Cost and Benefits of Warehouse Management Systems

Benefits, Types and Costs of Warehouse Management Systems

Warehouse management systems (WMS) help control the flow of products and labor within a warehouse or fulfillment center. While basic WMS might coordinate the picking, packing, and shipping operations, there is a large range and a more robust system might handle inventory receiving, inventory management, demand planning, labor management, supply chain management and other warehouse operations.
A WMS will improve workflow efficiency, reduce errors, save on costs associated with errors, and get faster turn-around time for order fulfillment

Running a WMS can be time consuming and expensive for an ecommerce business; it requires large upfront costs for hardware, extensive training, and additional monthly costs for upkeep. If you partner with an experienced 3PL to handle your shipping and logistics, chances are they have a WMS; if you are seeing out your own WMS or looking for a third-party logistics (3PL) partner, it’s good to know the best kind of warehouse management system that will work for you. Here are some basic terms associated with WMS to help you find the best WMS or 3PL (based on what WMS they might have) for your needs. 

What Your WMS Can Do For You 

Inventory Control: The inventory management aspect of a WMS uses data collection to control inventory receiving and movement throughout a fulfillment center. The data is collected utilizing special hardware such as a barcode scanner that tracks all of the SKUs as they enter a warehouse, and again as the products depart. This can ensure that you are aware of the location of all of your inventory at any given time which helps control your inventory accuracy.

Task Management: By helping to direct picking, packing and other fulfillment related tasks, a WMS allows for workforce consolidation that reduces wasted time and effort throughout the warehouse. Other tasks include product replenishment, cycle counting, and put-aways.

Inventory Tracking: Being able to track products throughout the entire warehouse cycle allows for full visibility of all points in the process, providing real-time analytics of location and status of any point throughout the fulfillment process. The major data points that are tracked with a warehouse management system are receiving, warehouse inventory location, warehousing, packaging, shipping and delivery.

Labor Tracking: Labor tracking allows managers to check the performance and efficiency of their workforce. They measure key performance indicators (KPIs) and make sure time and resources are allocated in as effective a manner as possible.

Containerization: This aspect of a warehouse management system builds part/pallet/container relationships and can also allow for mixed container tracking. It helps reduce the number of scans that are necessary to track SKUs as they are received and moved through a fulfillment center.

Labeling: An integrated labeling system eliminates many manual tasks, simplifies workflows and cuts down on human error. It ensures compliance to various labelling standards and requirements and allows your suppliers to print their own bar coded labels for shipments that you receive. 

WMS Pricing Models

The Subscription Model: This is also referred to as SaaS(software as a service). A SaaS model warehouse management software license often includes cloud deployment, support, and maintenance, but it is not a requirement. The advantage of a SaaS software solution is that you often have much lower startup costs, but it is wise to weigh the startup savings against the total cost over time. Pricing can vary greatly depending on the terms of the services (e.g. Cloud deployment). The price you pay is for use of the software and does not include configuration. Implementation and configuration of a SaaS solution is an additional cost that must be considered, and upgrading the solution may not be included in your SaaS contract and require additional service costs. The long term cost of a SaaS solution is actually higher than if you had purchased the same solution in a Perpetual License model, but the advantages can often outweigh the long term cost increase.

Perpetual License Model: This is the traditional WMS software purchase method. Perpetual License pricing proposals often include additional warehouse management solution options such as maintenance, support and special configuration based on your needs. If you decline those additional costs and options you can still use the WMS software indefinitely, however you won’t be able to upgrade to new versions or call the vendor for support if something goes wrong with your WMS. Configuration and implementation are not typically included in the price, so it is important to consider what your start up cost along with the software cost might be.

On Premise Model: An On Premise solution is installed directly on servers located within your warehouse. The advantages of On Premise installation are significant, but the primary advantage is dramatically improved network performance. The typically quoted disadvantage is increased IT spend, which is a valid concern. Many people many people incorrectly believe that On Premise installations are automatically perpetual license purchases, but it is possible to purchase a SaaS license and install the software on your own servers. If you need the performance of On Premise, but do not want to lay out the startup cost, you may consider options such as a SaaS license for the software and hardware leasing through a major hardware manufacturer. Don’t automatically assume that in-house means high up-front cost.

Implementing a Warehouse Management System

A successful WMS implementation will require in-house preparation before it is brought on board, configuration to make sure that it has all the functions that are necessary for your needs, and implementation that could take time to make sure all of your workers have a full understanding of how to operate the new system. Each of these steps will incur their own cost, depending on the scale and scope of your project. WMS suppliers normally charge an hourly rate to configure and install your software. They will take your exact specifications and functionality requirements into consideration. Developers should also provide an upfront estimated number of hours for your project. Configuration costs can increase if changes exceed the initial scope of the project, so this is where thorough planning and forethought on your end can prevent excess costs. Also keep in mind, your new WMS may necessitate changes to your existing warehouse. You might have to add Wi-Fi or wiring for specialized hardware charging stations, rearrange inventory locations, or take other necessary steps to make sure you are able to take full advantage of all of the options that your WMS offers. These modifications may raise the initial investment cost of your system, so it is important to keep them in mind.

Bottom Line

An effective warehouse management system can provide many benefits for your company. These include real-time inventory visibility, significant cost savings, reduced errors, increases in productivity and gains in efficiency. Implementation costs can vary depending on which WMS solution is the best for your business so it is important to consider all options and costs associated with implementation and upkeep of a new WMS.

If this seems like more than you are ready to take on, you should consider partnering with a 3PL that already has an established warehouse management system in place. They are experts at managing warehouse and fulfillment operations, and you won’t have to worry about costly and time consuming implementation and they can help you scale as your needs grow.


If you are looking guidance deciding if investing in your own WMS or working with a 3PL is the best fit for your company, we would love to hear from you. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support. Send us a note to connect about how we can help your company grow.