Chapter 7

What is a warehouse management system (WMS): Three types

A warehouse management system (WMS) is software that allows for visibility, maintenance, and improvement of your warehouse’s overall operations and processes. Some of the key functions of a WMS include alignment with …

• Inventory management
• Supply chain management
• Transportation management

Not all warehouse management systems are created equal — and that’s a good thing. Reason being, you have a number of options to choose from, which allows you to find the WMS that best fits your company’s specific needs.

Let’s take a look at the three main types of WMS available today.

Third-Party WMS

Also referred to as an on-premise or standalone warehouse management system, a third-party WMS is just what it sounds like: A system developed by a third-party company that focuses solely on all things warehouse management.

Typically, a third-party WMS includes both proprietary hardware and software — meaning you must use the provided hardware in order to run the company’s software.

The main benefit of using a third-party WMS is that, since these systems are focused solely on warehouse management operations, you can be quite sure they will provide the functionality and value you’re looking for in such a solution. Moreover, since the overall system is proprietary in nature, the provider of a third-party WMS will ensure you’re able to use their solution to its highest capacity.

On the downside, you’ll need to invest in both the proprietary software and hardware from the get-go.

There’s also no guarantee that you’ll be able to easily integrate your third-party WMS of choice with your other digital systems (e.g., CMS, accounting tools, etc.).

Finally, you may need to update both software and hardware as time goes on — which will add to the total cost of ownership.

Cloud-Based WMS

In contrast to on-premise WMS solutions, cloud-based warehouse management systems operate through the SaaS model.

This means that you won’t need to use proprietary hardware to run the software — and you’ll be able to access it on any modern device (from desktops and laptops to mobile devices and tablets).

A cloud-based WMS can be the perfect solution for growing companies looking to integrate their WMS with their other digital tools and software. Since you won’t be using proprietary software, you’ll typically be able to sync your WMS data with that of your other tools:

As a cloud-based inventory and order management system, QuickBooks Commerce provides numerous integrations and benefits that work in conjunction with WMSs:

• Stocktake app to audit inventory on hand
• Stock transfer documentation between warehouses
• Bin locations so your staff knows exactly where to pick items
• Pickpack app that to pick items and pack orders at various locations
• Reorder points and safety stock warning at the variant level by warehouse
• Purchase order receiving app to ensure that intake counts are correct
• 3PL exporter to automate CSV export of orders and fulfilments for uploading
• Integration with shipping providers to cater to the last leg of operations

Another key benefit of using a cloud-based WMS is that they typically allow for scalability as your company grows. While you may opt for a lower tier of service to get your warehouse operations up and running, you’ll easily be able to upgrade to a more robust service as you need to do so.

Unlike with on-premise solutions, this won’t require that you upgrade your hardware or take any extra steps other than simply paying for an upgraded service.

Along this same line, cloud-based WMS providers update their software on a regular and frequent basis. This ensures that you’re always privy to the best service your provider has to offer — and that your software remains free of glitches, bugs, and security-related concerns.

ERP Software

Many enterprise resource planning tools offer WMS services as part of their overall software package in addition to other tools, such as:

• Customer relationship management software
• Human resources tools
• Accounting services

The main advantage of using an ERP-based WMS tool is that you’ll easily be able to integrate and sync data between all tools within the suite. This will ensure that all information presented within any of these platforms is accurate, up to date, and consistent across the board. 

In that same vein, this synchronization will help you consolidate operations into one overarching tool. In other words, you won’t need to spend countless hours inputting the same data into each separate platform — it will automatically be done for you after you’ve input the data a single time.

That said, the main issue with opting for an ERP-based warehouse management system is that it’s inherently not a dedicated WMS, but more of a jack-of-all-trades. While this doesn’t necessarily mean that such solutions aren’t valuable, you’re likely to get much more out of a dedicated WMS solution, such as the ones we mentioned above.

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