What is a Warehouse Management System (WMS)?

What is a warehouse management system? A WMS (management system for warehouse) is a tool utilized to control, coordinate and optimize the movements, processes and operations of a warehouse.

Although the flow analysis and the decision on the type of location to use in the warehouse will determine the specific form and configuration of the management software, there are basic functions that are fundamental for any WMS to perform:

  • Management of goods received: Goods are received through the receipt process, during which there is close monitoring of the diversity, quantity, characteristics, and condition or quality of goods entering the warehouse and which, therefore, will become part of its stock. As a result, the information gathered is checked against the order received from the corporate ERP (Enterprise Resource Planning).
  • Management of locations in the pallet flow racks: It involves what are called location processes. These processes carry out orders for the placement of goods in the warehouse, determining their best position according to their type, characteristics, dimensions, etc. To do this, it uses previously specified rules and strategies.
  • Stock control: it is one of the most important tools in the WMS because it is used to obtain, in real-time, the status, quantity, and characteristics of stock stored in the warehouse.
  • Dispatch of goods: These processes create the orders sent to customers, transfers items to other warehouses, and returns them to suppliers. In short, they are responsible for the exit and removal of stock from the warehouse, through operations such as picking, issuing of complete containers, the consolidation of orders, and the dispatch of orders to the distribution vehicle.

The following contains a summary of the operations that must be performed by the WMS for each of these basic functions.


Path of a Warehouse Management System (WMS) with the different computerized and technological equipment


Example of the architecture of a warehouse management system.


Entry functions

Within this group there are three main operations that can be managed through the WMS: receipt, capturing logistical data, and labelling containers and goods.



In terms of receipts, items are at times received without pallets. These need to be consolidated into different containers once their characteristics and logistics attributes are registered, before being located in the warehouse.

Sometimes incoming goods are already palletized, which means there is no need for consolidation. It is only necessary to validate their logistics attributes and the quantity of goods received before locating them in the warehouse.

The third type of basic receipts is customer returns. While this is similar to the types of receipt mentioned above, it does involve specific features, such as applying statuses and blocks when the items enter the installation. These statuses and blocks can indicate, for example, the need to pass the items through quality control, wait for pending inspection, etc. Then, these must be located in the warehouse in specific areas established for this type of goods.


Data collection

The second main function when goods enter is to capture logistics data. These data include different information, such as the batch the load belongs, its best before date, weight, temperature, serial number, etc. Capturing these data during the reception process provides tracking of the stock.

Logistics attributes, such as the batch or serial number, tell us in hindsight which goods have been used by each specific client.


Labeling of goods

The third function for inflowing goods is complementary to the above. A WMS must be able to generate barcode labels for all containers and goods stored. Thanks to this, all processes and operations carried out within the warehouse are accurately validated by reading these codes, eliminating the possibility of errors or confusion that may occur when handling the goods.

A device reads the barcode and informs the WMS

Barcodes optimize the identification of pallets

Moreover, each item received can be labelled with a barcode so that later on outflowing warehouse processes are quicker and more efficient.

Receipt documentation can also be used to prepare reports that show the differences between the planned goods and those actually received, as well as other aspects, such as compliance with time slots for receiving goods.


The role of the WMS does not end with these activities. Through an interface, it transmits the receipt completion to the company’s ERP, stating the exact number of units that have entered the warehouse. The ERP can then carry out the administrative procedures with the suppliers.


Location functions

This type of operation involves three important processes: location through rules and strategies, cross-docking, and replenishment and consolidation.

Management of location through rules and strategies

The first of these processes finds the ideal location within the warehouse for a specific good. To determine this, the software takes into account parameters such as the rotation of items (A, B, or C), the types of containers used for the consolidation of goods, the families or types of products being handled, the hazardousness or incompatibility of different products so that they are not stored close to each other, the features and volume of items, etc.



The use of cross-docking reduces the number of movements of the load. If there is an open order but a lack of stock, when the relevant product arrives in the warehouse it is taken directly from the receipt area and housed in the order preparation area. Once the necessary items have been prepared for dispatch, the remainder are located within the warehouse.


Management of replenishment and consolidation tasks

The third function is also designed to reduce the movement of goods within the warehouse. As with cross-docking, it is applied before the load is placed in its final position. This function is carried out in centers with picking stations. If there is little of the product left over in these positions, the latter must be restocked with the goods that have just arrived, ensuring that there is sufficient stock to fulfill orders. After this operation, the remaining load is located in the warehouse.


Stock control functions

When managing the goods stored, the WMS must be able to provide complete and useful information about the stock. To do this, it uses several features.

  • The most intuitive of these is the display of the warehouse's layout. This provides access, on a screen, to a graphical representation of the installation showing each of the locations and their composition, both in terms of the containers and the goods themselves.
  • Location management is another tool that must be offered by a WMS. With this tool, the user can obtain and edit information about the positions, such as the type of location, the blocks applied, its dimensions, its characteristics, the storage areas it belongs, etc.
  • It must also be possible to manage the status of stock, in order to check and change data relating to quarantines, breakage, losses, blocks, reserves, etc. The WMS can also perform operations that help with stock management. One of these is the calculation of item rotation. Using movements over a specified period of time, the system can determine and report on the ideal rotation for an article and compare this with the relevant information in the article master. With this tool, the A B C rotation can be recalculated and the classification assigned to the item changed where this is considered more efficient or appropriate.
  • There is a final vital feature related to stock, which is their recount and inventory taking. With these programmable tasks, a recount and inventory can be taken of everything from the entire warehouse to a specific article, location, or particular area. Any discrepancies in stock are automatically reported to the ERP.


Exit functions

In addition to managing the receipt and location of goods, the management system also controls the dispatch of goods.

  • The main functions for this storage phase start with managing the preparation of the load leaving the warehouse. This includes grouping and assigning orders, among other things, and allows for control over how orders are filled and who is responsible for them: assigning dispatch docks, the operators to complete the preparation, the way of grouping orders and the time slot it occurs, etc.
  • As part of the preparation, the WMS can manage operations that need to be carried out, such as picking processes, at a very detailed level. In this regard, the system determines and guides the routes of personnel assigned to this task, as well as the presentation of items. One of the most important advantages of having a WMS control picking tasks is that the system is capable of optimizing the process, thus, it is completed in the shortest time possible. This is done using the least movements necessary, while simultaneously respecting the parameters specified by the ERP for the outgoing order.
  • Another part of preparing goods is the labelling of dispatches, through which packed orders are identified. The labelling process is also used on received items.
  • Likewise, outflowing items are recorded, which helps with the making of documents such as the packing list (list of articles included in the order), documentation for the transport company, and reports that show any sort of discrepancy.
  • After these operations, the WMS manages the process of loading dispatch bound goods onto the vehicles. Thanks to this function, the quality of the dispatch is controlled and errors such as sending material not requested by the customer is prevented.
  • The WMS can manage everything up to the final phase of the exit operations, such as communicating the final dispatch to the ERP through the bi-directional interface of the two systems. With this function, the company’s resource manager is informed of how many units of each item have been included in the dispatch, as well as which items are dispatched in each of the completed issue orders. With this information, the ERP can manage administrative processes with the customers.


Functions in complex warehouses

Sometimes, installations consist of interrelated areas or warehouses. For example, it may be necessary to manage an area of selective pallet racking, an AS/RS with stacker cranes, etc. There are endless combinations that can create highly complex centers. A single WMS must be able to manage all of these different types of area with different operations for the receipt, location, and dispatch processes.

  • The software must be capable of managing order preparation systems that use pick-to-light and put-to-light solutions. This type of installation helps provide greater fluidity and speed in order preparation.

Pick-to-light solution applied at the pharma industry

Pick-to-light solutions are very useful for pharmaceutical companies

  • Picking can also be streamlined through the use of other technology, such as voice picking. With this system (which must be managed by the WMS) the operator does not have to use their hands to operate the terminal or other controls, but receives orders over a voice system and gives verbal instructions through the same system. This allows for greater maneuverability with goods that must to be handled using both hands. This solution is excellent for frozen storage warehouses, since it allows communication without having to use the terminals while wearing gloves and speeds up work (where times are monitored) within the chambers.
  • The management system must also be able to manage the stackability of goods when preparing orders. This allows items to be prepared in an optimal manner following determined parameters. In other words, it is ensured that, for example, on a single pallet or in a single container the goods are prepared starting with the most solid and ending with the least solid.


Other functions

Depending on the warehouse and the company, there are another three functions that are essential for integrating the installations into the rest of the company or logistics center.

  1. The first is the management of the flows of goods (receipt and dispatch) to production lines. With this feature, the optimal flow of goods to or from the production or manufacturing lines is achieved, which obviously facilitates in-house processes.
  2. The second function relates to the administration of various warehouses with a single WMS (multi-warehouse management). With this feature, a company can manage all of its warehouses with a single global system and, as a result, optimize resources as well as IT systems. This also helps the processes of transferring goods between different warehouses.
  3. Thirdly, and at a higher level to the above, there is multi-organization management which, as the name suggests, means that various organizations can be managed by the same WMS.


A WMS can even manage various warehouses in an integrated, comprehensive manner

A WMS can even manage various warehouses in an integrated, comprehensive manner


Lastly, some projects require designs that are specifically adapted to the customer. Certain operations carried out by some companies may not be included a priori in the software, so specific development is required which takes the existing WMS as its starting point . As a result, the management system must be sufficiently versatile and open to allow for the programming of these customized features.

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