Warehouse Management Systems (WMS): The ultimate e-commerce warehouse orchestrator

Every successful business department needs an orchestrator to manage day-to-day operations, identify pinch points, and contribute to the overall operation. The warehouse is no different. As one of the most important aspects of a broader e-commerce supply chain operation, it needs the right blend of people, processes and technology to run smoothly.

In most cases, warehouse management systems (WMS) fulfill the technology requirement by providing everything from real-time inventory visibility to streamlined order fulfillment to optimized resource allocation. And because many WMS vendors have kept in lock step with the warehouse automation and robotics trend, their platforms generally either support, or integrate well with, these new advancements as they’re being deployed on the DC floor.

“It’s both interesting and encouraging to see how the WMS’ ‘central conductor’ role continues to evolve in response to changes that are happening within the fulfillment operations themselves,” says Amarendra Phadke, CTO at Capgemini Engineering. “For example, the modern WMS can now handle very complex routing and logistics processes, and in some cases it’s also managing the reverse logistics process.”

Supporting the busy e-commerce environment

Warehouse management systems hold the top stop as the most-used supply chain management application in the modern warehousing and distribution environment.

According to a recent reader survey conducted by Peerless Research Group (PRG) on behalf of sister publication Modern Materials Handling, about 58% of companies are using these platforms to manage their operations. And, 25% of companies that aren’t already using WMS expect to add the application to their supply chain software stacks within the next two years.

According to the results, operations adopt WMS for varying reasons. This year, for example, the need for real-time control (48% of readers say this is their primary impetus); adaptation to new picking requirements (44%); better labor management (36%); and upgrades of existing packaging requirements (36%) rank as the biggest drivers of this software investment.

The busy e-commerce fulfillment arena is especially fertile ground for a modern WMS, which these days is usually delivered via the Cloud. Here are five trends that support the notion WMS is—and will continue to be—a critical part of any supply chain operator’s technology portfolio.

1. Hooks into popular e-commerce storefronts

Digital storefronts are booming, and e-commerce platforms like Shopify, BigCommerce, and WooCommerce help sellers reach and transact with their global customers.

These platforms handle the front end—showcasing products, processing orders—and an integrated WMS steps in to track inventory and orchestrate the order picking and packing process. When these two critical systems share data in real-time, for example, accuracy goes up and stockouts go down.

Phadke says the seamless sharing of data between WMS and e-commerce platforms has become extremely important for online sellers. “These functions were previously handled by other systems,” he says, “but now WMS is taking center stage in the process in order to ensure good inbound and outbound order flow.”

The platform also monitors inventory levels in specific facilities, which in turn helps ensure that the “available quantities” that consumers see are in fact accurate. This helps boost customer service levels and reduces the need for costly, space-hogging safety stock.

“Gone are the days when companies had to wait a day or longer to get accurate inventory data,” says Phadke. “WMS provides that information in close to real-time to the point where companies can confidently generate shipping dates at the time of order processing.”

2.Gets the job done better, faster, and cheaper 

E-commerce companies are focused on speed and efficiency—two things that ensure that orders get out the door on time and that customers’ delivery expectations are met. These are crucial metrics in an era where B2C customers in particular expect lightning-fast, dependable deliveries—and by lightning-fast we mean same-day or
next-day, in most cases.

To meet those expectations, companies need software that provides inventory invisibility as close to real-time as possible. They also need advanced analytics, artificial intelligence (AI) and other tools to help create a tighter correlation between demand planning and slotting optimization. These are both areas where the modern WMS shines.

“The WMS helps companies fulfill orders at a much faster pace, again, depending on their current online and omnichannel sales,” says Phadke. “The software dramatically reduces the time it takes from order receipt to shipment, and helps companies get things done faster, better and cheaper.”

3. Positioned to leverage the power of AI and ML

WMS vendors are looking for ways to inject AI and machine learning (ML) into their platforms. Although, Howard Turner, director of supply chain systems at St. Onge Co., says that we’re still in the early stages of this trend.

“For now, at least, AI and ML usage in WMS seems to be somewhat theoretical and showing up on product roadmaps,” says Turner. “I’m not aware of any actual applications yet, but we do hear vendors talking about future capabilities in these areas.”

When those visions do become reality, e-commerce companies will be perfect candidates to start taking advantage of those extended WMS capabilities. Generative AI (Gen AI) will also come into focus at that point by helping to optimize facility layouts and more accurately predict demand. This intelligent automation can also help businesses to make more informed, data-driven decisions in the fast-paced e-commerce fulfillment world.

Turner says that AI and ML can also help companies sift quickly through their data overload and make better sense of the information that many of them are drowning in. Where a WMS dashboard may show how many trucks and pallets are arriving or leaving the DC on a specific day, for example, AI can do its part by answering questions like “how many orders do we need to process on this shift” and “how ahead or behind are we right now in meeting that goal?”

Enabled by AI, the WMS can help identify the critical information someone needs to focus on at this given moment in time, or provide an easily-digestible summary of data. Warehouse managers can then use those insights to identify patterns, see what’s happening in their operation and “really boil that down to the most critical components,” says Turner, “versus having to comb through all of the tables and charts that are being displayed on the dashboard.”

4. Adaptable technical architectures that don’t require extensive coding

The days when companies were relegated to adopting monolithic, standalone software systems are long gone. Those systems—WMS included—typically required a lot of customizations and other steps that only their makers could handle.

Today’s technical architectures are modular and cloud-based, allowing for greater flexibility and integration. That means companies can seamlessly connect best-of-breed solutions, creating a tailored technology ecosystem that meets their unique operational needs and scales with their growth.

Software vendors are also using more microservices and low- or no-code architectures, both of which allow users to customize and extend their software’s functionality without the need for deep programming expertise.

Dwight Klappich, research vice president at Gartner, Inc., says some of the demand for simplified technical architectures is coming from the customers themselves. “They’re getting more sophisticated in the way they’re looking at the technical architectures,” says Klappich.

For example, companies are not just looking for a “cloud-first” software deployment approach; they also want to be able to run any application in the cloud. “The cloud is a host, but what companies are really asking for are multi-tenant cloud, composable, technical architectures,” says Klappich, who is also seeing higher demand for extensible, adaptable WMS platforms.

And while WMS has always been customizable, companies like Microsoft, Oracle and Infor are now offering a more robust set of tools that their customers can use. “You see a lot more low-code, no-code, and pro-code approaches being used,” Klappich says, “and a bigger focus on architectures that accommodate change without requiring extensive coding.”

5. Soon the software will be learning as it goes

WMS vendors may be in the early stages of adding more AI and ML to their development recipes, but if history is any indicator, it won’t be long before warehouse operators have these tools right at their fingertips.

After all, AI as a commercialized concept has caught on like wildfire, and the WMS space isn’t one to rest on its laurels.

Looking ahead, Turner envisions a time when WMS platforms tap into the power of AI and ML to “learn as they go.” That means they’ll not only be able to assess the data that’s right in front of them and help turn it into actionable insights, but they’ll also get a feel for the operations they support and play a more integrated role in their success.

If this all sounds a little too “science fiction” for the business world, think again. Gen AI will likely play an important role in this scenario as it can process vast amounts of unstructured data (historical weather patterns, social media trends) to further refine demand forecasting, proactively adjust operations and optimize resource allocation.

“Some vendors are talking about using software to pick up on trends, help companies react to changing business conditions and recommend a course of action to decision makers,” says Turner. Take visibility of inventory in transit, for example. The initial instinct may be to ship out an incomplete order even if the missing items are arriving at the warehouse that afternoon.

Under the right circumstances (e.g., a non-urgent order), holding that order and shipping it later the same afternoon is the smarter decision. However, this pivot typically requires human intervention and research.

“It’s not hard to accomplish, but someone does need to have the foresight to say, ‘Oh, I see these orders are pending for certain items that we don’t have in stock, so let me check our in-transit deliveries,’ for every incomplete order,” Turner explains. “Using AI and ML, a WMS would be able to automate that process and recommend that the orders be held for a couple of hours.”