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Warehouse management & warehouse software for beginners

Over time, warehouse management has become more and more automated. For a long time now, warehouse employees in large warehouses no longer have to be able to manually remove items from the shelves or operate a forklift. You now have computer-controlled, precise conveyor technology in fully automated high-bay warehouses and automated shipping processes. But what exactly is warehouse management and which warehouse processes fall into this area of ​​warehousing? What tasks can a warehouse management system take on and what different software offers are there for different companies and sizes?

What does warehouse management mean & how does it work?

Warehouse management describes as part of warehousing all warehouse processes that occur during storage as part of the process organization. This includes control, administration (stocks and storage locations) and monitoring.

Warehouse management is knowing what is where in the warehouse and what is going on there. The central registration of the entire article management such as quantities, status, inputs, outputs and physical storage locations means that all data can be called up at any time. If this information is complete and is continuously updated, the processes can be automated to the greatest possible extent. For example, by entering parameters for minimum and maximum stocks for certain product groups or entering best-before dates, so that the goods can be removed from the warehouse if the shelf life is exceeded.

The aim of professional warehouse management is complete tracing of the individual items within the warehouse. Only then can automatic ordering systems for reorders, for example, be used correctly and customer orders processed without delays.

In detail, warehouse management involves the following warehouse processes that are related to one another:

The individual processes of warehouse management

What is the task of an inventory in warehouse management?

Not entirely understandable at first glance, the inventory seems to fit in with the other warehouse processes. However, this is due to the fact that an inventory is often only classified as a simple inventory. But it has a much more far-reaching purpose, because not only is there an inventory of the number of items in stock, but also a financial assessment of the remaining stock.

During the business year, which does not have to be identical to the calendar year, the same items are often reordered at different prices. The value of the stock items is therefore different. There are therefore three different methods with which the price of the remaining stock can be assessed at the end of the fiscal year. The prerequisite is that a procedure has been consistently and consistently applied to the corresponding stock items throughout the year.

To make the application and evaluation clearer with an example, we assume two toasters as stock items, one of which was bought for EUR 50 at the beginning of the year and the other was reordered in the course of the year for EUR 52. Until the end of the year, only one of the two toasters was sold for inventory purposes. What is the value of the remaining toaster in stock?

The inventory is an important tool in warehouse management

Depending on the procedure, the price of the remaining stock can be determined in this way. An inventory is much more than a momentary inventory at the end of the fiscal year. The result also flows into the company's annual financial statements, for example.

Professional use of software & automated warehouse management

While the warehouse management used to work with the help of index cards that were filled out by hand, the static Excel tables for this purpose in warehouse management have often become obsolete.

The effort to program an Excel table in a really meaningful way with the help of macros not only means a considerable expenditure of time, but in addition to the necessary programming knowledge also means understanding the relationships that apply within the table. A table not provided with macros and formulas without the necessary, programmed cross-connections, in turn, requires constant updates, extensive entries and checks. In addition, no shipping processes can be generated from an Excel table. It works much faster and more error-free when automated.

Pure warehouse management systems vs. integrated suite systems

As a rule, warehouse management is therefore carried out with the help of software, the warehouse management system (called LVS for short) as an inventory management system. The LVS describes and manages all interdependencies between stocks and the physical storage locations. If the physical storage locations such as shelves are not recorded and only the inventory of articles, it is a matter of pure inventory management. In this case, only the stock itself and possibly the availability and condition are relevant, but not the where in the warehouse. This is the simplest variant of the warehouse management system.

Automatic ordering systems, cash register or cash register software (booking of articles by scanning barcodes or entering article numbers) and resources such as labor, warehouse technology, etc. can also be integrated into the LVS.

So-called warehouse management systems (WMS) are an extension of the WMS. They not only contain the automatic processes for disposition - order processing - but also control options for the storage system status and various optimization and operating strategies. WMS are used, for example, in the large warehouses of mail order companies such as Amazon or logistics companies and ensure the smooth flow of orders through shipping including freight processing to the customer's doorstep.

Both the LVS and the WMS are closed software systems. They fall into the category of pure storage systems. In contrast to this, there are also the so-called integrated warehouse management systems, which largely encroach on other areas of the company, e.g. in controlling, accounting, purchasing, sales, etc.

A third and at the same time the most extensive variant of automated warehouse management is the integrated suite system. Here the warehouse management is integrated into a merchandise management system and contains all sales data such as orders and deliveries, purchasing (orders and incoming goods) and material withdrawals from the warehouse for production or manufacturing. The integrated suite system collects all these items, lists them clearly and is therefore particularly suitable for production companies with their own warehouse, e.g. in automobile production or the production of food.

Requirements & reasons for automated warehouse management

The scope of software depends, among other things, on the size of the warehouse and the type of inventory. At the same time, the investment opportunities are decisive, because professional software and the associated updates, as well as the creation of system requirements such as an internal network, are a considerable cost for companies.
Economy and efficiency are the be-all and end-all

When using automated warehouse management, the cost-effectiveness of the warehouse itself naturally plays an important role in addition to the investments for the acquisition and integration of the software. For example, physical storage spaces should be used and fully utilized in the best possible way, items should be quickly available with the appropriate storage and conveyor technology within the warehouse, and resources such as the labor of warehouse employees and dispatchers should be efficiently deployable in order processing.

In addition, warehouse management systems such as WMS accelerate processing in large logistics centers while at the same time reducing operating costs. Varsity Logistics even states a cost reduction of 35% since the system was introduced.

Last but not least, the use of automated warehouse management systems also means saving jobs and is therefore also a personnel saving factor for companies with warehousing despite higher acquisition costs.

Advantages & disadvantages of warehouse management software

As overwhelming as the advantages over the disadvantages of manual warehouse management are from a certain order of magnitude, warehouse management software also has some disadvantages in practice. The advantages and disadvantages at a glance:

  • Central warehouse management
  • Greater storage efficiency
  • Extensive automation also in overarching areas
  • Use of software interfaces
  • Faster process handling
  • (Long-term) cost savings
  • High initial investment
  • Partly complex changeover
  • Updates
  • More complex data maintenance & error correction

How do you find the right software for warehouse management?

Both in terms of functionality and price, there are big differences in the offers for warehouse management software. Out-of-the-box solutions, WMS customized for the company and integrated suite systems must match the requirements and needs and, last but not least, the industry.

Modern warehousing requires software, but it has to be the right one. They should all bring order to the warehouse structure in order to use storage space and personnel efficiently and with a low error rate. Small companies need small solutions and with completely oversized warehouse management software would not only overshoot the target in terms of costs. Large warehouses, on the other hand, require complex software interfaces and careful integration in order to provide other areas of the company with the necessary information.
This software is recommended!

Sage 100, LogControl warehouse software WHM and Megaventory warehouse management are among the best rated professional warehouse management software in the warehouse & logistics sector in relevant tests.

Various software and pricing models available

The costs for software, which is billed monthly per user, are manageable. This includes the individual warehousing software for the central management of small and medium-sized warehouses with little automation. The monthly usage fee is from 10 EUR. This solution is useful, for example, for smaller craft businesses or retailers.

Warehouse management software as part of a suite solution consists only of basic software that can be supplemented and adapted with additional software depending on the industry-specific usage requirements. For the partially functionally restricted use, the price is from 15 EUR per month plus software expansion packages.

Of course, the aforementioned software offers are also available as a complete package instead of on a monthly basis. Small companies, however, work more cost-effectively with monthly usage fees and can use the support of the providers. Updates are usually already included in the monthly price.

Complex warehouse management systems that are individually tailored to the customer or integrated suite systems ensure extensive automation of large warehouses and logistics centers. Due to the complexity and company-specific requirements, prices are only possible after consultation.
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