Warehouse management systems (WMS) integrate warehouse functions and provide greater inventory visibility, which can lead to more efficient warehouse operations. Organizations may wonder: What is the impact of investing in WMS? Does the data-intensive nature of WMS lead to higher costs? Do WMS provide a substantial return on investment?

Results from APQC’s Open Standards Benchmarking in logistics show that organizations using WMS have more efficient and accurate warehousing processes and lower overall logistics costs, although the cost to operate warehousing at these organizations is higher than at organizations without WMS.

Warehouse Efficiency

Organizations that have implemented WMS report higher perfect order performance than organizations without these systems (Figure 1). The results indicate that organizations using WMS are better able to deliver customer orders on time, complete, without damage and with accurate documentation. The difference in performance between the two groups is 4% at the median, which is significant from a customer-facing standpoint.

 

Organizations that have implemented WMS also report a lower amount of expedited orders than organizations that have not implemented WMS. WMS can help reduce expedited orders, especially when they are fully integrated with other business systems such as enterprise resource planning (ERP), transportation management, automatic order picking and radio frequency identification (RFID) systems.

The perfect order performance and amount of expedited orders achieved by organizations with WMS could be tied to the visibility provided by the technology. The integration of warehouse functions into one system enables staff to quickly pick and ship products. A centralized inventory reduces the chance that product is unavailable to send to a customer, which in turn can increase on-time deliveries and reduce expedited orders.

Yet efficiency is not the only factor to consider when evaluating WMS. Organizations must also gauge the impact of WMS on logistics and warehousing costs to determine whether these systems are the right investment.