Warehouse Management System

A warehouse management system (WMS) is the linchpin of warehouse processes. This is where the threads of internal logistics come together. The software controls, monitors and optimizes the processes within the warehouse - clearly structured, flexibly configurable and expandable. Find out everything you need to know about warehouse management systems.

What is a Warehouse Management System?

A Warehouse Management System (WMS) is a software application that supports companies in the efficient management and control of their warehouse processes. A WMS automates and optimizes a variety of processes that take place in a logistics center, including inventory tracking, inbound, stock placement, deposit, order picking, order processing, dispatch and outbound. The software helps to increase efficiency, reduce errors and gain better control over the warehouse activities.

This applies in particular to logistics service providers, e-commerce providers, retailers, wholesalers, manufacturing companies, the pharmaceutical industry and the food and beverage industry. Having the most efficient logistics possible is becoming increasingly important, especially in e-commerce retail. Statista assumes that the sales volume of e-commerce in Germany will increase to 102.2 billion euros in 2023. This corresponds to an increase of 6.7% compared to the previous year and represents a new record. For 2027, the platform even expects a market volume of 142.4 billion euros. At the same time, however, fewer staff are available to handle the increasing number of orders. According to information from the Institute for Employment Research (IAB), more than 1.7 million jobs were recently unfilled in Germany. In addition, according to the ifo Institute, German companies need an average of four months to fill vacancies with the skilled workers they are looking for. The lack of specialists is particularly serious in logistics. Companies therefore need to deploy their existing employees as efficiently as possible. Intelligent software systems such as WMS can make a major contribution to this.


A WMS is particularly beneficial for companies with the following requirements or challenges:

  • Large inventories 
  • Complex logistics requirements
  • High order volumes 
  • Precise inventory and stock tracking 
  • Traceability of products and batches

Why WMS? Five advantages

For any company with stock levels and movements, the use of a warehouse management system is essential. The first one offers numerous advantages, including higher productivity, a lower error rate and optimized use of resources. We have compiled five immediate benefits for you.

1. Efficient warehouse management

A WMS makes it possible to use the available storage space in the best way. For example, the system shows which goods should ideally be placed in which place. This enables better organization of stock levels and minimizes unused space. This reduces storage costs.

2. Faster order fulfillment

The system streamlines the order fulfillment process by identifying the most efficient way to pick products. This leads to faster order cycles and shorter processing times.

3. Higher delivery accuracy

As the software supports employees in selecting the right products, it minimizes errors in order processing. This leads to higher delivery accuracy and a lower number of returns. In this respect, you continue to benefit from the system even after a product has passed the outgoing goods department.

4. Real-time stock tracking

The warehouse management system continuously records up-to-date information on stock levels. This helps companies to maintain an overview of their stocks at all times. This makes inventory management extremely precise and helps to prevent overstocking or bottlenecks. It also enables the user to analyze data, identify trends and continuously improve processes. In this way, the software can help the user to achieve optimum stock levels.

5. Better traceability

In some sectors, such as the pharmaceutical and food industries, product safety guidelines are particularly strict. Among other things, this requires complete traceability of products and batches, which is also necessary in the event of recalls or quality problems. A WMS makes a significant contribution to the necessary transparency.

Ten functions of a WMS

A warehouse management system (WMS) comprises a wide range of functions to manage and control a warehouse. In detail, the functionalities (often modules) can vary depending on the provider and the specific requirements of a company. Here is an overview of ten important functions of a WMS:

1. Inventory management

  • Yard management: assigning storage yards based on products, sizes and other criteria
  • Inventory tracking: Real-time monitoring of products in stock
  • Batch and serial number tracking for traceable products
  • Best before date management

2. Order fulfillment and picking:

  • Order processing including confirmation, prioritization and allocation
  • Picking optimization: Determining the most efficient way to pick products
  • Multi-order picking: Simultaneous picking of multiple orders

3. Stock movements

  • Monitoring the flow of goods or materials
  • Deposit: Management of the storage of products in the warehouse stock
  • Stock transfer: Movement of products from one storage location to another
  • Stock removal: Removal of products from stock for dispatch

4. Dispatch management

  • Shipping preparation: compiling orders for shipping, creating shipping labels
  • Freight documentation: Generation of shipping documents such as loading lists and bills of lading
  • Transportation coordination: Planning of shipping routes and means of transport

5. Labor management

  • Labor assignment: assigning tasks and orders to warehouse employees
  • Labor tracking: Monitoring employee work performance and progress

6. Reporting and analysis

  • Warehouse reports: generating reports on warehouse activities, inventory changes, etc.
  • Performance analysis: Evaluate the performance of warehouse staff and processes

7. Integration with other systems

  • With ERP systems: Exchange of data between the WMS and the enterprise resource planning system
  • With barcode and RFID technologies: recording of product information and movements

8. Traceability and recall management

  • Traceability of products: Ability to quickly identify the origin of products
  • Recall management: Identification and management of products in the event of a recall

9. Storage yard optimization

  • Dynamic storage location management: optimization of storage location usage based on product characteristics and movements
  • Cross-docking: Direct forwarding of goods at goods receipt for delivery without storage

10. Multi-client and multi-warehouse capability

  • Several clients (of a logistics service provider) can operate the WMS independently of each other
  • The system can be used at several warehouse locations of a company

Optimal warehouse utilization

KPI-oriented dispatching by the warehouse management system

The video shows you how PSIwms “Adaptive Order Start” function enables a KPI-oriented dispatching of order, considering currently available capacities. This way, you achieve a consistent utilization of all warehouse areas.

You can find more videos about the WMS on our YouTube channel

Usage variants of warehouse management systems

Standalone WMS (on premise):

With this option, the WMS will be installed and operated on local servers in the physical data center of the respective company. This means that the user retains full data sovereignty and control over the security measures and system configuration. In addition, the functions can be individually adapted to the requirements of the respective company. However, implementation generally takes longer than with other solutions. In addition, maintaining and updating the system is more time-consuming for the user. This leads to higher costs.

2WMS in the cloud

These systems will be hosted and provided via the internet. They are usually offered as Software-as-a-Service (SaaS) in a subscription model. Cloud solutions are particularly scalable, flexible and accessible from different locations. The major advantage is that the provider takes care of updates and maintenance work. The IT requirements for the user are therefore somewhat lower than with on premise solutions. In addition, the cloud-based WMS is usually available very quickly.

ERP-integrated IMS module

Some enterprise resource planning (ERP) systems include warehouse management functions. The advantage of this is that no additional software needs to be integrated. However, the limited functionality of this solution is based on warehouse management systems (WMS) and cannot be compared with a warehouse management system (we explain the difference below). This variant is therefore unsuitable for complex warehouse requirements.

WMS, ERP or IMS - which system is the right one for you?

You probably already have an ERP system. If this is the case, you may be wondering whether you need a warehouse management system at all, or whether you can simply map your warehouse functions via your ERP. You may also have come across the term warehouse management system (WMS) in the context of logistics software and are wondering whether and to what extent this differs from an IMS. Here you can find out which solution makes sense for you.

Lagermitarbeiter während der Arbeit im Lager zwischen Lagerregalen


It is possible to implement some very basic functions of a warehouse management system within an enterprise resource planning (ERP) system. ERP systems sometimes offer basic warehouse management functions that may be sufficient for smaller warehouses or less complex logistics requirements. Some of the corresponding ERP modules include functions such as goods receipt and goods issue as well as storage location management. The question is: Can you map all your current and future warehouse processes with the existing functions of your ERP system?


A warehouse management system (WMS) is not the same as an inventory management system (IMS). Mistakenly, these two terms are often used interchangeably in Germany, as "Warehouse Management System" is the literal translation of "Inventory Management System" in German language. In fact, there are some key differences between the two solutions. The most important difference is that while an inventory management system merely manages and monitors the quantities and storage locations in the warehouse, a warehouse management system controls and optimizes the warehouse processes and thus goes one-step further. A WMS is therefore the solution of choice for larger warehouses and/or more complex logistics requirements. One example of this is just in time or just-in-sequence processes. Here, a WMS helps to provide the right goods in the right quantity at the right place at the right time.

If you have the following requirements, it makes sense to also integrate a WMS:

  • Complex warehouse processes such as advanced picking methods (e.g. batch picking or multi-order picking) or cross-docking
  • Automation of warehouse processes such as picking, data collection or packing
  • Seamless integration between warehouse management, sales, purchasing and other business processes
  • Real-time transparency of warehouse stocks and activities
  • Industry-specific requirements, e.g. in the food, pharmaceutical or high-tech industries

Performance Features of a WMS

A warehouse management system should offer certain features that help to improve the efficiency, accuracy and productivity of warehouse operations. We have compiled the key features for you:

Flexibility and scalability: a WMS should be easily adaptable to a company's growth and changing requirements. It offers the user either an uncomplicated option to modify the system themselves or the corresponding support will be provided.

Intuitive usability: A clearly structured, straightforward and easy-to-understand user interface is necessary. Users should be able to quickly find their way around the software without extensive training. This requires simple and logical navigation through the system's various functions and modules. A clear menu system, well-placed buttons and short response times make it easy for the user to navigate through the software.

Good integration capability: For the best possible information flow and data consistency, the WMS should be easy to link with other software solutions such as ERP and SCM systems. It should also be possible to easily integrate a wide range of technologies, including warehouse automation. 

Analysis and reporting: To optimize processes continuously, the software has to offer powerful analysis and reporting functions that can be used to monitor key performance indicators and identify bottlenecks.

Reliable support: A WMS provider should always be available to help and advice its customers beyond the purchase and integration of the software. Easily accessible support, through either direct customer support, online instructions or chatbots, is necessary. Regular software updates are also important to ensure that the WMS is always up-to-date and meets changing requirements.

Manageable training requirements: A WMS should be easy to understand and use. This is particularly significant when new employees need to be introduced to the work processes. It should therefore be possible to use the system efficiently after just a small amount of training.

Usability: A good provider regularly collects feedback from users in order to continuously optimize the software. Involving users and industry experts in the further development of the software is a key factor for long-term success.

Selecting and implementing a WMS: five tips

Selecting and implementing a warehouse management system is a complex process that requires careful planning. A few measures will increase your chances of success and make the choice easier.

1. Define your requirements and identify critical functions. Carry out a needs analysis and define your objectives. Take into account factors such as warehouse size, type of products stored, inventory volume and warehouse technology. Based on this, create a list of the core functions that your WMS must have.

2. Think about the future. Look for a system that is flexible and scalable. The software should be able to be adapted to changing requirements without overly expensive and time-consuming interventions. Your warehouse management system should grow with your company.

3. Obtain experience reports. Exchange ideas with other companies that already use a WMS. This will give you a more practical picture of the systems and providers in question. Does a WMS provider deliver what it promises, or does it leave you out in the cold once the system has been implemented? The experiences of other users provide information.

4. Carry out demos and test runs. Ask potential providers for demos or test versions before implementation to see the software in action and check how well it fits your processes and other requirements.

5.Involve your employees. Once the WMS is in use: get feedback from all users in your team. Use this experience to further adapt and optimize your WMS.

WMS in practice: the example of fashion logistics

Warehouse management in the textile industry with fully automated logistics

LPP is the largest fashion group in the region of Central and Eastern Europe. The company's five brands sell their products both online and in stores. It would be impossible to stock the approximately 2,000 stores in over 20 countries efficiently and in line with demand without robust logistics. LPP relies on PSIwms to control the processes in the distribution center.

You can find more videos about the WMS on our YouTube channel

PSI Logistics customers and their successes

Next.e.GO Mobile

Next.e.GO Mobile SE uses Industry 4.0 methods to produce electric vehicles that are “practical and affordable”. The basis for this is a particularly high level of agility in production and logistics.

FIEGE Logistik

FIEGE operates three million square metres of warehouse and logistics space worldwide. For warehouse management and process control, FIEGE relies on PSIwms in three logistics centres.


Klinikum Nürnberg

Nuremberg Hospital has a total of 42 institutions and various interdisciplinary centres. For the purpose of supplying all departments and locations, the hospital relies on PSIwms.

Koenig & Bauer Kammann

As a manufacturer of decoration machines, the company plans, designs and assembles at its plant in Löhne. PSIwms is used for the smooth handling of production logistics.


Up to 1.5 million garments leave LPP's 66,000 square metre distribution centre daily. Behind this is a logistical masterstroke, made possible in part by the use of PSIwms.


Mahr is a manufacturer of production measurement technology. For production supply and dispatch processing, Mahr relies on the PSIwms with integrated forklift control system - connected to the ERP system PSIpenta.

Mister Spex

Mister Spex relies on our WMS to optimise its logistics processes. At the logistics centre in Berlin-Siemensstadt, PSIwms controls the entire intralogistics and production supply.


MV WERFTEN operates three shipyards. Genting HK has cruise ships built at the three shipyard sites in Wismar, Rostock and Stralsund for the shipping companies belonging to its own group.


NOSTA Group offers logistics services along the entire value chain - on land, on water, on rails or in the air. NOSTA relies on PSIwms to control its material flows.

Würth Elektronik eiSos

Würth Elektronik eiSos develops, manufactures and distributes electronic and electromechanical components for the electronics industry. Our PSIwms is used to handle the logistics processes.

Würth Elektronik France SAS

Würth Elektronik France guarantees delivery of all catalogue products within 48 hours. Würth relies on PSIwms for the swift and smooth handling of logistics processes.

Alfred Kärcher

For optimised storage and picking processes according to product-specific strategies, Kärcher relies on our warehouse management system PSIwms at the central logistics centre in Obersontheim.

The WMS of the future: the most important trends

Eine visuelle Darstellung zum Thema Lager der Zukunft mit digitalen Icons

Thanks to new technologies and changing user requirements, warehouse management systems will become even more intelligent, adaptable and efficient in the future. The following trends could shape the WMS of the future:

Flexible configuration and expandability: in an increasingly volatile business world, it is becoming more and more important that WMS can be flexibly adapted to changing requirements.

Cloud-based solutions: The Software-as-a-Service (SaaS) subscription model will become even more dominant in the future due to its scalability and flexibility.

WMS variants: In the future, warehouse management systems will more often be available in different variants or editions, broken down by company size or industry.

Easy accessibility: If the level of complexity of the respective warehouse allows it, companies will increasingly opt for standard variants with preconfigured processes that can be downloaded conveniently and used via an app store in a quick way. This model is particularly attractive for logistics service providers with many small customers.

Artificial intelligence (AI) and machine learning will contribute to the optimization of inventory planning, picking routes and storage location management.

Digital assistance systems: Augmented reality (AR) and virtual reality (VR) can be linked to WMS to improve employee training and assist with order picking.

Warehouse automation: Automated guided vehicles (AGV / AMR) and automated conveyor technology can be found in more and more logistics centers. Against the backdrop of technical innovation and the growing shortage of skilled workers, their number will continue to increase. It must be possible to connect these technologies to the WMS. In addition, drones will be used more and more frequently in the future to capture objects in high-bay warehouses and transmit this data to the system.

Frequently asked questions about Warehouse Management Systems

What is a warehouse management system?

A Warehouse Management System (WMS) is a software application that efficiently manages and controls a company's warehouse activities. The main goal of a WMS is to optimize warehouse processes, improve inventory management and increase the accuracy of warehouse data.

Is a WMS the same as an IMS?

An IMS is not the same as a warehouse management system (WMS). Despite having the same word meaning and even though some vendors use both terms interchangeably, especially in German, there are key differences between IMS and WMS. An inventory management system monitors quantities and storage locations, while a warehouse management system controls and optimizes warehouse processes. This means that the functional scope of the WMS is greater, making it the better choice for large warehouses and complex requirements.

Is it safe to use a cloud-based WMS?

Cloud-based solutions are now widespread and, with reputable providers, are at least as secure as other WMS variants. Major investments are required to set up a secure data center. Aspects such as access restrictions, fire protection, power supply and many others have to be taken into account. This is hardly feasible for medium-sized companies. Large cloud providers, on the other hand, already provide the corresponding security infrastructure - often developed over many years and certified many times over.

What distinguishes a WMS from an ERP system?

In contrast to an ERP system, a WMS is specifically tailored to the area of management and control of a warehouse. ERP systems sometimes offer basic warehouse management functions, which may be sufficient depending on the size of the warehouse and the complexity of the logistics requirements. However, an (additional) WMS is required for higher requirements, for example due to multiple locations, industry-specific requirements or a high need for accuracy.

    Any questions? Are you interested?

    Contact us, we will be happy to assist you.

    Rüdiger Stauch
    Head of Sales

    phone.: +49 6021 366-561
    e-mail: sales@psilogistics.com

    The fields marked with * are mandatory.

    Default contact form (EN)
    Fotos : Adobe Stock/pressmaster & /Gorodenkoff