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Top 5 reasons to order WMS integration with other information systems in 2020

Why WMS integration with other systems speeds up logistics, reduces errors, and improves service.

  • Top 5 tasks solved by WMS integration with other IT systems in 2020
  • 1. Outperform competitors on service
  • 2. Enter e-Commerce and become an attractive fulfillment operator
  • 3. Eliminate human error

January 21, 2020 Logistics companies lose money and miss out on multimillion-dollar gains when they delay integrating their WMS with SAP, 1C, access control systems, and other systems. What should they do? Outperform competitors on service Enter e-Commerce and become an attractive fulfillment operator Eliminate human error Ensure the security of inventory assets Support internal reforms and business process changes Reading time: 7 min.

WMS (warehouse management system) is an information system that automates the management of business processes in warehouses, from receiving and putaway to storage, picking, and returns. The minimal "must-have" set of WMS functions that is now found in any warehouse with an area of 1,000-10,000 m2 includes the following components.

Automatic identification Product data is encoded and applied to packaging and containers as a barcode or RFID tag label, and reading is performed using radio terminals.

Location-based storage Each storage bin in the warehouse is assigned its own code with its "address" (storage zone, rack number, section number, shelf number, etc.), and each item is also assigned its own "address" when it arrives.

Optimization of consolidated cargo picking processes The program suggests the shortest route the picker should take to quickly collect all inventory assets for shipment.

Product accounting Inventory counts, handling defects and returns. For major logistics providers with warehouses larger than 10,000 m2, this is not enough: they need to integrate their WMS with other information systems, both internal (conveyor management system, access control system, etc.) and external (clients' IT systems - merchants - and executors - delivery services, freight forwarding companies, etc.).

Such companies already have WMS in place (in some cases not just one, but three or more), but the issue of connecting it with other information systems is usually still unresolved. How critical is it to order the development of such integrations today? What benefits do logistics teams miss when they put off the development of comprehensive IT solutions? Let us look in more detail at the main benefits of integrating WMS with other information systems for large logistics companies.

2. Enter e-Commerce and become an attractive fulfillment operator

According to PricewaterhouseCoopers, digitalization is the main trend in the transport and logistics industry.

Commerce is moving online more and more, and logistics for e-Commerce has its own specifics (high demands on last-mile service, single-item orders, fast delivery anytime and anywhere). The company that adapts its processes best to these requirements will gain access to a market that could grow 2.5 times over the next five years.

Industry leaders are already integrating their WMS with delivery services, gaining a competitive advantage: you need to catch this train in 2020 so it does not become painfully regretful five years later, or maybe even sooner.

Which technologies should be used in development?

If most logistics service customers use Magento CMS, then it is also convenient for logistics providers to use Magento when working with them.

That way, they can simply duplicate orders from online stores into this system and then process them on their side.

Magento's advantage is that it is specifically optimized for e-commerce. With it, it is convenient to create a single external gateway through which you can receive orders from many e-Commerce partners and integrate this system with your WMS once, instead of carrying out expensive integrations every time a new merchant is added.

This significantly reduces the cost of connecting new partners to your warehouse.

Possible WMS integrations using Magento: integrations with product suppliers - WMS can be tailored for both a store and a marketplace, you can create your own marketplace and enable direct orders from the warehouse; integrations with LMS - Magento can collect information about orders and picking status and send the required data to the door-to-door delivery service; integrations with internal information systems (for example, a conveyor, sorter, and so on).

Depending on the task, it may be possible to use the out-of-the-box version of Magento with customization and module development, or to create unique microservices.

3. Eliminate human error

"Anything that can go wrong will go wrong." Murphy's Law If you follow the Poka-yoke philosophy ("error-proofing"), which originated at Toyota factories, you probably care about making business processes eliminate the very possibility of mistakes and oversights. With modern WMS, that is easy: you need to properly program the equipment employees use, or even remove part of the manual work from the workflow altogether by integrating WMS with the warehouse conveyor, print service, and so on.

In such conditions, it is impossible to mix anything up, lose anything, or forget something through carelessness.

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4. Ensure the security of inventory assets

  1. First, WMS can be integrated with access control and management systems to record all data on employee and vehicle movements in and out of the warehouse.

  2. Entry and exit control can be carried out not only with electronic passes, but also with biometric data (face, fingerprint) or using surveillance cameras.

  3. This prevents theft and helps quickly identify those responsible if theft does occur. Second, when a WMS is installed in the warehouse, employees less often count goods manually or do not count them at all, which minimizes the risk of errors or fraud during recounts and inventory checks.

  4. Operators are equipped with radio terminals or other barcode scanning devices, and instead of manual counting and check marks in a report, they simply bring the device to the barcode.

  5. Data from scanner sensors is sent immediately to the inventory accounting system, if integration is configured.

  6. This makes work faster and, most importantly, increases the reliability of the results.

5. Support internal reforms and business process changes

"The market supply [among carriers and freight forwarding companies] is very large, and the companies that win are those that can reduce transportation costs not by raising rates, but by optimizing business processes," explains expert Lyudmila Simonova, Partner at the research agency M.A.Research. "Such companies can grow by 50% a year even in a declining market: there are plenty of examples among major players." The success of WMS implementation and integration largely depends on how well business processes are organized.

Sometimes reforms in a company begin with a review of processes, and automation follows later. But more often, the start of WMS and other information system implementation acts like a spotlight, exposing the problem: chaos cannot be automated. For example, how are online orders processed in warehouses without connecting WMS with the IT systems of freight forwarding companies? The operator has to manually send all order data that needs to be delivered from the warehouse to the delivery service.

Usually, it looks like an Excel file or an electronic request in the LMS website's personal account. After that, the driver comes for the cargo with documents. There are many documents, and all of them are prepared, processed, and stored manually. Can you imagine how labor-intensive all these operations are in warehouses handling several million SKU per day? The system is sluggish and not scalable, yet these business processes can be successfully automated (we have extensive experience in this area), and unnecessary operations can be eliminated.

By the way, the way your IT contractor treats BPM (business process management) says a lot about its approach to quality. Does it analyze your current processes and suggest improvements? Or does it stay out of things and cobble something together from whatever is available? When working on complex system integrations, we follow the sequence below.

At the first stage, we audit the current solutions and optimize technical and business processes in line with the client company's objectives. We do this because we care about how the client builds the process chain; everything must be strictly functional and at the same time justified from the perspective of its business goals. The focus is the client's return from development.

The second stage is the actual software development

This includes work on creating the required modules, subsystems, components, services, user interfaces, and functional interfaces.

At the third stage, we prepare operational documentation. It will help the client begin using the implemented solutions.

Final stage

Training and certification for employees who will use our solutions. Read more about how we implemented a BPM system at kt.team and why we recommend it to others in our blog.

Conclusions

We have reviewed the five main reasons to implement WMS and integrate it with other information systems in the warehouses of large logistics companies. At first glance, all arguments are in favor.

But let us not forget an important condition that ruins half of such integrations. We wrote about this in one of our previous articles, "Impact Mapping, Unit Economics, and PDCA: Effective e-Commerce Development Management."

Until the client team, together with the developers, performs Impact Mapping - an analysis of how tasks align with business goals - and calculates the unit economics of all planned solutions, integration should not begin. We recommend paying special attention to this before ordering development. If you need advice on this topic, we are always ready to help.

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