Warehouse Management System

Definition:

A warehouse management system (WMS) is a software application designed to support and

optimize warehouse functionality and distribution center management. These systems facilitate
management in their daily planning, organizing, staffing, directing, and controlling the utilization
of available resources, to move and store materials into, within, and out of a warehouse, while
supporting staff in the performance of material movement and storage in and around a warehouse
( Extracted from: "What is a WMS" warehouse-management.com. Retrieved 2017-08-25).

Usage:

A warehouse management system is used as tool where manual processing of inventory cannot be
carried out in most efficient manner. To aid to the manual process, WMS is used which increases
the system efficiency, thus providing better customer satisfaction and enhanced work throughput.

WMS also helps in implementing the concepts of LIFO, FIFO etc. as per the inventory type. For
example, in a steel manufacturing organization, various products are used, some are used as raw
material and some are used as spares for maintenance of equipment. Metallic Spares are generally
greased coated and can be stored in open space and can be subjected to LIFO, whereas rubber
items need to be stored in cool and dry space as their self-life is less and thus needs to be
maintained under the FIFO system. WMS helps in distinguishing the product variants and thus is a
great tool for inventory management.

Apart from this, it can be used for storing the end products of a steel production units. A steel plant
handles varieties of end products of several grades and in the forms like plates, sheets and coils
being dimensionally different. The products when stored in the plant ware house needs to be
nomenclated in such a manner so that they can be identified easily and allocated to the customers
as per the requirement. WMA eases the stock-keeping of the products and maintaining the inventory
for faster product identification process in the warehouse thus increasing the On Time In Full (OTIF)
delivery percentage.

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Features:

To support the warehouse inventory operations and management, A WMS uses a database that
contains detail description of specification of the product elements which includes:

1. Unique stock keeping units (SKUs) which are also called product code. Thses codes or
SKU’s are generated by proving the specifications like element type, dimension,
Material of Construction (MOC) etc. In many cases case pack, part numner etc. are also
provided. The products have the codes such that thet can be searched by location with lot
code, manufacture date, etc. SKUs may include raw material, material in process,
finished goods, fabricated parts, assemblies, and etc.
2. Production Line/Stream: WMS database also provides the details like the stream or line
which produced a certain product. For example, a slab when denoted with a certain SKU
provides the data which includes, the furnace number that produced it, the heat number,
batch number, production date and year etc. Sometimes it also provides the line of
machine number that produced it.

In a steel making unit, various slabs are produced from a single heat, thus the SKU
provides the heat number, batch number and the production ID’s.

Production
Id's
Batch No.
Production
Heat Casting Id's
No.
Production
Batch No.
Id's

3. Warehouse storage locations: The WMS has a feature to provides the individual
product location number, its usage type like in-order stock, under inspection, finished

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 goods, Material-to-Avalability (MTA), Material-to-Order (MTO) etc., storage type
(pallet, case, coil), capacity or location size, restriction to storage on the basis of high
value materials, material of construction, flammable, hazardous, outdoor, etc.), etc.
4. Special Economic Zone (SEZ) warehouse storage: Some areas are declared as Special
Economic Zone and the products handled in those locations are coded separately so that
the can be identified easily. Such products are dealt in different warehouses located in
the SEZ area.

WMS daily management function includes:

WMS Function

Planning Organising Directing Controlling

1. Planning: It includes incoming, dock unloading and assigning locations to the goods as
per their MOC, dimension, usage rate, criticality etc.
2. Organizing: Once the locations are assigned, the prolducts are organized in the
warehouse location as per their SKU’s or product code. Generally similar kind of
products are kept in one single location. For example, fasteners are kept separately as per
their sizes and type (High Tension, Low Tension), bearing are kept separately as per the
bearing numbers.
3. Directing: This is the process to upload the documents pertaining to the products like the
test certificates, quality certificates, invoices, billing documents, etc. in the WMS system
so that same can be retrieved later when required.
4. Controlling: This is the most important feature which enables the management to control
and forecast the inventory and safety stock respectively. Overstocking and understocking

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 of inventory, both are a costly affair as it includes holding cost. Holding cost can be of
high proportion if inventory management is not carried out in a proper and planned
manner. This also includes the ABC analysis of products on the basis of:

Based on "Value &

Annual Consumption"

ABC Analysis Types

Based on "Product Lead Based on "Criticality of

Time" Usage"

(I) Value and Annual Consumption: For example,

 'A' items – High value, low consumption like Turbine Journal Bearings (20% of the items)
 'B' items – Average Value, frequent consumptions like ball bearing (30% of the items)
 'C' items – Low Value, High Consumption like High Tensile Bolts, Lubricants etc. (50% of the
items)

(II) Criticality of Uasge: For Example,

 'A' items – Highly Critical (20% of the items)

 'B' items – Less Critical (30% of the items)
 'C' items – Least Critical (50% of the items)

(III) Product Lead Time: For Example,

 'A' items – High lead time (Lead time > 1 Year)

 'B' items – Average Lead time (Lead time > 6 months)
 'C' items – Low Lead time (Lead time < 1 month)

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 Note: Different organization have different ways of segregating the products and carrying
out ABC Analysis. It depends mostly on the industry type and product type.

ABC analysis when integrated with problem solving technique like Pareto Analysis,
determines the vita few and useful many product ranges of the organization. It helps in
identifying the problems and its solution pertaining to inventory management. Also, it
helps in identifying the portion of the capital expenditure on various product/spares.

Conclusion:

Warehouse Management System can be a standalone system or part of a supply chain system
or module of an Enterprise Resource Planning (ERP) package (like Material Management
Module or MM Module of SAP). Depending upon the criticality of the function, product and
sophistication/ size of the organization, WMS can be a simple handwritten, excel sheet,
spreadsheet, or an organization based customized software, as the case may be. Proper usage
of the WMS not only helps in controlling the inventory but also minimizing the holding cost
pertaining to overstock of inventory in turn maximizing the profit.

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References:

[1] "What is a WMS". warehouse-management.com. Retrieved 2017-08-25.

[2] Manufacturing planning and control systems for supply chain management By Thomas E. Vollmann

[3] Lun, Lai, Cheng (2010) Shipping and Logistics Management, p. 158

[4] Purchasing and Supply Chain Management By Kenneth Lysons, Brian Farrington

[5] Best Practice in Inventory Management, by Tony Wild (2nd Ed., p. 40)

[6] Iovanella, A.: Vital few e trivial many, Il Punto, pp 10-13,July, 2017.

[7] Barbara Pawelek, Jozef Pociecha, Mateusz Baryla,ABC Anal-ysis in Corporate Bankruptcy Prediction,
Abstracts of the IFCS Conference,p 17, Tokyo,Japan,2017

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