What Small Business Owners Need to Know Before Choosing a Warehouse Management Software
Many small business owners think they can manage inventory, shipping, and order fulfillment just fine with spreadsheets – until suddenly, they’re faced with too much demand and not enough organization.
This can happen when you get your first wholesale order, or if you suddenly experience an uptick in customer inquiries about order statuses and shipping updates. Where once a simple Excel sheet did the job, you find you’re overwhelmed and struggling to fulfill orders on time or keep up with customer questions.
Warehouse management software can help small companies grow as painlessly as possible by automating inventory tracking, streamlining order processing, and integrating with shipping carriers to provide real-time updates. The right warehouse management software (WMS) can make or break a small business, so choosing the right one is a big decision. Choose the wrong system, and you have incorrect inventory levels, incorrect shipments, or delays in packing orders. Selecting the right WMS can save you time, money, and a lot of headaches down the road.
Why does WMS matter?
You may think that picking the right WMS is critical for every business, and you’d be right. But it’s especially important for a small business owner. The reason is high customer expectations. Your customers will expect Amazon-level service and reliability from you, even though you don’t have Amazon’s resources. Regardless of the size of the business they’re dealing with, over 60 percent of consumers expect free shipping on their orders, and they expect orders to arrive within three days. That’s quite a lot to live up to.
There’s also the matter of your reputation. Enormous companies like Amazon or Walmart can get away with the odd negative review or experiences due to the sheer volume of transactions. But for a small business, it only takes one or two negative reviews before it starts seriously affecting your revenue.
Finally, the necessity of picking the right WMS also comes down to your margins. Small business owners need a WMS that is going to save time and money down the line. A well-suited WMS can streamline warehouse operations, automating key processes such as inventory management, order fulfillment, and shipping. By reducing manual tasks and optimizing workflows, business owners can significantly save time and improve operational efficiency. Time saved translates into increased productivity and the ability to handle higher order volumes – without the need for additional labor costs.
What to factor into your decision
This should go without saying, but don’t get swayed by the latest and greatest WMS system just because everyone is talking about it. You want something that has features that work for your business. For example, imagine your business specializes in ecommerce and dropshipping. You should look for a WMS that offers simple integration with popular ecommerce platforms like Shopify or WooCommerce. This will let you automate order imports, and inventory synchronization, and get real-time tracking updates.
Conversely, your hypothetical ecommerce business probably doesn’t need advanced automation features like robotic picking or conveyor systems. Those would be more suitable for large-scale operations with high order volumes and extensive inventory management needs.
You may also want to look for advanced reporting and analytics with demand forecasting, integration with your existing accounting or ERP systems, and seamless integration with popular shipping carriers such as UPS, FedEx, or DHL.
Your WMS also needs to provide you with room to grow. You may be a small business now, but hopefully that won’t always be true. You want to invest in a WMS that works for your business today while having the capacity to scale up with you.
For example, look into whether the WMS can handle increased order volumes, warehouse locations, and product lines without sacrificing performance or racking up significant additional costs. This will save you the hassle and expense of having to switch to a new system as your business grows. Alternatively, if you’re not planning on expanding your small business, you can find more cost-effective systems, like a basic WMS package with limited features.
You also need to look at ease of use. Small business owners typically don’t have time to learn new, complex systems. That’s why user-friendliness is a great factor to take into consideration. Do you want something as close to plug-and-play as possible? Do you want a WMS that comes with a ton of user support? When you investigate potential options, check out how easy the analytics dashboards are to interpret, or how intuitive you find the user interface. Ultimately, you want a WMS that will seamlessly slide into your business with a minimum of fuss.
Lastly, it’s crucial to look at affordability. While cost should not be the only determining factor, you do need to look for a WMS that sits inside your budget and provides a solid return on investment.
WMS options are typically one of two pricing models: perpetual licensing and monthly subscription models. Your choice will significantly affect both your initial and annual budgets. Perpetual licensing models are more expensive upfront since you’re effectively buying the software outright. Entry-level WMS options for this pricing model typically cost around $2,500 per warehouse.
Recurring service costs are typically significantly lower. You pay month-by-month and many providers include some support and upgrade options in the monthly price. The subscription model uses cloud infrastructure for data storage and processing, offering flexibility and scalability.
Aside from pricing models, you should also calculate any potential additional charges for installation, customization, or support. Balance the costs against the potential benefits and efficiency gains the WMS can bring to your operations.
For example, imagine you choose a subscription-based WMS that costs $100 per month per user plus a $1,000 installation cost. If you have five users, that means one year of your WMS will cost at least $7,000. Your WMS should ideally result in over $7,000 of additional sales that year, or recouped employee time.
When gauging the cost-effectiveness of your WMS options, don’t be shy about asking for multiple demos, getting at least three quotes, and asking what services are included in the cost. These vendors will be more than happy to make sure they’re the right fit for your business.
Choosing the right WMS
The process of selecting the best WMS for your business is an important one. The right WMS will help you keep up with customer expectations, manage your reputation, and even grow your business later on. The wrong WMS could be an expensive waste of time that results in frustration and loss of revenue.
By keeping business fit, scalability, user-friendliness, and cost in mind, you should be able to figure out which WMS is right for your business.
Carl has led Smart Warehousing since 2001 and spent his entire career in the logistics, warehousing, and