With the current pace and development of the supply chain, efficient warehouse operations are vital for companies to satisfy customer demand and capture market share.

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A warehouse management system (WMS) is the most effective solution for efficiency objectives. A WMS is a software solution that is designed to manage and control warehouse operations including inventory management, order fulfillment, and shipping processes.

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When a warehouse adopts a WMS, there are numerous benefits that can emerge including, but not limited to, increased inventory accuracy, decreased order cycle times, and increased labor productivity. 

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Nonetheless, there are many costs involved when implementing a WMS, and these costs can vary based on deployment models, features, and business size. This blog will take a closer look at what costs are associated with implementing a WMS, providing you with information to assist you in budgeting.

How much does a WMS system cost?

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The price of a warehouse management system (WMS) has a wide range depending on the deployment model, functionality, and company size. Cloud-based WMS options typically can range from $100 to $500 per user per month, mainly due to the flexibility of deployment and low upfront investment.

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On-premise systems usually include a one-time perpetual license fee, which can range in price from $2,500 to over $200,000 per facility, depending on the complexity of the system. 

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Costs related to implementation, customization, hardware, and support will also come into play with any WMS solution and these variables will be further discussed in the following sections of this article.

Understanding WMS pricing models

Choosing the proper warehouse management system (WMS) to meet your organization’s needs means learning about the two main pricing models available to you: subscription-based (SaaS) and perpetual licensing. The cost structures, benefits, and considerations of each pricing model are different, and they can ultimately affect your organization’s operations and budget.

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1. Subscription-based (SaaS) model

In this subscription-based method, the company is subscribing to the WMS by paying a monthly or yearly fee. The subscription-based model is often (but certainly not always) seen with cloud-based service delivery models (where the software is hosted on servers owned by the vendor, and accessed via the internet).

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Key characteristics:

• Lower one-time costs: You only incur setup and training expenses initially, which is a lower barrier to entry than for most other software options, particularly for businesses with little capital.

• Scalability: As your business changes and grows, you can easily modify the number of users or features to use the software.

• Automatic updates: Software updates and maintenance are the vendors’ responsibility, which means they will have the latest features and security patches.

• Predictable ongoing costs: A recurring subscription fee creates a more predictable operating budget and financial forecast.

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Cost considerations:

Subscription fees can vary quite a bit depending on the vendor, features, and number of users. Monthly user fees can range from $100 to $500, depending on the complexity of the systems and features. There can be other costs as well, such as implementation, support, or add-on modules. In aggregate, recurring fees can compound, and could very well be at a higher total than perpetual license costs over time.

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2. Perpetual licensing model

With the perpetual licensing model, you make a single payment for a software license, and can use the WMS indefinitely. This is generally an on-premise model, with the software installed and managed on the company servers.

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Key characteristics:

• Higher initial costs: The upfront costs associated with purchasing, installing, and implementing the software license and hardware have significant costs.

• Lower long-term costs: In many cases, a company's costs after an initial investment will be limited to maintenance and support, which will be between 10% and 20% of the license cost and charged annually.

• More control: On-premise systems require important decisions around management, user access, control of customizations, and access to key data.

• Longer implementation: Implementation can take longer due to procurement and installing new hardware.

Perpetual license fees can vary widely depending on the complexity and variety of features within a system, but typically fall between $2,500 and $200,000 per facility. Other considerations include hardware, IT staff costs, and maintenance.

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3. Choosing the right model

Many factors will influence whether an organization uses a subscription-based model, or not. Determining the right choice involves a consideration of budget constraints, how much control they desire over the particular system, potential for growth or scalability, and their overall strategy for the future.

• The subscription-based model is particularly favorable for organizations looking for an affordable, flexible and manageable IT infrastructure option.

• The perpetual licensing model is recommended for organizations looking for a one-time investment in IT resources with greater autonomy to manage their systems, and are not resource-constrained for IT infrastructure.

Both of these pricing models are important for each organization to understand before making an informed decision that best supports the organization's objectives and business needs.

Cloud vs. on-premise deployment

Selecting between a cloud-based warehouse management system (WMS) and an on-premise WMS is a significant decision that will affect your operations, costs, and future scalability. While each deployment method has its distinct pros and cons, in the end you must choose one over the other.

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Cloud-based WMS solutions are hosted and maintained on the vendor's (the technology publisher) servers with access via the internet. They tend to go by a subscription model and offer low start-up costs and ease of scaling. 

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On-premise WMS vendor solutions are hosted and maintained on the company's own servers, this offers some advantages of control and customization, but typically has a larger start-up expenditure. To help you assess which technology deployment model makes the most sense for your business needs, here is an in-depth comparison:

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In summary, a cloud-based WMS is probably the best choice for smaller to medium sized companies that require flexibility, scalability and low upfront cost, while an on-premise WMS is almost certainly better for large companies with a lot of need for customization, the right size of IT infrastructure and more control over data and systems.

Calculating WMS installation costs

There is much more to implementing a warehouse management system (WMS) than simply the cost of software licensing or the subscription fee. Start-up costs include set-up, configuration, integration, and training, among other costs, and vary widely depending on the deployment model, whether cloud-based or on-premises; and the complexity of your operations.

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1. Installation and customization

For cloud-based WMS solutions, the installation and configuration costs are somewhat lower, ranging between $1,000 and $10,000, depending on complexity and any customization requested. Generally, installation and configuration expenses cover the out-of-the-box software configuration, some basic integrations, and user training.

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On-premise WMS installation and configuration costs are generally higher than cloud solutions when it comes to installation and configuration, costing between $3,500 and $40,000. This is because of the costs to purchase the hardware, heavier systems configuration, and usually more complex integrations with existing infrastructure.

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If you're deploying at an enterprise level, costs possibly increase even further with integration with other systems (ERP, TMS ... etc).

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2. Integration expenses

Integration of a WMS with systems is a key element for ensuring a smooth operational process. The costs for integration can vary significantly:

• Basic integrations: integrating with standard systems may yield costs from $10,000 to $30,000.

• Advanced integrations: integrating with complex systems and/or multiple systems may yield costs from $30,000 to $80,000, depending on the complexity and number of integrations.

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3. Training costs

Proper training facilitates the use of WMS, resulting in fewer errors by staff and consequently an increase in productivity. The training costs are generally in the range of $1,000 - $5,000 for small to midsize companies. For larger companies, or companies with complicated operations, this will increase from $5,000 - $50,000 costs associated with advanced training and more advanced support.

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4. Maintenance and support

Continuous maintenance and support are critical to ensure a WMS operates smoothly.

• Cloud-based: Maintenance and support are generally included in the subscription fee.
• On-premise: Maintenance fees are typically 10% to 20% of the original license cost per year and include updates, patches, and technical support.

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Although these numbers provide good estimates, the actual costs depend on your business, chosen WMS solution, and operational complexity. It is important to get price quotations from vendors according to your organization's requirements.

Essential WMS features and their impact on cost

The features you select in a warehouse management system can affect not only how your warehouse is operated but also how much you pay. While there are features you will need for almost any type of business, there are others that might only make sense as you grow or specialize. Here is a review of some of the more common WMS features and what that typically means when it comes to pricing:

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Hidden costs to consider in WMS implementation

When purchasing a warehouse management system (WMS), it is essential to understand the cost of a WMS is more than just the acquisition cost, for the duration of your system's implementation there will be unknown costs or costs that could not have been predicted that will influence the cost of your investment. Knowing these costs will help you to plan your budget in a way to alleviate surprises during your implementation process. 

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1. Hardware and equipment upgrades 

When implementing a new WMS you may have to purchase additional hardware such as RFID readers, barcode scanners, or mobile devices. Depending on the size and complexity of your warehouse, your expense for equipment could be substantial. When purchasing new hardware make sure it is compatible with your existing hardware and you won't be incurring further costs.

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2. Customization and configuration

Customizing the WMS to fit your needs usually involves customization. Customization is a different price for different systems and ranges from $5,000 to more than $50,000. The more complicated the system and the vendor, the greater the cost. A very large percentage can be avoided by defining your needs upfront. 

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3. Integration with existing systems

Integration to existing systems(including ERP or inventory management) is critical to ensuring that the WMS operates seamlessly with your current processes. Integration costs depend on the systems included and the number of systems in place. Integration costs can range from $3,000 to $30,000.

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4. Training and change management

Having effective training will ensure your people use the new WMS effectively.  Training costs can range from hundreds of dollars to thousands of dollars; it depends on the complexity of the system and your team size.  You must also deal with change management in your organization to make the transition more effective.

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5. Infrastructure and connectivity

For cloud-based WMS systems, reliable Internet connectivity is an absolute requirement. Upgrading your existing network to meet the requirements of the system could be a costly proposition on its own.  You'll also want to ensure that your infrastructure can accommodate the new system before you agree to its implementation.

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6. Data migration and backups

Importing data from your current systems to the new WMS can be complicated. Data transfers may require additional resources, and it is strongly recommended to conduct backups of potential use cases to assure there is no data loss during the transition to the new WMS. During the data migration, the additional resources required to conduct this operation may add to the cost of the implementation. 

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7. Post Implementation Support

Even after implementation, you will have ongoing support and maintenance once the WMS is functional, as issues may arise. Some vendors will include support, while others will charge separately. Ensuring you understand what is included in the support level, will allow you to determine future costs. 

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Taking into consideration the hidden costs associated with a WMS, will help you build a proper budget for implementation, allowing for a smooth transition.

WMS cost analysis by business size

The cost of implementing a warehouse management system (WMS) is not a cookie-cutter or one-size-fits-all solution and really depends on the size of your business, as well as the complexity of needs. Small businesses, mid market firms, and enterprise-sized companies will all view a WMS investment differently, and the costs reflect that difference.

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1. Small businesses

For small businesses, especially those with a single warehouse and fewer than 10 users, the prices for WMS are generally between $100 - $300 per user per month. These businesses generally have a focus on core features, such as tracking inventory, simple order management, and mobile access. 

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Cloud-based WMSs are particularly popular with businesses at this level because they can be much easier to purchase in comparison to a traditional WMS, having less up-front expenditures due to no physical infrastructure requirement, and they're very flexible as the business grows.

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2. Medium businesses

Organizations with approximately 10 - 50 users, or mid-sized operations, typically spend $300 to $500 per user per month. As businesses reach this stage, they likely have multiple warehouses or more complex processes which requires the WMS to support real time analytic capabilities, even better integration with ERP systems, and better analytics and reporting tools. 

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While cloud solutions are still prevalent, businesses will start to explore hybrid options or more customized solutions for particular industry needs.

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3. Large Enterprises 

For large service environments, where many of the aspects of supply chain complexity and number of transactions are intensified, the costs for WMS is roughly $500 per user per month with project costs likely in the six figures. 

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What large enterprises need are advanced features that include automation, labor management, RFID, and multiple-system integration across even multiple regions or countries. Many large enterprises will implement their wholly unique and custom solution that matches their unique internal infrastructure and continuing objectives.

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This understanding of how WMS pricing varies with the size of your business will help you assess WMS solutions that meet your current needs where you are not paying too much or not spending enough.

Industry-specific WMS cost considerations  

Various sectors utilize warehouse management systems differently. Here is how WMS pricing varies according to what retail, manufacturing and third-party logistics (3PL) companies generally require: 

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1. Retail and eCommerce

Key requirements:

• Real-time inventory management across locations. 

• Integration with online marketplaces and point-of-sale systems. 

• Timely picking, packing, and returns. 

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Cost considerations:

• Costs can be relatively high compared to other sectors due to the need for omnichannel support and automation, which try to reduce human labor. 

• Cloud-based systems are common because it allows the business to minimise upfront costs and avoids having to scale their technology during a seasonal peak. 

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2. Manufacturing

Key requirements:

• Managing raw materials, WIP (work in progress), and finished goods

• Integration with ERP and production planning systems

• Batch tracking and quality control

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Cost considerations:

• Higher setup costs, due to a more complex workflow

• Long-term ROI increased because of production efficiencies and material waste reduction.

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3. Third Party Logistics (3PL)

Key requirements:

• Support multiple clients with a variety of billing options.

• Different workflows to facilitate a bunch of different industries.

• Reporting and integration with clients.

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Cost considerations:

• Higher cost due to multi-client architecture & customization

• Incremental ongoing support with customized functionality.

The role of RFID in reducing WMS system cost

Deploying radio frequency identification (RFID) technology in a warehouse might initially seem like a new expense, however, over the long term, RFID can lower operational costs and improve your WMS operational efficiencies. RFID technology requires radio waves for automatic identification and tracking without needing line-of-site (like traditional scanning with a barcode).

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RFID enables improved utilization of manual labor, faster inventory counts, and less human error as the Auburn University’s RFID Lab uncovered in their study, as retailers that implement RFID can achieve an inventory accuracy rate of 95%, compared to the approximate 63% that achieve through a manual/barcode method.

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With a WMS system, RFID allows an operation to receive and pick faster, as well as to track location in real-time. This results in fewer stockouts, improved order accuracy, and lower labor costs, especially in a high-volume operation.

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RFID implementation can vary in cost greatly, based on the scale. In general:

• RFID passive tags cost anywhere from $0.10 to $0.50 each depending on the type and volume.

• RFID readers/security/infrastructure vary in cost, from $3,000 to $20,000 per zone.

• Developing or middleware may need to be developed for integration to WMS, which adds to the upfront cost.

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However, over time, many companies begin to see a return on their investment through:

• Lowered labor.

• Faster cycle counts.

• Less shrinkage or inventory loss.

• More precise forecasting of demand.

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RFID is not required for every process but for warehouses with high throughput, high SKUs, and complex supply chains, it can be a formidable angle for manufacturers to reduce long-term costs associated with WMS usage.

The total cost of ownership (TCO) for WMS systems

When assessing a warehouse management system, it is important to go beyond the price tag. The total cost of ownership (TCO) tells a complete story by putting all direct and indirect costs of ownership into perspective during the life of the system - from implementation to ongoing support.

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TCO typically includes:

• Licensing or subscription fees: Regardless of whether you choose a one-time perpetual license or a recurring monthly cloud subscription, this is the primary cost of your investment.

• Installation and configuration: These costs include the software installation, data migration, business process mapping, and connecting to other systems like ERP (Enterprise Resource Planning), accounting, or ecommerce.

• Training: You want your staff to utilize the system efficiently, so training is almost mandatory. Initial training and some ongoing refreshers will be needed as well.

• Hardware (for on-premise or RFID): Additional hardware such as servers, scanners, RFID readers, or networking infrastructure will contribute to the expense of the project.

• Maintenance and upgrades: For on premise systems, maintenance contracts typically range from about 15–25% of the license cost annually. Cloud-based systems usually have support included as an operating expense (but still some platforms will charge you for anything beyond minimum support).

• Customizations and ongoing development: Over time, many businesses will customize or enhance the WMS, and depending on the size, these costs can become a significant long-term investment.

• Support: Whether your plan includes tech support as part of the fee schedule, or it is tiered, or billed separately, you will need to consider the cost of support, depending on your vendor and plan.

Although upfront pricing may appear lower for some systems, the TCO allows organizations to prepare for what it will actually cost for the WMS over 3–7 years. For instance, if a cloud-based WMS has lower upfront cost or barrier to entry it may cost more in the long run depending on user count, use levels, and extra services.

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Understanding the TCO allows you to be sure you're comparing solutions on an equal playing field—not just price, but value for the life of the system.

Real-world case: Industrial parts distributor achieves 204% ROI with savant WMS

A global distributor of industrial components faced the usual growing pains of a growing business: labor costs were increasing, inefficient warehouse processes were in place, and inventory visibility was limited. They looked at Savant WMS, an all-in-one warehouse management system designed for complex inventory situations and to streamline the logistics in their operations.

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Key outcomes: 

• 204% ROI in only 6 months: Rapid recovery of implementation costs as a result of more efficient operations and savings on labor.

• $405k annual savings on labor: Automation of the various processes such as order picking, packing and shipping, kept the company from having to hire more warehouse employees with increased order volume.

• Annual savings of $63,785 on warehouse management time: Due to faster and more accurate order processing; the time spent on manual coordination and issues was drastically minimized.

• Improvement in order processing accuracy and speed: With better data visibility and real-time inventory visibility, errors were down and order processing was faster improving customer satisfaction.

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What factors contributed to a successful implementation? 

• A good technology fit: Savant WMS was a good fit for requirements, without over-engineering the system. 

• Integrated well with their existing tools: Savant WMS was able to be integrated into their current way of operating without having to overhaul their tools and general processes. 

• Executed easily: The warehouse team was able to pick-up the system very easily, as they had a sense of what was expected from the new outputs and outputs.

This case illustrates how the right WMS can alter the bottom line to reduce costs and improve processes, especially when all the needs of the operational requirements are closely matched to the capabilities of a new WMS.

Fictional use case: How a mid-sized 3PL achieved a 22% cost reduction with Fynd WMS

Managing multiple e-commerce clients was creating issues for a mid-sized 3PL company. There were problems in the warehouse with delays in fulfilling orders, problems with correct inventories and high expenses for employees’ labor.

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Challenges:

• Problems in inventory control because of frequent stock discrepancies.

• Problems arise from having to process records manually such as delays and errors.

• A challenge with adding new clients is the rigidity in the company’s processes and routines.

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Solution:

The business brought in Fynd WMS which helps manage the warehouse and simplify operations.

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Key Features Utilized:

• Real-Time Inventory Tracking: Provided all clients a higher degree of accuracy regarding stock levels, and fewer inconsistencies.

• Automated Order Processing: Transported the picking and packing and shipping processes to an automated system, reducing user error rates.

• Customizable Workflows: Provided the company the option to customize warehouse processes for each unique client, allowing for better scalability.

• Mobile Access: Allowed warehouse personnel to have the option to work in the mobile space allowing them to manage a greater number of activities more effectively.

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Results:

• Reduced Operating Costs 22%: - due to automated processes and increased accuracy.

• Order Accuracy Improved: - less order mistakes and a high level of client satisfaction.

• Faster Client Onboarding:  - no disruption adding new clients in unique workflows.

A 3PL company’s mild-mannered warehouse operations were profoundly transformed for monetary gain and significantly improved client satisfaction from the use of Fynd WMS.  This case is illustrative of the benefits of a strong warehouse management system.

Vendor comparison table

In many cases, the choice of a WMS boils down to trying to compare vendors that satisfy the goals of your business, budget, and growth strategies. Below is a simplified comparison of a few different WMS providers:

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Note: Pricing is likely to differ depending on number of users, locations and tiers of features. Always see the vendor to get an accurate quote.

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This table is a useful way to provide a high-level comparison, but choosing the right WMS will still depend on ancillary needs such as integrations, necessary flexibility to customize, level of support, and tools specific to your industry.

Tips for finding an affordable WMS

Finding the right warehouse management system (WMS) doesn't necessarily involve the most expensive solution. Below are several simple suggestions to help you locate a WMS that meets your operational needs while "staying on budget".

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1. Start with requirements

Prior to vendor and WMS comparisons you will want to identify the "table stakes" solutions you are looking for in a WMS. For example: do you gain value from real-time updates of your inventory? Are you managing multi-clients? Do you need barcode/RFID support? Knowing these parameters will help avoid paying for unnecessary capabilities.

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2. Consider the total cost of ownership.

Be aware that you are most likely paying for more than just the licensing fee associated with the WMS. You may have additional fees for implementation, training, hardware (if needed), maintenance, and integration of other applications. Therefore, a cheap solution might not be the best choice in the long run.

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3. Select a vendor with scalable pricing 

Find a provider that has variable pricing based on usage, users, or transactions, so that you can continue to grow without outgrowing the provider.

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4. Ask for a live demo 

Never fail to do this. A live walk-through of the WMS systems can help you assess usability, relevant features, and how close it will fit into your actual workflow.

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5. Look for industry features 

A general WMS may not have some features that are essential for your industry. For example, if you are a 3PL, you will want to see if the system has multi-client logic to support flexible billing.

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6. Assess support and onboarding

In a way, it depends on the size of the system; less expensive systems may be just as good at onboarding and customer support as a larger, more expensive solution. Ask about SLA response times, training materials in documentation, and implementation support.

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7. Trial before you buy

There are many SaaS WMS providers that offer free trials or pilot programs. This helps you assess how they perform in the real world before you lock in.

Why choose Fynd WMS?

If you’re searching for a flexible, efficient, and true-to-life warehouse management solution, Fynd WMS is definitely worth serious consideration. Whether you are an ecommerce brand with growing sales and orders, or 3PL provider, or a retailer looking to manage sophisticated omnichannel fulfillment, Fynd provides the features to rationalize complexity - not inflate it - and add to your logistics costs.

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1. What sets Fynd WMS apart?

A. Multi-client support built in

Our core functionality is multi-client. Whether you're a 3PL or not, we make it easier than ever to manage multiple clients, SKUs, and workflows without messy workarounds. You can easily see what each client owns and needs without jumping from tote to tote in your workflow.

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B. Mobile-first experience

We've designed our platform with floor teams in mind. Our system works seamlessly on mobile devices, allowing you to have your warehouse staff picking, packing, tracking, etc., without needing to restrict warehouse functionality to people sitting at desks.

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C. Modular and scalable

Start with basic functionality and add on as you grow. Fynd is modular, so your approach to inventory control, pick, packing, smart shipping, and everything else you may do constitutes your agility.

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D. Real-time visibility

We offer real-time inventory updates and fulfillment tracking, as well as valuable information about performance—all in one place.

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E. Customizable workflows

Every warehouse is different, and we understand that. You can design your operations according to your business model without waiting for a developer to assist with each new request.

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F. Affordable and transparent

We offer pricing that is flexible and transparent, allowing you to scale and grow as your company does. You have enterprise grade tools without an enterprise price tag.

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2. Built for modern logistics

Fynd WMS goes beyond just another plug-and-play tool - it is solving real operational pain points. Whether it is eliminating manual tasks or enabling better fulfillment accuracy, it is built for teams that want more than just dashboards.

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Understanding your operational needs is just as important as cost in choosing a warehouse management system. The true cost of a WMS involves much more than the purchase price (liquidation models and deployment types, hidden expenses and industry considerations, etc.). 

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If you're a small business considering your first WMS, or a larger business upgrading your WMS stack, you can improve your operations, reduce inefficient processes, and ultimately spend less money over the long run by investing in a current warehouse management solution. 

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As long as you take a careful and informed approach, and find a tool that fits your actual workflows, you'll maximize the value of your WMS investment.