Modern customers have become accustomed to fast, consistent, and omnichannel order fulfillment. Under these expectations, businesses need warehouse management solutions that can keep up with the demand for quicker and more efficient fulfillment operations. Traditional on-premises warehouse management systems (WMS) often fall short, with complex setups and high upfront costs. That's where cloud WMS comes in — it’s a more flexible, scalable, and cost-effective solution for modern businesses.
What is Cloud WMS?
A cloud WMS is a warehouse management system that is hosted on the cloud, providing businesses with remote access to their warehouse data and operations. Unlike traditional on-premises WMS, which requires significant upfront investment in hardware and software, a cloud WMS operates on a subscription-based model. This means no more hardware headaches, reduced IT costs, and the ability to scale your operations seamlessly without the constraints of physical infrastructure. A cloud-based WMS eliminates the need for local servers and IT maintenance, enabling companies to focus purely on optimizing their supply chain processes and enhancing overall efficiency.
Features of Cloud WMS Software
Cloud warehouse management software offers builds on the features on offer from traditional warehouse management systems to totally transform warehouse operations and protect against potential disruptions.
1. Scalable Platform Infrastructure
As your business grows or shrinks, you need to be able to predict peak capacity and invest in hardware and software accordingly. Scaling up involves significant costs and time for upgrades, especially when you need to configure and manage a multi-warehouse setup and optimize your distribution network.
Cloud WMS offers virtually limitless scalability, allowing businesses to adjust resources based on demand without major investments or downtime. This flexibility ensures continuous operation even during sudden workload increases, helping businesses avoid bottlenecks and optimize warehouse operations.
Cloud-based WMS operates on a subscription basis where costs are aligned with actual usage. VMWare estimates businesses spend 41% less cost and hours on infrastructure after moving to the cloud. As the end user, you can expect the financial flexibility to scale expenses according to their needs, reducing unnecessary expenditure on unused resources.
2. Centralized Warehouse Control
On-premises WMS often relies on periodic data updates, which can lead to delays in decision-making and mismatched stock levels. On the other hand, with a cloud WMS, offers remote access to your warehouse data and operations from anywhere with an internet connection. A centralized warehouse control tower empowers managers and staff to control and monitor warehouse management and fulfillment operations from a centralized, unified WMS platform.
With mobile-based operations, your warehouse managers can manage tasks on the go with real-time access to warehouse data. Data access and visibility directly enhances decision-making, improves inventory management, and reduces errors in order processing.
3. Out-of-the-box Integrations
Since traditional warehouse management software are set up in-house, integration with other systems like ERP or CRM can be complex and costly, often requiring custom development. Cloud-based WMS seamlessly integrates with various business systems like ERP, TMS, and e-commerce platforms, to ensure a connected order-to-ship process from end-to-end. According to O'Reilly, retail and ecommerce are among the most proactive industries when it comes to cloud adoption.
When done on the cloud, hardware integration with warehouse devices like barcode scanners, RFID systems, and weighing scales is also considerably painless, especially across a distribution network spread across multiple warehouses.
As your business grows, the complexity of integration can often pose a complex challenge to future scalability. This ease of integration eliminates manual data entry, reduces errors, and enhances warehouse efficiency by automating processes such as order fulfillment and inventory updates.
4. Built-in Security and Compliance
On-prem WMS puts the onus of security and regulatory compliance on the business itself. Since security is managed in-house, it tends to be resource-intensive and may not always meet the latest standards; you always have to stay on top of it.
Cloud WMS adopts a shared security model where data is stored in secure data centers with advanced security protocols like encryption and intrusion detection systems. This ensures higher levels of data protection without the need for extensive internal resources, but it’s still not a pass for businesses to ignore their security posture. Fortinet estimates 95% of organizations are moderately to extremely concerned about their security posture in a public cloud environment. Guided receiving and putaway processes make it easier to comply with FEFO and FIFO regulations by automatically capturing expiry and inbound information.
5. Responsive Process Optimization
Cloud warehouse management software improves on existing features provided by traditional WMS to holistically improve processes across multiple business areas and make them more responsive and efficient. Both cloud and traditional WMS provide robust inventory management capabilities. However, cloud WMS often offers real-time visibility and automated processes, reducing the risk of stockouts or overstocks. Having a single source of truth makes it easier to conduct inventory audits and ensure accuracy and accountability in maintaining stock levels.
While both systems can handle order fulfillment, cloud WMS excels in optimizing and automating picking routes with dynamic task allocation and implementing smart workflows for faster, more accurate order processing. Cloud-based warehouse management software can even track license plate numbers (LPNs) assigned to warehouse units to enable advanced inventory control in real time. A single, unified WMS platform also makes it easier to manage individual products as well as complex inventory assortments like kits and bundled packages.
Cloud-based WMS can automate put-away processes, directing workers to specific storage locations based on various criteria, such as product type, popularity, and expiration dates. This reduces labor costs and minimizes errors.
6. Intelligent Analytics and Reporting
Traditional WMS typically offers basic reporting capabilities, which require manual data extraction and analysis, and a lot of legwork on customizing dashboards to meet specific business needs. As a result, reporting can be delayed on occasion due to periodic data updates, leading to outdated information.
Cloud warehouse management software is equipped with intelligent analytics tools to provide real-time visibility into key performance metrics for fulfillment, inventory, and warehouse operations. This granular visibility into inventory allows process owners to trace stock movement across the entire warehouse.
As a business owner, you get access to pre-built dashboards designed to track on-floor activities for inbound and outbound warehouse operations and other functions, create customized cycle count instances at defined intervals, or automate ABC analysis by pulling past inventory data; all within a centralized warehouse management software.
Implementing Cloud WMS
Switching from an on-premises setup to a cloud WMS can pose a challenge to most businesses; the key is to break down the process into discrete steps and adopt a slow and strategic approach to the entire process.
Planning and Choosing the Right Provider
Assess Operational Needs and Goals
Consider the size of your warehouse and the complexity of your operations. Larger, more complex operations spread across multiple locations will require more robust features. Identify specific functionalities you need, such as real-time inventory tracking, integration with existing systems, and advanced reporting capabilities. Then, based on your operational needs, prepare an initial budget by evaluating the cost structure of potential providers, focusing on subscription fees versus potential savings from reduced hardware costs.
Evaluate Providers
Ensure the provider offers features that align with your operational needs, such as integration with ERP and CRM systems, and existing hardware infrastructure. Choose a provider that can scale with your business growth and offer flexible solutions to adapt to changing demands. Verify that the provider complies with industry standards for data security and offers robust encryption and access controls.
Migration from Traditional Systems
Data Preparation
Before migration, ensure all data is accurate and organized. This includes verifying inventory numbers and updating product details. Collaborate with your provider to map existing data structures to the new system, ensuring consistency and accuracy during migration.
Phased Migration Approach
Start with a pilot phase to evaluate the system's functionality with a subset of data. This helps identify potential issues without impacting full operations. Gradually migrate all data once the pilot phase is successful, ensuring minimal disruption to ongoing operations.
Training and Onboarding Staff
Comprehensive Training Programs
Chalk out training programs dedicated to different user roles within the warehouse, ensuring each team member understands how to use the system effectively. Remember, the end goal is to eliminate data silos, not create more. Provide access to training materials, such as user manuals and online tutorials, for continuous learning.
Encourage User Adoption
Allow staff to practice using the system in a controlled environment before going live. This builds confidence and proficiency. Establish channels for staff to provide feedback on the system, which can be used to make improvements or address concerns.
Change Management
Develop a Change Management Plan
Involve key stakeholders early in the process to gain their support and address any concerns they may have about the transition. Maintain open lines of communication throughout the implementation process, keeping everyone informed about progress and changes.
Minimize Operational Disruptions
Choose a go-live date during a period of low activity to minimize disruptions. Consider a soft launch approach to gradually introduce the new system. Establish dedicated support teams ready to address any technical issues immediately after launch.
Benefits of Cloud WMS
It’s true, implementing a cloud-based WMS is a lot of work and there needs to be a ton of considerations before you take the leap. However, take a moment to consider the long-term benefits of making the switch from an on-premises, in-house system to a cloud warehouse management software for your distribution network.
1. Enhanced Scalability and Flexibility
- Cloud WMS offers the flexibility to scale computing resources up or down based on real-time demand, eliminating the need for upfront investments in hardware.
- New warehouses or distribution centers can be quickly set up and operational with minimal infrastructure requirements.
- As your business grows, you can easily expand your WMS capabilities without significant capital expenditures.
2. Reduced IT Costs and Maintenance
- Cloud WMS eliminates the need for on-site servers, storage, and networking infrastructure, reducing hardware costs and maintenance expenses.
- With a subscription-based model, you can better manage your IT costs and avoid unexpected expenses.
Caption: The state of cloud costs when measured against expected operating costs (Source: CloudZero)
Cloud providers manage system updates, security patches, and maintenance, freeing up your IT resources to focus on core business activities.
3. Improved Data Security and Disaster Recovery
- Cloud providers implement advanced security measures, such as encryption, access controls, and regular audits, to protect your sensitive data.
- Cloud WMS solutions often include built-in data redundancy and disaster recovery features, ensuring business continuity in case of hardware failures or natural disasters.
- Cloud providers often comply with industry-specific regulations (e.g., HIPAA, GDPR), reducing your compliance burden.
4. Real-time Visibility and Analytics
- Cloud-based WMS provides real-time access to warehouse data from anywhere with an internet connection, enabling better decision-making and operational oversight.
- Cloud-based analytics tools offer powerful insights into inventory levels, order fulfillment performance, and operational efficiency.
- Granular, data-driven insights empower businesses to optimize your supply chain, reduce costs, and improve customer relations.
5. Enhanced Collaboration and Integration
- Cloud warehouse management software can be easily integrated with other software platforms and hardware devices, enabling efficient data sharing and workflow automation.
- Cloud-based platforms facilitate real-time collaboration between warehouse staff, logistics teams, and other stakeholders, improving communication and coordination.
- By integrating with other systems, you can streamline your supply chain processes, reduce manual tasks, and eliminate errors.
Integrations with Cloud WMS
One of the biggest reasons businesses are switching to cloud WMS is the ease of integration with third-party software, vendor platforms, and hardware and IoT devices around the warehouse.
ERP Systems
Cloud WMS integrates effortlessly with enterprise resource planning (ERP) systems, synchronizing inventory data, order processing, and financial reporting data in real time. An open channel ensures that all process owners have access to consistent and up-to-date information, naturally leading to better decision-making and operational transparency.
eCommerce Platforms
Having a cloud-based WMS guarantees seamless connectivity with ecommerce platforms like Shopify, Amazon, and WooCommerce. Having built-in connectors for most of the biggest ecommerce fulfillment platforms allows for real-time order processing, inventory updates, and status tracking, ensuring accurate stock levels and timely fulfillment, without the need for complex and time-consuming custom development.
Shipping and Logistics Software
Cloud WMS connects with shipping carriers such as FedEx and UPS for automatic label generation and tracking. Multi-carrier integration streamlines the shipping process by automatically selecting the most cost-effective carrier and allowing both the business and the customer to track the status of packages in real time.
Accounting Tools
On-premises WMS often require manual data transfers or complex middleware solutions to connect with accounting systems. Cloud-based WMS directly integrates with accounting software like QuickBooks or Xero, facilitating automated billing, invoicing, and financial reconciliation. This ensures accurate financial records and reduces manual entry errors.
IoT and Automation Tools
Cloud warehouse management software can readily integrate with IoT devices, AGV/AMRs, and cobots as and when your warehouse employs them. It’s easier to connect to run-of-the-mill IoT devices such as sensors for real-time monitoring of warehouse conditions like temperature and humidity. It can also integrate with automation tools and robotics to optimize picking and packing processes.
Implementing Industry 4.0 technologies also means you’ll have to plan, schedule, and carry out regular maintenance events across all devices. Having all this information in one platform makes it all the easier for your warehouse managers to execute.
Conclusion
Adopting a cloud warehouse management software (WMS) is a strategic move that can significantly enhance the efficiency and scalability of your present warehouse operations. It’s a considerable step up that offers the flexibility and cost-efficiency needed to adapt to changing market demands. However, keep in mind that it’s a resource-intensive transition that requires some careful thought and consideration. Contact us to schedule a demo to better understand how a cloud WMS can help your warehouse operation and if it’s the right move for your business case.
