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APQC's Open Standards Research defines a warehouse management system (WMS) as a transaction-based system that integrates warehouse functions and provides inventory visibility. The system utilizes total warehouse information and user-defined business rules to direct productive warehouse movements. Some systems use sophisticated techniques such as cross-docking, flow-through distribution, and task linkages to further increase productivity. Systems are often integrated into ERP, production, transportation, order management, and financial systems.
So what's the impact of using WMS? Are there tangible benefits to implementing such a system at your organization? Based on APQC's data, we would argue that there are. Organizations reporting WMS implementation report higher perfect-order performance -- the ability to flawlessly take and fulfill a customer order -- than those who have not implemented it.
WMS solutions enable organizations to manage inventory in real time with visibility into current inventory locations and levels. This visibility enables the organization to streamline the processes related to shipping and delivery. Organizations that ship a greater percentage of their orders in full-loads are able to reduce their costs by taking advantage of the full capacity of the vessel (truck, train, plane, ship) and often negotiating better freight rates. In APQC's database, organizations that have implemented WMS more frequently utilize full-load shipments than their counterparts.
Additionally, WMS can help reduce the percentage of expedited orders, especially when WMS is fully integrated with other business systems, including ERP, TMS, automatic order picking, and RFID issuance and tracking.
As the world becomes increasingly global, mobile and high-tech, organizations must continuously improve their internal processes to satisfy their external customers. To achieve this goal, we expect to see an increasing number of organizations implement WMS and other electronic systems. As with any such undertaking, organizations should carefully consider their business models and needs when selecting the appropriate system.
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