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Warehouse Management Systems (WMS)

Warehouse Management Systems (WMS)

A warehouse management system is a software application designed to support and optimize warehouse functionality and distribution center management. 

  • A WMS helps to manage a warehouse effectively, including management of inventory.
  •  Basic warehousing functions, such as receiving, labelling, stocking, locating stock, picking, and shipping, require software that is programmed specifically for these tasks. 

Functions of a WMS

  • Tracking Stock
  • Layout Design
  • Picking & Shipping
  • Reporting Information to Managers.

Benefits of A Warehouse Management System

  • Labour Control
  • Improved Customer Relationships
  • Better Planning On Demand
  • Improves Productivity
  • Reduced Admin
  • Optimised Processes
  • Ensures Transparency and Visibility
  • Ensures Safety of Stock
  • Enhanced Security

Learning Activities

Activity 1: 

  • The Africa Trading Company is considering doing an ABC analysis on its entire inventory but has decided to test the technique on a small sample of 15 of its SKU’s. The annual usage and unit cost of each item is shown below.


  1. First calculate the annual dollar volume for each item
  2. List the items in descending order based on annual dollar volume. 
  3. Calculate the cumulative annual dollar volume as a percentage of total dollars. 
  4. Classify the items into groups as per ABC Analysis.

Activity 2: 

  • A computer company has annual demand of 10,000 units. They want to determine EOQ for circuit boards which have an annual holding cost (H) of $6/unit, and an ordering cost (S) of $75. They want to calculate total cost (TC) and the reorder point (R) if the purchasing lead time is 5 days.


  1. EOQ (Q)
  2. Reorder Point (R)
  3. Total Inventory Cost (TC)
  • Activity 3: 
    • Victoria Traders has annual cost of goods sold of $10,000,000. The average inventory value at any point in time is $384,615. Calculate:
  • Required:
  • Inventory turnover
  • Weeks/days of supply


  1. Discuss why inventory management is important in today’s supply chains.
  2. From a manufacturing setting, describe the different types of inventories that could be stored in a warehouse.
  3. Why should organizations implement inventory control systems? Discuss the various inventory control tools and techniques.
  4. Highlight the different types of inventory costs. 
  5. Discuss the benefits of a Warehouse Management System (WMS) in inventory management.