How to Create a Warehouse Management System for Your Logistics Business

Organizations that manage inventory and logistics leverage online retail technology to distribute their products to customers worldwide. Implementing a Warehouse Management System will give end users and business owners everything they need to manage stocks, optimize space usage, streamline inventory and order management processes, and save money.

Key moments:

• The operating mechanism of the system for warehouse management
• User roles to choose according to your business needs
• The core feature set to integrate in warehouse management solution
• Warehouse management software challenges you may face, and other crucial.

Dive deeper into our guide on warehouse management system development! You will grasp the essential information that will help you succeed in creating resilient software for improving inventory accuracy and increasing the efficiency of your warehouse workflows.

A Warehouse Management System (WMS) is a type of software widely used in the manufacturing and retail industries as it tracks all products and goods as they come in and go out of the warehouse.

Let’s look at the below diagram to understand the WMS operating mechanism on the whole and see the significant warehousing processes.

To explore the significant activities and find out which to optimize, let’s look at the business operations you can automate managing your custom warehouse management software.

Warehouse associates do many tasks within a warehouse, depending on what is needed most. This might include picking up and moving goods, keeping track of inventory, scanning and labeling items, filling out invoices, and more. You might think of warehouse associates as the backbone of the warehouse, always keeping things going.

After you decide what warehousing processes should be optimized, you must also define the user roles for your future warehouse management system development process. It means you should outline the category of users for your future WMS and provide them with functionality adapted to their responsibilities. This identification will help you benefit more from WMS creation.

It is necessary to admit that warehouses are not just big buildings or facilities but also fast-paced environments for the workers to cooperate and complete tasks safely and quickly as good team players. Warehouse owners from their side should work hard to keep processes moving along smoothly and pay close attention to control the team’s activity (e.g., employing them, ordering tasks, and checking performance).

The below brief list of typical warehouse roles and responsibilities will give you a better idea of what roles you should perform within your WMS development.

Understanding the diverse user roles within a Warehouse Management System development is paramount for ensuring the seamless coordination of warehouse operations. Exploring how these roles interact and contribute to a well-optimized and responsive logistics ecosystem, let's unravel the intricacies of the Warehouse Management System's core functionality.

Every WMS requirement is unique, but that doesn’t mean they’re all very different. Most tend to follow the exact requirements and needs, addressing common problems and desires. The important thing for you to decide is where you’ll be a standard user and where you need additional support. To answer these questions, let’s look through the list of the core WMS functionality modules.

This functionality module is designed to streamline accepting and recording incoming inventory. Along with many functions, it helps verify that received goods match the purchase order and are in acceptable condition. The module also determines the optimal location for newly acquired items based on demand, available space, and storage conditions.

Moreover, the receiving module for WMS development allows the warehouse workers to perform the thorough inspection and validation of the received goods' quality, which is essential for further items manufacturing or shipping to the end client.

The inventory management module focuses on maintaining accurate stock levels and ensuring optimal space utilization. Furthermore, it helps to perform real-time tracking by providing up-to-the-minute visibility into inventory levels, locations, and movements.

The module also assists warehouse workers in facilitating regular and systematic counting of a subset of inventory, improving accuracy without necessitating a complete inventory count. Due to the inventory management module use, the warehouse personnel can get recommendations for reorder points, safety stock levels, and storage locations for efficient inventory management.

! Kindly note that instead of creating an inventory management module for your warehouse system, you can also proceed with the separate inventory management software development, and then integrate it with your WMS. It’s essential since the separate inventory management software allows you to streamline and optimize your warehouse operations, ensuring that inventory levels are accurately tracked, as well as reducing the risk of stockouts or overstock situations.

The order fulfillment and management module is the core of warehouse operations, serving as the linchpin for efficiently processing customer orders. This module is built to enhance accuracy, speed, and overall customer satisfaction.

It helps effectively manage customer orders, capturing and recording them as they are received, ensuring real-time visibility into demand. It also allows classifying customers based on their importance to the business, guaranteeing high-priority orders are processed promptly.

This module is intended to ensure the accuracy and speed of the order fulfillment process. Due to the advanced selection and shipping, the warehouse staff can be guided through the picking process using visual or audible cues, improving accuracy. Thinking on how to create a warehouse management system, you should add this module to your functionality list as it enables the simultaneous picking of items for multiple orders to increase efficiency. It also integrates with shipping carriers and automates the shipping process, including label generation and shipment tracking.

The Analytics module generates a spectrum of reports tailored to meet the specific needs of warehouse stakeholders. Additionally, users can create customized reports, allowing for a more nuanced analysis of performance metrics based on unique business requirements.

By extrapolating from historical patterns, this WMS development module also enables businesses to forecast future trends with a high degree of accuracy. Whether anticipating seasonal fluctuations in demand or optimizing warehouse staffing levels, predictive analytics empowers decision-makers to address challenges and capitalize on opportunities proactively.

This module emphasizes seamless communication and integration with other systems. Its key functionality ensures real-time data exchange with Enterprise Resource Planning (ERP) systems for synchronized business processes. The module for automatic data sharing prioritization also facilitates integration with third-party applications, suppliers, and customers for automated data sharing. Finally, the module enables the electronic exchange of business documents with trading partners, such as purchase orders and invoices.

We’ve described only the critical feature modules required for your WMS system’s seamless functioning as well as the warehousing automation for your logistics flows. You should understand that the ultimate functionality list depends on your business requirements and needs.

Once you’ve proven your WMS concept viability and collected the end-users’ feedback, you can analyze it and think about adding advanced warehouse management system features to increase warehousing operational efficiency.

This is an example of the advanced WMS functionality you can add to your warehousing system:

• The support of Electronic Data Interchange (EDI)
• Inventory maintenance and electronic transfer
• Dashboard
• Advanced reporting functionality
• Adaptability to mobile devices
• eCommerce implementation
• Full security matrix, etc.

Choosing the feature set for your future WMS is complex and responsible, as your business performance and success depend on this choice. You can facilitate this task and contact us for an in-depth consultation. Our domain experts will guide you on how to create a warehouse management system and make an entire WMS feature set based on the needs of your shipping company.

Making decision as to warehouse management system creation, you have got the choice to use a ready-made WMS or build a custom one from scratch. Let’s consider their characteristics:

• The ready-made warehouse management system is a pre-built logistics software designed to fit standard domain requirements with particular functionality.
• The custom WMS refers to a tailor-made and specifically designed logistics platform for managing and optimizing your warehouse operations. It is built to meet particular business requirements of your distribution center.

We’ll compare both approaches according to their crucial characteristics to help you choose.

Off-the-shelf solutions are generally more cost-effective than custom warehouse management system software, as they typically involve subscription, setup, adjustment, and training fees to begin using the platform. But, WMS system vendors usually charge extra costs for each new user added to the platform after exceeding the plan’s limit. So, scaling your logistics business this way may be challenging.

When considering the matter, it is advisable to develop a custom warehouse management system if there is a sufficient budget to construct the entire platform architecture and if one wishes to avoid any scalability and integration constraints. It costs more initially but saves money in the long term. Moreover, creating a custom system for WMS development offers numerous integration opportunities without additional costs compared to using a pre-made platform.

Off-the-shelf warehouse software typically come with features, some of which may not be necessary for your business. In simple terms, you have limited options. Custom warehouse management software development creates a structure and features tailored to your warehouse’s needs. The features list can also be modified during development to better align with your evolving business needs.

Ready-made WMS software offers a predetermined selection of readily available integrations. This option can be a time-saving and user-friendly choice if you require a list of integrations. In contrast, only a few standard warehouse management systems provide customizable integrations upon request. However, building a custom warehouse management software allows seamless integration with multiple products via the required API connections.

Off-the-shelf warehouse management systems have limited scalability for your business. Scaling your business may lead to a need for a new warehouse management system provider due to limited production capacities.

During the development process of a custom warehouse management system, scalability is incorporated to accommodate the number of employees, warehouses, and other relevant factors. This allows for a one-time investment and provides you with smooth scalability of your business as it grows.

You can see that custom WMS solution development is more reliable and profitable (in the long run) than using a ready-made system. The next step is to develop customized WMS software, and we’ll find out how it is created with the help of the logistics IT vendor.

Based on our logistics software development experience, we’ve prepared a comprehensive algorithm on how you should act when creating a digital product to manage your warehousing operations.

It is crucial to review your existing warehouse operations thoroughly. This process involves conducting a comprehensive analysis to identify pain points, inefficiencies, and potential areas for improvement within your current warehouse processes.

Begin by closely examining the day-to-day operations of your warehouse, from receiving and storing inventory to order fulfillment and shipping. Engage with key stakeholders, including warehouse managers, supervisors, and frontline staff, to gather insights into their pain points and obstacles hindering optimal performance.

Moreover, you should conduct brainstorming sessions with your team to discover why you must create a new WMS for your shipping company or modernize the existing logistics system. It will help you later while preparing a feature list for your warehouse management solution.

A comprehensive evaluation process is crucial when selecting a trustworthy WMS development partner to develop your warehouse management software.

Below we give you the factors you should consider while making your choice:

Research and identify potential logistics IT partners with experience developing logistics solutions through professional websites like Clutch. Look for IT providers with a proven track record in creating solutions similar to your requirements. Consider factors such as the company's size, industry reputation, and the duration of its involvement in the logistics IT sector.

Evaluate the expertise of each potential partner. Look for case studies, client testimonials, or success stories related to their previous warehouse management projects. Consider the compatibility of their solutions with your existing technology stack and business processes.

Ensure the selected logistics IT partner provides continuous support and updates for the developed warehouse management software. A reliable partner should offer a structured support plan and be responsive to any issues that may arise post-implementation. Additionally, assess their capability to adapt the software to future changes in technology or business requirements through maintenance.

Following this algorithm, you can make an informed decision when choosing a logistics IT partner, ensuring a collaborative and enduring partnership that contributes to the success of your warehouse management software.

The Solution team, consisting of a Solution architect, business analysts, and UI/UX designers, collaborates with you to establish the project's scope and generate a feature list for your forthcoming WMS. When completing the task, the specialists will consider your business goals and constraints, including timelines, budget, and collaboration preferences. Finally, the Solution Team will give you a rough cost estimate for your upcoming WMS project and a proposal upon completion.

In the Discovery phase, the team will outline the necessary business procedures, platforms to be covered (such as web, iOS, Android), feature list, third-party services, and the most suitable technologies for your WMS logistics solution, among other things that have been previously gathered as requirements and needs for the project at hand. The specialists record the technical and business requirements in the Software Architecture Document (SAD). Moreover, our professionals utilize the deliverables from the Discovery phase to generate a detailed project cost estimate.

Furthermore, a team of IT specialists is brought together to develop a warehouse management system tailored to your needs. Meanwhile, the UI/UX designers begin working on the design for your intelligent warehouse platform. As per your request, we also provide tech consulting services to address any concerns related to your business software development.

Our team of warehouse management system development experts follows an iterative approach, working on your project in two-week intervals called sprints. During each sprint, the specialists complete a specific amount of work under the supervision of our Project Manager.

The development team creates the predetermined features during the WMS logistics software development process. QA engineers are responsible for testing the functionality of your warehouse management solution project until it is released, ensuring that the work completed in each sprint is thoroughly tested. The front-end and back-end are tested simultaneously, and software developers use the resulting data to address bugs.

Moreover, if required, the developers integrate your WMS software with third-party logistics systems like the following:

• Enterprise Resource Planning (ERP) software development
• Transportation Management System (TMS)
• Customer Relationship Management (CRM)
• Warehouse inventory management software
• Supplier collaboration systems
• Order management software development
• Data Analytics and Business Intelligence (BI) Tools
• Electronic Data Interchange (EDI)
• Voice Picking and Augmented Reality (AR) Solutions
• E-commerce platforms, etc.

However, if you already have a functioning warehouse management system and need to upgrade it with modern technologies and new functionality, you can also use our legacy systems modernization services.

After the WMS development is finished and the system is released, your warehouse staff can pass training on using the solution provided along with our learning materials. Moreover, considering the WMS system’s functional complexity, you may need maintenance and support services. It means our logistics software development team doesn’t stop working with you but constantly monitors your WMS system performance, collects the users’ feedback, and adds new features or bughunts.

Let’s discuss the most widespread challenges of WMS software development and what you should know to solve them effectively.

Enterprise data warehouses are valuable assets that store and analyze information from various sources. This helps organizations to gain insights, make decisions, and optimize performance levels. Though, data warehouses also pose significant security risks, such as unauthorized access to unauthorized access to sensitive data, data leakage, unauthorized access to facilities, corruption, or loss. Therefore, securing the data warehouse development and maintenance life cycle is vital, from the initiation stage to deployment and beyond.

Let us now discuss the best practices and tips to help your company achieve this goal.

All security requirements should be documented before the Client starts building or modifying the data warehouse. These include information security policies and procedures, data sources, data categories, data flows, users, data access rules etc. The regulatory standards should also be taken into account.

That applies to your data warehouse, such as GDPR, HIPAA, PCI DSS, or ISO 27001. By proclaiming the security requirements, you can align your data warehouse design and architecture with the general security objectives and avoid potential gaps or vulnerabilities.

Ultimately, the following action items should be taken into account to ensure security requirements are fully implemented:

• Determining the scope of the information data warehouse management system
• Implementing data encryption and masking
• Managing the user roles and permissions
• Monitoring and testing the data warehouse.

By the way, Cleveroad obtained ISO 27001 standard certification that proves our ability to manage data security risks when developing warehouse management software for you.

Running a warehouse involves considering many rules, laws, and regulations that are the basis that helps perform a custom warehouse management software smoothly. We will closely examine these essential rules, decomposing them in a way that’s easy to understand. Let’s also cover everything from keeping employees safe to protecting the environment and managing inventory properly.

This table mentions only the most common regulations you need while developing WMS software. However, it should be noted that there are more specific regulations (e.g., foods, pharmaceutical ones) you need to comply with depending on the goods storing in your warehouse.

Dealing with warehouse management system development challenges requires not only a skilled logistics IT vendor’s help but also a budget for implementing technological know-hows and paying the specialists for their services.

Logistics software development specialists calculate the detailed price of a warehouse management system regarding functionality complexity, software type, integrations, design, and software development rates. If to sum up all of the above factors, the average custom WMS cost will be from $70,000 to $250,000+. However, you can get the exact number of budgeting from the IT experts if you have at least a required functionality set or can define a type of WMS you would like to receive.

Kindly note that you do not need to necessarily hire in-house software engineers to build a warehouse management system. You can hire a vast pool of outsourcing logistics IT experts to create a solution to manage your warehouse activities.

We’ve prepared a corresponding table to help you consider the approximate warehouse management system development team composition and outsourcing hourly wages for their services.

Looking through the table, you can see that the rates vary significantly worldwide. For example, developers from North America tend to have a higher rate, but the price does not necessarily reflect the quality of their service. Additionally, looking for WMS development specialists with the necessary skills and expertise in local markets can be challenging. Moreover, it can be an expensive option as you will have to compete for fair salaries.

Central and Eastern Europe is recognized for its proficiency in this field. Outsourcing warehouse management software development to Central European countries can result in lower rates and highly qualified developers. Numerous software development companies offer custom software solutions at an average rate of $50 to $70 per hour. Furthermore, hiring globally allows access to diverse skilled professionals in various technologies, including those in high demand. As an example, one of the largest American tech companies, Google, utilizes outsourcing services for its numerous products and services.

As you can notice, warehouse management software development is a complex process depending on different constituents. So, you should gain the support of a qualified logistics software development vendor to succeed with your WMS development process.

Cleveroad is a skilled logistics IT company with 11+years of experience of developing custom complex solutions for logistics providers, retailers, manufacturers, distributors, and wholesalers to improve workflow performance. Our digital solutions also improved collaborations between shipping organizations, their partners, and customers.

Confirming our position as a reliable software development provider, Cleveroad has also got ISO 9001 2015 standard certification (quality) and ISO/IEC 27001:2013 certificate (security). Moreover, we have also obtained an Amazon Web Services (AWS) Select Tier Partner status to deliver high-quality cloud consulting services.

Working with us, you will get a range of benefits for your logistics business:

• Hands-on experience in creating logistics solutions like Warehouse Management Systems (WMS), Transport Management Systems (TMS), Fleet Management Software, Inventory Management Software, and mores.
• In-depth knowledge in the integration of WMS software with external systems or third-party services (e.g., Xero, Salesforce, Google Maps, Logistaas)
• On-demand IT services: creating WMS solutions from scratch, legacy system modernization, IT consulting services, logistics software design, IoT implementation, etc.
• Consultations with one of our logistics IT experts: Solution Architect, Business Analysts or Project Managers
• Flexible collaboration models to choose from: Time and Material, Augmented Staff, Dedicated Development Team, etc.
• Signing a Non-Disclosure Agreement per your wish to protect your WMS software concept

To prove our expertise, we want to represent you one of our successful portfolio cases created for a logistics company — Transportation Management System (TMS).

Our customer is a long-distance freight transportation and storage company in the United States. To improve its control over shipments, automate route planning, and streamline warehouse operations, the organization had to develop a turnkey digital solution.

Furthermore, our client needed a smooth connectivity with their current business systems — the CRM and warehouse management system. The team we formed designed and used a TMS platform tailored to the customer’s needs. The system enabled manual modifications and enhanced route planning. We also created an application for drivers to navigate along custom routes easily.

Developing the TMS system, we’ve included the following functional modules:

• Route planning module
• Jobs for Delivery module
• Fleet Management
• Delivery Points Management module
• Company Staff Access System.

Our team also succeeded in integrating TMS with other logistics systems to maintain data integrity and prevent duplication. This resulted in reduced shipment losses and improved delivery times for our client thanks to the functioning of custom transportation management system. By operating within a unified TMS environment, our client can meet their business requirements and effectively increase profits.

Start benefiting from our hands-on experience in Logistics by building a resilient and functional custom warehouse management software to optimize the space in your fulfillment center.