Tips for Choosing the Best Warehouse Management System

What features and capabilities should you look for when choosing a warehouse management system? And what red flags should you watch out for?

This guide will give you a clear understanding of the must-have WMS features and what support you should expect from a vendor.

We’ll explain the different WMS deployment models, how to avoid post-implementation challenges and a six-step framework for choosing the right warehouse management system.

A warehouse management system (WMS) is software that helps eCommerce, third-party logistics providers (3PL) and wholesalers manage and optimise warehouse operations. 

They’re built to automate manual tasks, provide better inventory control and offer end-to-end visibility of fulfilment processes.

Core WMS capabilities

The key business areas WMS software helps with include:

Inventory: Allows you to manage and track goods to ensure you store the right amount

Orders: Streamlines picking, packing and shipping to fulfil orders faster with less errors  

Labour: Automatically allocates orders to staff or batches them together to improve efficiency

Analytics: Real-time dashboards help you track warehouse KPIs and metrics.

Why choosing the right warehouse management system matters

Not all WMS warehouse software​ was created equal. Here are three outcomes the best warehouse management systems offer:

Cost-efficiency: Features to automate time-consuming tasks, streamline stock counts and enhance space utilisation
 
Improved customer service: Improves picking accuracy via use of barcode scanners to help prevent returns

Scalability: A cloud-based WMS can handle increased workloads and multiple warehouses as your business grows. 

Here are the key capabilities specific types of businesses should prioritise in a system for warehouse management:

3PL and multi-client operations

Inventory management: Provides real-time view of stock, allows you to set low stock notifications and use stock control methods

Invoicing: You can set chargeable rates for storage, handling, picking, rework and shipping, and easily raise client invoices based on activities in the system

Client portal: Customers can view their stock, orders and invoicing to minimise their queries

Automation: Streamlines tasks like order validation, stock allocation, order batching and raising shipping labels

Integrations: Connects with customers’ eCommerce sales channels and inventory management software, as well as courier platforms.

eCommerce D2C with high order volume

Order management: Connects with eCommerce sales channels to receive order information, removing the need to log into multiple platforms

Real-time insights: You can track order volumes and inventory levels as stock is allocated and orders are shipped

Automation: Eliminates manual tasks by automating order validation, courier selection, order batching and pick list creation

Traceability: Provides a record of stock attributes as they move through your warehouse.

SMB upgrading from spreadsheets or legacy tools

End-to-end visibility: You can monitor your entire fulfilment process in real-time in a single dashboard

Automation: Eliminates repetitive tasks and the need to transfer data between systems

Cloud-based: Provides anywhere, anytime access, with hosting and updates fully managed by the vendor

Intuitive: It’s easy to use and therefore will help staff embrace the system.

The deployment model of a WMS determines how it’s hosted, managed and purchased. They include:

On-premise or server-based

These systems are hosted on hardware at your premises. They require external IT help to maintain the system and apply feature or security updates.

There’s the risk of downtime if software issues arise. You won’t have a software vendor on hand to rectify them. Connecting to third-party platforms requires costly, customised integrations.

Cloud-based

Cloud-based software is accessible in your web browser on any device. It’s hosted and maintained by your vendor, who manages all feature and security updates.
 
They provide seamless integrations with marketplace, courier and shipping platforms as well as software like an ERP, and offer cost-efficient monthly or annual subscriptions.

Bespoke or custom

This is when your system for warehouse management is set up with features and integrations specific to your business’s needs.

While customised software can better fit your workflows, it requires a longer planning and implementation process and is far more costly.

Let’s look at the evaluation criteria when comparing WMS warehouse software solutions:

Workflow fit across receiving → picking → shipping

Your warehouse management system software must allow you to optimise the way your team operates across the fulfilment process with features like:

Integrations

Look for a WMS that integrates with marketplaces, courier and shipping apps as well as systems like an ERP.

Prioritise a solution with native connectivity to apps like Shopify and Amazon and or an API (application programming interface) to connect to third-party platforms.

Scalability and peak-season performance

You don’t want a system that lags or crashes when processing increased workloads. Ensure you ask sales reps about any limitations with adding more users or data.

Because they’re hosted by the vendor, cloud-based solutions offer enhanced scalability that allows it to work reliably as business demands grow.  

Usability, training and support

One way to help your team embrace a new system is to choose one that’s easy to use and backed by vendor support.

The free trial is when you can get a feel for how intuitive it is. During product demos, ask the sales rep to explain vendor support offered.

Security, compliance and data residency

Because on-premise systems store data on your local server, security falls upon you. With a cloud-based system, your data is hosted in a secure cloud environment managed by your vendor, protected by strong encryption.

Find out where your data is hosted, as some vendors may host your data overseas. Cloud-based systems also offer security like two-factor authentication and role-based permissions.  

Vendor viability and roadmap alignment

It’s worth researching the financial position of a vendor, as this can determine if they invest in Australian staff. Local support will mean quicker fixes for issues.

It’s also a good idea because stronger financial performance means more investment in system updates. Ask sales reps if they have a roadmap for system development.

Here’s the recommended path to take when comparing systems and getting management buy-in:

1. Map your requirements by process

What processes could be improved and what’s your team struggling with? Are there KPIs you want to improve?

Assess these across each area of your operations; receiving and stock control, picking and packing, and shipping. Ask your team what they need in a system.

List the must-have and nice-to-have capabilities a WMS needs to take your business to the next level.  

2. Shortlist candidates and run demos with your scenarios

Scour WMS vendor websites for brochures, datasheets and videos. Visit software comparison sites to see what independent reviewers and users are saying. Tap your network to ask their honest opinions. Sign up for free trials and demos.

Demos help you unearth capabilities that may not be apparent online. Tell the sales rep about the warehouse scenarios that are challenging your team, and ask how the system can help.

Ask about the limitations of a system; you don’t want to discover them after you’ve signed on the dotted line. It’s also a good idea to ask about the support a vendor offers.

3. Validate references and implementation approach

Ask vendors to provide contact details of current clients. Ideally, referees should be from businesses similar to yours and actual users of the warehouse management system software.

You could also ask them:

• What are its best and worst features?
• Have there been any performance issues?  
• Were there challenges with your team’s uptake of the system?
• Was it difficult to connect to other platforms?
• Were there any unexpected issues or costs?
• Would you select the system and [vendor] again?

4. Understand the vendor’s implementation approach

Ask your vendor about the implementation and onboarding process, including:

• Do you have a plan with clear timelines?
• What kind of human support will you provide?
• Will you handle our data migration, and what’s the process?  
• How will my staff interact with your implementation team?
• What training will be provided?
• What support resources will you provide?

5. Model TCO, ROI and identify key risks

To understand your long-term software investment, you can calculate the total cost of ownership (TCO) for a specific period. With this figure, you can then calculate your system return on investment (ROI). We’ll show you how to calculate these in the next section.

Clearly outline the risks of implementing your system, like the data migration or integration failures. Formulate mitigation strategies to handle these scenarios.

6. Decide with stakeholder sign-off

Create a business case that includes your risk analysis as well as your TCO and ROI models.

If possible, run a pilot where you roll out your system within a specific area of your warehouse, so you can test the data migration process, how the system functions, integrations and user experience. A successful pilot will help you secure executive buy-in. 

Calculating total cost of ownership (TCO)

This calculation factors in:

Upfront costs: Software licences, setup fees, hardware and implementation fees

Ongoing costs: Recurring subscriptions, technical support, maintenance, vendor training and labour costs of internal IT staff who administer the system

Hidden costs: Staff costs related to internal training, migrating data and customising the system.  

You can calculate TCO for a specific period, for example five years, using this formula:

TCO = Upfront costs + ongoing costs + hidden costs

Calculating return on investment (ROI)

This requires you to put a dollar value on your system’s benefits. This could be reduced labour costs due to automation or an increased revenue due to enhanced efficiency.

Calculate ROI for a specific period with this formula:

TCO = (Benefits - TCO) / TCO

Calculating your payback period 

This shows how long it will take for the system’s benefits to equal its total cost. The formula to find out how many years this will take is:

Payback period = Upfront investment / annual net benefit

Typical benefit drivers

Here are the benefits you can place a dollar value on:

Accuracy: Automation to avoid error-prone data entry as well as use of barcode scanners to help avoid returns

Labour: Your team spends less time working thanks to automation, optimised receiving workflows and enhanced picking routes

Space: Location management capabilities help you store more stock

Throughput: All these capabilities help you process more orders faster.

Integration complexity and hidden costs

If you don’t check how easy it is for a system to integrate with third-party platforms, you’ll pay the price later. Some platforms require costly custom integrations that can set you back thousands.

It’s critical to prioritise systems with API connectivity and native integrations with marketplace, courier and shipping platforms.

Over-customisation leading to technical debt

Choosing a system requiring many customisations to suit your workflows could see you in a sticky situation.

Customisations to a system’s core code could be overwritten by future vendor upgrades. This means you must skip the upgrade (and risk security or performance issues) or incur the huge cost of getting your vendor to apply the custom code to the new version of the system. 
Instead of changing the system’s code, see what you can configure within its bounds.

Vendor lock-in; weak exit terms

Before you sign on the dotted line, look into the finer details of how difficult it is to switch to another vendor’s system. Some vendors make it hard to migrate data to another platform, or make you pay a huge sum to do so.

Change-management and adoption risks

If your team isn’t brought into the process of choosing a system, and you end up selecting one that doesn’t meet their needs, their uptake of it may be poor. Get them involved early and ensure they get the training they need.

Trusted by over 600 eCommerce and 3PL businesses, Access Mintsoft delivers the powerful automation and visibility you need to run a more efficient warehouse.  

Watch our 4-minute video tour to explore Mintsoft’s features or book a demo with our team today.