Analyst Insight: In studies comparing organizations that use warehouse management systems (WMS) against organizations that don't, APQC found that those with such systems performed better in perfect-order performance, full-load utilization, and in reducing expedited orders. The improved performance occurred among all groups - bottom, median, and top performers. The improvements were particularly noticeable among the bottom performers.

-Marisa Brown, director of APQC Knowledge Center, and Rob Spiegel, knowledge specialist

WMS solutions integrate warehouse functions and provide inventory visibility. The systems utilize 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. WMS is often integrated into ERP, production, transportation, order management, and financial systems.

WMS enables shorter order fulfillment times and better on-time delivery.

Nearly 62 percent of APQC's respondents utilize WMS. These organizations demonstrate higher performance in customer order cycle times, and an improved ability to deliver orders to customers on time. The median performer using WMS demonstrated customer order fulfillment of 4.6 days versus non-users with 7.0 days.

As for perfect orders, those using WMS demonstrated improved performance. The perfect order is the ability to flawlessly take and fulfill a customer order. It includes on-time delivery, complete orders, damage-free orders, and accurate documentation rates. The median and top performers showed a 2-percent improvement, while the bottom performers showed a full 11-percent improvement.

Shipping full loads was another metric with demonstrated improvement for organizations using WMS. Those organizations that can lift their percentage of full loads are able to reduce their costs by taking advantage of full capacity, whether with trucks, trains, ships, or planes. Bottom, median and top performers all showed better performance with WMS. Top performers outperformed by 5 percent, median by 8 percent, and bottom performers by 18 percent.

Another measure where WMS users had better performance than non-users was in reduction of expedited orders. These are orders that are forced because of poor transportation planning, stock re-balances, raw material shortages, or production schedule changes. Those organizations using WMS had lower expedited orders across the board. The top performers had fewer expedited orders by 10 percent, median performers by 5 percent, and bottom performers by 3 percent.

The Outlook

Based on its data, APQC sees tangible benefits to implementing WMS systems. They enable organizations to better manage inventory in real time with visibility into current inventory locations and levels. This visibility enables organizations to streamline their processes related to shipping and delivery. As well as improving internal efficiencies and reducing overall cost, WMS systems also improve customer relationships through improved fulfillment.