What is a warehouse management system (WMS)?

A warehouse management system is a software system that controls the activities within the distribution center. The system knows which goods are to be received and shipped. It determines which tasks need to be performed to process the goods and sends commands to human operators and automated material handling systems to execute these tasks. Furthermore, the system captures relevant data on orders, shipments, inventory, warehouse layout, warehouse staff, vehicles, customers, suppliers and activities in the distribution center, to mention a few. This ensures the tracking and tracing and quality of warehouse activities.


If a company wants a new software system to operate its distribution center, then it can either decide to custom-build a system or to buy a standard WMS. In the 1980’s and most of the 1990’s companies predominantly used their own custom-built software to control their warehouse operations. The warehouse software was often part of a large monolithic business system that also supported sales, purchasing, production and finance. The capabilities of these so-called legacy systems were limited, but served the purpose of getting goods in and out. Since then, a considerable number of software vendors have developed so-called standard WMSs. These off-the-shelf systems have dramatically changed the way in which the software is implemented. For custom-made systems, we first determine how we want to organize the warehouse processes, then we build the system accordingly. In the implementation of a standard WMS, as it is the case with any packaged software system, we configure the parameters in the WMS so that it supports the intended way of working.


Standard WMSs have been highly popular in the last decade. So what are the main advantages of standard WMSs compared to custom-made systems? We consider three advantages here:

  • Quick implementation
  • Ongoing development
  • High flexibility.


An obvious benefit is that a standard WMS accelerates implementation time. Instead of writing customized software code from scratch, the user configures the options in a standard system, which saves a lot of time. Moreover, most standard packages have been installed numerous times before, so programming errors have generally been resolved. This also saves time in testing the new software prior to installation.


Standard systems also become better over time. Vendors provide new features in the form of software upgrades to their existing users. Furthermore, the vendors guarantee that old functions and configurations will continue to work in upgraded versions, meaning upgrades are reasonably easy to install without disrupting the current practices. Software upgrades not only provide new functions but they also keep the system up-to-date with the latest technological developments.


However, a standard WMS has one advantage that outweighs all others, namely its flexibility. If the manager decides to redesign the processes after some time, then this is achieved relatively easily by reconfiguring the parameters. For custom-built systems this is a much more complex challenge.


Nevertheless, standard software is not a panacea. If, after ample analysis, the desired method of working cannot be configured in the standard WMS, then it is necessary to amend the standard package software with customized enhancements prior to implementation. This introduces the many disadvantages of customized software. In fact, most failed package installation projects in recent years can be attributed to an abundance of custom enhancements. Related problems are encountered later on when the company wants to upgrade its system. The customizations have to be refitted to the standard software and the combination needs to be tested extensively once again. WMSs with many customizations can hardly be upgraded at all.

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