WMS Tiers: Which Category is Right for Your Warehouse?
Originally published on February 23, 2023 by Erhan Musaoglu, Updated on February 23, 2023
In recent years, the rise of ecommerce and growing market pressures have made finding the right WMS solution essential to ensuring product variability, consumer loyalty, and high-efficiency fulfillment. Setting aside any Enterprise Resource Planning (ERP) solutions (which may or may not include some form of warehouse management), there are three widely accepted tiers of warehouse management solutions. Each has its own pros and cons depending on the size and complexity of your fulfillment network.
Let’s discuss the three tiers of WMS technology: what to expect with each and how to select the ideal tier based on your operation’s needs.
In this guide, we’ll explore:
The Three WMS Tiers
Although each WMS tier has different features and levels of functionality, all three work to reduce lead time and improve fulfillment results. When successfully implemented, all warehouse management systems help to increase operational accuracy, order fulfillment speed and minimize the costs associated with distribution and labor.
With most WMS technology, regardless of whether it is Tier-1, 2, or 3, you can expect to benefit from:
- Streamlined data capture and reporting
- Consistent inventory management and order fulfillment accuracy
- Higher efficiency workflows within your warehouses
- Better operational insights for informed decision making (ex. demand forecasting)
- Lower operational costs
That said, each WMS category offers a different level of performance and sophistication. Tier-1 is considered the most robust category of WMS, while Tier-3 is the most basic. As a general rule, as you descend from Tier-1, the intricacy, overall capabilities and cost of the solution will decrease. Tier-1 offers multiple functionalities, can be highly customized, and offers connectivity that supports complex fulfillment network operations. Tier-2 is similar to Tier-3 (which focuses on basic inventory management for a warehouse), but is typically able to expand its functions to include things like integrating with automation systems and serving multiple warehouses.
Pros and Cons of Tier-1, Tier-2, and Tier-3 WMS Solutions
You will get the most out of your Tier 1, 2, and 3 WMS technologies, if you choose the right one. Let’s look at each category’s primary characteristics, including pros and cons, so you can better identify which WMS Tier is ideal for your business.
Tier-1 WMS is the most sophisticated category of WMS solutions. They come with the highest degree of functionality and interconnectivity with other systems, making them invaluable for high-volume, large-scale operations. Whether you oversee several fulfillment centers or a global fulfillment network, Tier-1 WMS solutions are sure to support steady growth and flexibility on every level.
- Pro: Most offer in-system configurability, so you can adjust automation rules and upgrade workflows without halting operations or reprogramming software
- Pro: Comes pre-integrated with solutions and offers built in tools (ex. measurement and currency rate exchanges, dimensioning tools, rate shopping, etc.) without added costs that you can adjust as needed
- Con: Costs the most capital investment and takes (on average) the longest of Tier-1, 2, and 3 to get up and running
- Con: Requires a much more intensive implementation process, one which requires you to work with providers’ implementation teams (they oversee installation, training, and ongoing technical support)
Although a Tier-1 costs more and can take more effort to launch, a Tier-1 can become a permanent platform for your operation – one that does not need to be upgraded or replaced every few years, but which adapts right alongside your business. Do not wait for your operation to outgrow your system before making a change.
Tier-2 WMS solutions offer more capabilities than Tier-3. You might say that Tier-2 WMS solutions are Tier-3’s more flexible cousin, since these systems offer robust avenues for automating warehouse processes and connecting with other solutions.
- Pro: Built to be able to integrate with warehouse control systems (WCS) and contribute to the efficiency of automation systems (ex. can connect to automated storage and retrieval systems (ASRS), conveyors, replenishment systems, and autonomous mobile robots (AMRs), etc.)
- Pro: Can be programmed to handle multi-warehouse environments
- Con: Costs more than Tier-3 and can take a longer time to implement
- Con: Although it can be modified to match more of your warehouse’s needs, this process can become costly as you need to re-program or change functionalities, integrations, and features while you are actively evolving
Tier-2 WMS solutions are ideal for operations who are outgrowing manual processes and looking to take the next step in their fulfillment growth without taking on too advanced or expensive of a solution.
Tier-3 WMS offers basic WMS functionality to allow you to manage the flow of materials in and out of manual warehouse environments. Although often standalone systems, they can be integrated with picking systems and ERPs to help connect the various areas of your warehouse. If you want help with inventory slotting, labor management or transportation logistics, you would need to clarify with your provider what add-ons are possible.
- Pro: Assists with inventory management, including the ability to move inventory from receiving through putaway, storage, picking, packing, and shipping
- Pro: Lowest capital investment as it is the fastest and easiest to install
- Con: Does not typically support multi-warehouse operations or complex fulfillment networks
- Con: Lacks flexibility, meaning you would have to change your established processes and workflows to match those that are possible for the WMS (limits growth)
If you’re looking for an inexpensive, effective inventory solution, a Tier-3 WMS will more than likely suit your needs. But be warned, trying to mesh other softwares with a Tier-3 WMS (as opposed to upgrading to a Tier-1 or Tier-2 solution) can be costly and difficult to execute on your business without losing valuable time and money.
Choosing Between Tier-1, Tier-2, Tier-3
When it comes to choosing between WMS Tiers 1, 2, and 3… it’s important to not only reflect on your current operations, but the direction you want to grow. Each of the WMS tiers mentioned above will help your operations… but how far will they take you? Do you want your operations to improve or transform?
Logiwa created a Tier-1 cloud WMS to be a long-term solution for our clients. As an ecommerce fulfillment system, our Tier-1 WMS was built to execute data-driven operations and provide unparalleled visibility and control over order fulfillment success. As a Tier-1 solution, Logiwa WMS is highly configurable and can be programmed to meet specific needs of B2B, DTC, or hybrid operations.
From smart inventory management and optimized order routing, to our two hundred pre-integrated ecommerce partners… Logiwa WMS supports limitless growth and industry flexibility. Learn more about working with a Tier-1 WMS at: https://www.logiwa.com.