Why WMS is the Solution for Better Inventory Control

9 October 2021

The warehouse management system helps monitor processes, control incoming and outgoing products, inventories, and information exchange with other sectors of the company.

Every logistics manager faces the challenge of ensuring control over their inventory. And this is not an easy task, after all, it is necessary to have high monitoring of everything that enters and exits the warehouse, as well as monitor internal processes and maintain good communication with other company sectors, such as Purchasing and Sales. In previous posts, we talked about the causes of warehouse problems and their consequences, and presented 10 tips to improve logistics management . In this text, we will show how WMS can be a great ally to achieve greater inventory control, as the system automates processes and centralizes information, allowing total monitoring of everything that happens inside the warehouse.

As writer Arthur C. Clarke stated, “Any sufficiently advanced technology is indistinguishable from magic.” What a WMS does for a distribution center seems like a trick. Companies that previously lost significant amounts due to lack of inventory control and implemented WMS have started to achieve accuracy levels close to 100%. And this means various gains, as inefficient inventory control causes a series of problems such as: excess stock or risk of stockouts, losses that often go unnoticed, and high operating costs. That’s why the best Supply Chain Leaders already use a WMS, being a benchmark in the business world.

What is a WMS?

The acronym WMS stands for Warehouse Management System. It is software developed to offer solutions that optimize operational processes within a logistics center with relative cost reduction. The WMS is not just a system for inventory control. The technology offers a series of features that benefit entire management, treating it as if it were a production line, where all steps are important to achieve the final goal, in this case, the availability of goods and services in the right quantity, at the right time, and in the right place.

The WMS is present from product receipt, through routing and storage, to shipment and supply of the production line. Its mission is to ensure that processes occur in an organized manner and with the best use of warehouse resources (people, equipment, and area).

When the product arrives at the warehouse or when an order is fulfilled, the WMS manages all activities related to the product itself, whether it is storage or sorting/shipping. All these processes are recorded with the appropriate tools, allowing full control of what happens inside the warehouse. This includes information on how many products arrived from the supplier, how many were sold, where they are allocated, stock levels, movements made, among other essential data to ensure excellent logistics management.

How does WMS effectively help inventory control?

This is an important question and can be answered simply: by allowing complete monitoring of product movements, recording all processes carried out, the WMS allows the manager to have the right information on stock.

This means that with a WMS, the inventory accuracy index, which measures how much the physical inventory matches the inventory in the system, tends to be close to 100%. In the following paragraphs, we will detail some software features that guarantee this result:

Cyclical Inventory

Many companies choose to inventory only once a year, which can be risky as any gaps will only be noticed at the end of the annual survey. With WMS, it is possible to perform cyclical counts while the company is operating. This is one of the major recommendations from logistics specialists: that companies periodically inventory, as the higher the frequency of counts, the greater the chance of finding the cause of stock disparities, losses, and movement and operation errors.

Moreover, in the case of WMS, since the inventory is carried out in an automated manner, with the help of records made at entry, storage, and exit, the system can also help reduce human error in counting.

A study conducted by the Department of Production Engineering at the Federal University of São Carlos showed how WMS was essential to increase the company’s accuracy. They evaluated a multinational automotive company that implemented WMS and increased inventory reliability from 87% to 98%, with prospects of reaching 99% the following year. With the use of software and full-time cycle counting, divergences were reduced by over 96%.

Another advantage of WMS is that the system can offer different inventory models (geographic, product, sampling, among others) ideal for both monitoring warehouse movements and routine quality controls.

Integration with ERP

The exchange of information between the Purchasing, Sales, and Logistics teams is essential. Therefore, it is important for the warehouse to have a system integrated with ERP. With WMS, this is possible, forming a cohesive process that starts in the ERP, passes through the WMS, and returns to the ERP again.

In fact, WMS and ERP continuously exchange information about what has entered the warehouse, what has been picked, what has been billed, and what has been delivered. This way, the sectors responsible for purchasing goods for replenishment will know exactly when each item needs to be purchased, maintaining the ideal stock level. Additionally, the sales team will always have updated information on how many products are available for sale. And, most importantly, warehouse managers will know exactly where their stocks are.

Registration and Security

Since the WMS generates a series of operations to be performed in the warehouse for each individual operator, all activities are recorded in the system. With this, it is possible to know who performed each action, which ensures much more security.

Registration and security mean greater stock control, as they prevent losses and misplacements and, when they occur, allow for quick identification of the causes/responsibles and the correction of failures.

Verification and Traceability

Inventory control also benefits from the traceability offered by the WMS. With the system, all products are checked upon entry, and a blind check can also be performed, where the operator checks the items without knowing what is on the invoice. This way, stock accuracy is increased as what is in the physical stock is subsequently correlated with what is in the system, allowing the detection of any failures and necessary adjustments.

Another feature of WMS is the traceability of items. This is done by scanning the barcode and checking important data such as batch, expiration date, or IMEI. All information is recorded in the system as soon as a product enters the warehouse. This way, it is possible to control damage and monitor exactly where a particular product is: if it is stored, if it has already left, if it has been shipped, and the destination location. Additionally, if there are expired products in the warehouse, the system also reports this information. Remember that the software follows FIFO and FEFO parameters.