What is a WMS? How a warehouse management system works

A WMS (warehouse management system) is a system that keeps track of everything that happens in a warehouse. It follows goods from the moment they arrive until they’re picked, packed and shipped to the customer. A good WMS knows where every item is. It also tells your team what to do next, and in what order.

In this article, we walk through how a WMS works and how it differs from an ERP. We also cover how to tell when it’s time to get one.

What does a WMS do?

In many warehouses without system support, the know-how lives in the heads of the people who work there. That works for a while. It stops working when orders pick up, when new people join, or when the person who “knows where everything is” goes on vacation. Or quits.

A WMS moves that knowledge into the system. Your team scans items and locations with a handheld scanner or a mobile device, and every movement is recorded. The system always knows what’s where, and it uses that to plan the work.

How a WMS works, step by step

Most warehouse management systems cover the whole journey through the warehouse:

• Receiving. You receive goods against a purchase order. The system knows what’s supposed to arrive, so you see right away if something is missing or wrong.
• Put-away. The system suggests where each item should go. A fast-moving item ends up close to packing. If the pick location is full, the rest goes to buffer stock.
• Stock levels and inventory counts. Stock levels update every time an item moves. With cycle counts, you can often skip shutting the warehouse down for a big annual stocktake.
• Picking. The system creates pick lists and decides how orders should be picked. In batch picking, one picker takes several orders on the same round. In zone picking, each person has their own part of the warehouse.
• Packing and shipping. The order is checked, packed and labeled for shipping. The right item goes in the right box and makes the carrier’s cut-off.
• Returns. You receive and inspect returns. Then the item goes back into stock or gets sorted out.

The system also collects data. You can see how many order lines are picked per hour, where queues build up and which items aren’t selling. Those numbers help you make decisions and run the warehouse day to day. They also help with bigger decisions, like whether to change your layout.

What’s the difference between a WMS and an ERP?

An ERP (enterprise resource planning system) keeps track of finance, purchasing, sales and customers. Many ERPs include a basic inventory module that’s plenty for a small warehouse. It knows how many of an item you have.

A WMS knows more than that. It knows where the item is and who should pick it. It also knows in what order that should happen, and how it affects the rest of the day’s orders. An ERP shows what has happened. A WMS steers what happens next.

Usually the two systems work together. The ERP keeps track of orders and items, and the WMS runs the warehouse. Orders come in from the ERP or the webshop, and the WMS reports back what has shipped.

Types of WMS

• Cloud-based WMS. The vendor runs the system, and you use it in your web browser and on your mobile device. It updates automatically, and you don’t need your own servers.
• On-premise WMS. The system runs on your own servers. You have full control but handle operations yourself, and every upgrade often becomes a project of its own.
• Inventory module in your ERP. A good start, but it can’t do as much. It fits when the warehouse is simple and you have few orders.

Also think about what kind of warehouse the system was built for. Many older warehouse management systems were built to ship big pallets to a few customers. E-commerce is a different world. You have lots of small orders and tight cut-offs, and customers want their package the next day. So ask what kind of warehouse the system was built for.

Signs your warehouse has outgrown its system

There’s nothing wrong with getting by without a WMS. A small warehouse with few items often does fine with the ERP module and good routines.

But when it’s time, a few of these signs tend to show up:

• Picking errors and double shipping are costing you a lot of money.
• New hires need several weeks before they can work on their own.
• Stock levels in the system don’t match what’s on the shelf.
• Orders miss cut-off even though everyone is running.
• You want to start automating, for example with AutoStore or conveyors, and need a system that steers it.

If you recognize two or more, it’s time to take a closer look at what system support you’ll need. You can start on the basics now, whatever system you use. Label your locations clearly, run an ABC analysis of your range and scan every time an item moves. It makes everyday work easier and a future system change smoother.

What to look for when choosing a WMS

• How easy it is to learn. If the system needs long training sessions, that’s a problem every time you hire, or bring in extra staff for peak season.
• How it plans. Does it just show lists? Or does it prioritize orders by cut-off and assign the work for you?
• Integrations. Are there ready-made integrations for your ERP, your webshop and your carriers?
• Automation. Can the system steer both robots and manual picking as you grow?
• Implementation. How long does a project take, and how much of the work do you want to do yourself?

How Bitlog WMS works

Bitlog WMS is a cloud-native WMS for companies that own and run their own warehouse. It keeps track of stock levels. But its most important job is planning the day so the right orders are ready on time.

• Autopilot plans the day. Every few minutes, Autopilot goes through all open orders and redoes the plan when something changes. Orders with the closest cut-off go first. If a rush order comes in midday, it lands in the right spot in the queue. Nobody has to reshuffle lists by hand.

• New team members are up and running in 15 minutes. Pickers see on their mobile device what to pick and where it is. It takes about a quarter of an hour to learn. That gets new hires and extra peak-season staff working fast.

• Manual picking and robots in one flow. If you run automation like AutoStore or conveyors, Bitlog WMS steers both the robots and manual picking. With Relay Picking, the order moves from zone to zone until it’s complete. With Picking Route Optimization, pickers walk up to 30% less.

• Your ERP stays. Your ERP is still the system of record for orders and items. Bitlog WMS runs the warehouse. There are ready-made integrations with Visma.net, Visma NXT and Visma Business, among others. Bitlog WMS also works on top of Microsoft Business Central.

• Live in weeks. Implementation takes about 5 weeks of work. You set the pace, so the warehouse can keep running as usual in the meantime. Plan for 5 to 12 weeks, depending on how fast you want to move.

• How it went for Apohem. Apohem set a goal of picking 100 order lines per hour within a year. They hit it in four months and now pick 45% above their picking target on average.

WMS FAQ

What does WMS stand for?
Warehouse management system. It’s the system that steers the work in the warehouse, from receiving to shipping.

Do I need a WMS if I already have an ERP?
Not always. For a simple warehouse, the ERP’s inventory module is often enough. But when you get more orders, more items or more people, you need a system that steers the work, not just one that tracks stock levels.

Can a WMS steer robots and other automation?
Yes, if it’s built for it. A WMS can distribute orders between robots like AutoStore and manual picking, so everything runs in one flow.

Want to see how it would work in your warehouse? Book a demo, and we’ll walk through your flow together.