A History of Warehouse & Inventory Management Systems

Date: July 16, 2020


A Lookback at WMS Evolution

Ever since humans evolved past nomadic hunter/gatherers and farming became a way of life, warehousing has also been a part of that life. However, taking a look back at the systems of inventory and warehouse management across the last few centuries, we’ve seen incredible growth in terms of innovation and efficiency. Therefore we plan to go through the past, present, and potential futures of inventory and warehouse management systems (WMS) and how their advancements have improved the supply chain as a whole to a point where a person can get a package on their doorstep in under 24 hours.

Now if you’re interested in a nifty history lesson, please continue reading at your leisurely pace. However, if you wish to jump straight to more modern inventory management, feel free to jump there using the link here.

The 19th and 20th Century of Warehouse Management

While basic warehouse and inventory management had been around for thousands of years, with the advent of railroads and the telegraph, these systems began to improve at a remarkable rate. Suddenly long-distance trades increased to incredible volumes and materials/goods could be shipped from one side of the country to the other in a matter of weeks instead of months. With more materials coming in, production/innovation time decreased, and efficiency increased. In order to for businesses to stay on top, processes needed to cut down wait time as much as possible. So, when materials and goods started to run low, warehouses would send telegraphs out to factories, mines, refineries, etc. to send more product to the depot station to keep the flow of input coming without any slowdown in output.

Fast forward to 1925. Pallet racks developed and allowed for vertical storing of goods. Management of the warehouse moved to optimize the cubic footage of a warehouse and build upwards. This allowed total warehouse storage to increase significantly. The following year, the idea of the forklift was developed to help move all these pallets. Suddenly large volumes of product could be moved with ease, increasing efficiency once more.

In 1967, IBM made the first computerized information management system. This was used by aerospace companies and NASA to handle complex, high-volume transactions, such as order entry, inventory management, and other transaction-oriented applications.

A few short years later in 1971, Walmart opened its first distribution center. This broadened the thinking to the whole supply chain. Storing goods in locations where they could be more quickly accessed to reach the end location and user cut down on time for shipping, restocking, and was able to flexibly move product to certain locations based on the needs of said location.

Moving along to 1974, the first UPC barcode was used in Troy, OH, for Wrigley’s Chewing Gum. Storing information about the product coded, UPC barcodes changed the way inventory in a given warehouse was counted, tracked, and known by every employee. No longer did every worker need to memorize attributes of a given product or use a reference sheet. Suddenly all the relevant information was stored within the barcode.

The following year in 1975 J.C. Penney created the first real-time WMS. This was a game changer. Updating stock inventory in real-time, J.C. Penney reduced time spent looking for product that wasn’t there and focused efforts on other areas to grow their business.

In 1988, Walmart created the first cross docking system. Adding another notch to the list of Walmart accomplishments, cross docking allowed for the reduction of time spent on the put-away, storage, and selection operations, as to significantly reduce distribution costs.

Then in the 1990s, the logistics boom was fueled further by the emergence of Enterprise Resource Planning (ERP) systems. The result of this emergence was a tremendous improvement in data availability and accuracy. The new ERP software dramatically increased and shined a spotlight on the need for better planning and integration among logistics components. The result was a new generation of “Advanced Planning and Scheduling (APS)” software.

All this has led us into the 21st century and the days of cloud-based paperless warehouses.

Modern Day Warehouse Management Systems

Now nearly everything we’ve covered until now is outdated. Sure, hardware like forklifts, pallets, and racks are all still used today, but the systems on which warehouses and inventory are managed is lightning fast by comparison and significantly more efficient. Today’s warehouse management system (WMS) is a hub of integrations, connecting warehouses to all areas of the supply chain, and is accessed online and often from the cloud. One thing to note, 3PL Central built 3PL Warehouse Manager, the very first cloud-based WMS back in 2006, and has been a leader in the online WMS space ever since. By reducing manual paper processes and keeping warehouse information stored in a centralized location where multiple people can access it at different terminals (i.e., online and through the cloud), the time lag for recording every single interaction with and within a warehouse decreases ten-fold; thus saving warehouses thousands of labor hours each year.

The most important features of the modern WMS are that they integrate, they’re fast, and they provide accurate information.

An integrated WMS will allow access to multiple software programs, all from within a single platform (AKA single sign on). No more needing to remember scores of login credentials to accomplish seemingly simple, yet crucial tasks, like sharing inventory with shopping carts, pulling carrier tracking numbers for shipping labels, and more.

A fast WMS has no lag time and accomplishes tasks instantaneously. Need to run an inventory report for a customer? Compute in seconds. Need to set up the shipping labels to deliver product to the end destination? One button click away. Need to calculate the total billable hours for warehouse work completed? Automate monthly recurring charges for customer billing. These things used to be done individually, based on the requests of a customer, or one at time by humans, which was a slower, error-prone, and arduous process.

Above all else, a warehouse must be accurate. Customers demand speed, but they also demand that their order is correct. No leniency is given to businesses or warehouses that mess up their order. With SmartScan, third-party logistics (3PL) warehouses can reach 100% order picking accuracy, ensuring that customers stay happy with the orders they receive.

The Future of the Warehouse Management System

While no one has a perfect crystal ball to know exactly what the future has in store, we can share some educated insights based on industry knowledge and trends we’ve seen over the years.

Expanding WMS Automation Processes & Integrations

While warehouse management systems already do a great job of reducing the manual tasks that cost a warehouse many labor hours, there are still areas for improvement and more parts of the supply chain that can eventually connect to a WMS.

Examples of areas that can be automated by a WMS include using robots, drones, and other hardware to not only pick, pack, and put away product, but also even run cycle counts. As image recognition software improves, robots will be able to run cycle counts to physically double-check the inventory on hand that’s been traditionally a tedious job done by individuals.

Now this isn’t to say that we want to replace warehouse workers entirely- just the reduce their burden on monotonous tasks, when their labor and thinking power can be better spent accomplishing other tasks on behalf of the warehouse. Tasks like taking care of customers and finding efficiencies. Areas that require imagination, interpretation, and aren’t easily automated by software, should be left to your employees.

Artificial Intelligence for Predictive Decision Making

What’s faster than having a shipment arrive just as you notice you need it? How about just before? The future of WMS will likely have some sort of artificial intelligence that utilizes big data, outside industry trends, and real-time inventory counts to know how fast product is moving and when to reorder it. Imagine never running out of stock because enough is always ordered beforehand, while never wasting space in your warehouse by carrying more product than what’s needed. This is the quintessence of maximizing profit from moving inventory while reducing storage space of stagnant products. There are already enterprise level WMS platforms available that will help with setting alerts for low inventory products and forecasting increases. However, the next step in this evolution would be an out of the box, deep learning, artificial intelligence that not only alerts, but takes care of the actual ordering, processing, and delivery of such products, making the entire ecosystem virtually hands-off.

This type of predictive model could even be used for labor management. If historically there’s peak season coming up, but unusual demand trends have changed the amount of work coming in, how much labor should your warehouse account for in the upcoming season? The idea is the artificial intelligence would use both the historical and current industry demand alongside other outside factors, to know exactly how many workers will be needed to fulfill all orders over a specific time period would save warehouse costs and alleviate 3PLs’ concerns about peak season labor costs.

In Conclusion about Warehouse Management Systems

Today’s world of 3PL warehousing is ever evolving, and it will most certainly continue to evolve in order to make processes more efficient while maintaining the highest accuracy possible. Therefore, your best option will be to find a WMS that can adapt and change with your business and the industry as it continues to improve. Learn more about how 3PL Central continues to stay at the forefront of this industry and will evolve right alongside you and your business. To request a demo of our WMS and see how it continues to evolve click here.


Daniel Zimmerman

Written by Daniel Zimmerman

Daniel is an experienced digital marketer, having formerly worked for some of the biggest digital marketing agencies in Southern California. Now tackling the logistics industry, he specializes in utilizing the right medium to find and show customers WMS solutions to pain points they face every day.