just as you finish eating, your roommate walks in and asks if she can have some, too. You only had enough ingredients for yourself, and besides, you’ll be late to work if you do it all over again. Plus, you no longer have the time or resources to accommodate for extra orders, and your list of things to do (and disgruntled people around you) is rising.


You think to yourself that everything would have been so much easier and faster if you both had just gone to the diner down the street.


Sounds familiar?


This is the same sort of problem that small-to-medium sized businesses face when dealing with inventory management logistics. If you are handling your own logistics, you may run into complicated problems along the way that will only snowball as you continue to scale.


A great way to avoid these issues is by outsourcing to a third party logistics company, or a 3PL. 3PL’s take over and manage your supply chain system so that you don’t have to, giving you time to focus on other aspects of your business to help it grow. 3PL companies provide a variety of services such as any of the following:

  • Managing your inventory
  • Picking and packing
  • Shipping goods
  • Inventory reporting
  • Inventory forecasting


So, how can you tell whether a 3PL company is right for you? If you’re a small business (as in, selling inventory out of your basement small), you can manage your warehouse pretty easily yourself. But if you’re looking to scale, sell internationally, or are shipping out inventory faster than you can blink, a 3PL might be for you. Here are some advantages to outsourcing to a 3PL:



It Helps Satisfy Customer Demand


Thanks to companies like Amazon and eBay, consumers want fast and cheap (like, so cheap it’s free) shipping and they want it now. If you’re handling picking, packing and shipping by yourself, the process might be slow and cumbersome. This could lead to disgruntled customers. In contrast, 3PL’s have centralized distribution centers, which means your inventory can get where it needs to go faster and cheaper than if you did it yourself. Customer satisfaction is the highest priority of any business. Letting a 3PL handle customer demand ensures they will be satisfied with minimal effort on your part.  


It’s Cost Effective

3PL’s manage your inventory with their own technology and warehousing methods. With a 3PL company there is never a need to invest in more technology, waste money on warehouses, or lose money to easily-avoidable errors. Plus, outsourcing logistics to a 3PL will get the job done more efficiently, so now you have time to concentrate on other aspects of your business that need your attention.


3PL’s Have Better Resources

Good 3PL’s employ experts in the field and follow industry best practices, all while keeping up to date with the latest warehouse management system technology. They can even handle international orders, including complications related to customs, duties and more that might arise between borders.  


They Keep You From Missing A Potential Sale

Nothing is worse than shopping online only to find out the item is out of stock during the purchase process. 3PL providers can help you with forecasting, which predicts future inventory sales and accommodates for unexpected fluctuations. By doing so, your 3PL provider ensures you will not miss a sale due to low or unexpectedly missing inventory.


3PL’s Streamline Your Logistics Process

3PL’s streamline your operations logistics to optimize results with little to no effort on your part. They account for complications that you may not notice, like low inventory or shipment errors. Many 3PL’s even have up-to-date monitoring systems, so you know where your inventory is at all times. This make your business more flexible and efficient.


A 3PL is nothing without a great warehouse management system. Check out a demo of how the Logiwa Warehouse Management System can benefit your business, today.


Do you need a 3PL Warehouse Management System?

Meet one of our industry experts to see our product’s free live demo.

3 Warehouse Location Functions to Achieve Better 3PL Warehousing

When defining your locations in the warehouse, some specific functions are more important than the rest. Having a flexible location design is crucial for better logistics and proper client management. You should question your 3PL warehouse management system if they have this flexibility.

Client-Location Allocation

A 3PL can assign a location directly to a client which makes it easier to calculate billing report. But is this the efficient way? A 3PL warehouse management system should give below options to 3PL warehouse:

  • Assign a specific location to a client
  • Do not assign any location but do not allow multiple clients in a location. If the location is empty, you can put away inventory of any client.
  • Allow multiple clients’ inventory in the same location

Customizable Storage Systems

A warehouse management system must provide standard storage systems such as B2B pallet racks, shelves, drive-inn, working station, packing station, staging area, drawers. But in many cases, these standard storage systems requires customizations for specific clients and industries. Your warehouse management system should have the option to customize and add new storage systems.

ABC Classification and Directed Putaway

A 3PL warehouse handles thousands of inventory if not millions. Some of the inventory move faster than the rest and some move slower. Your warehouse management system must optimize the movement flow in your warehouse. The best-of-breed WMS systems use customizable directed putaway algorithms to optimize the flow such as putting away fast movers to closer locations to the dock.


Would you like to learn more about 3PL warehousing?

Meet one of our industry experts to see our product’s free live demo.


What are Some of the Main Reports for a 3PL Warehouse’s clients?

With the rise of online commerce, the number of 3PL fulfillment centers is increasing tremendously. It is certain that 3PL fulfillment centers should have capable IT systems in their warehouse. When configuring a warehouse management system in a 3PL warehouse, there are some important reports which will facilitate their daily life. If you do not provide necessary reports to your clients, they will start calling you for the required information. Some of the basic reports which you can provide to your clients are:

Warehouse Inventory Report

One of the basic reports we have to provide. An inventory report usually shows:

  • SKU number
  • Product explanation
  • Available quantity in the warehouse

Available To Promise Report

Other than inventory report, available to promise report shows the pending purchase orders and sales.  An available to promise report shows:

  • SKU number
  • Product explanation
  • Inventory quantity
  • Open purchase order quantity
  • Open sales order quantity
  • Date
  • Quantity available for sales

Shipment Progress Report

The progress of shipments is the crucial KPI for a 3PL. Clients always keep an eye on the shipment progress, if their shipments are delaying or not. A shipment progress report should include:

  • Order number
  • Order status(Started, picked, packed, shipped etc)
  • Time to ship(How many days you have to ship the order)
  • Sales channel(Marketplace, shopping cart etc.)
  • Shipment carrier
  • Shipping option
  • Ship to information
  • Shipment tracking number

Inventory Shortage Report

In today’s retail world, shortages and backorders should be considered seriously to prevent any  customer complaint. A 3PL’s WMS must provide real-time information showing the shortages and backorders in the system. An inventory shortage report should have:

  • Order number
  • Sales channel
  • Time to ship(days)
  • SKU number
  • Quantity
  • Any pending purchase order

Billing Report

A 3PL should provide at least a weekly billing report to clients. The billing report should include the space utilization, receipt statement, shipment statement and value added services.

More reports can be added to this list for different industries and service levels. However the reports that are mentioned above are must-have reports for a 3PL fulfillment center.


Would you like to learn more about client portal?

Meet one of our industry experts to see our product’s free live demo.