Warehouse Management System Market

Market Overview

The global warehouse management system market size was valued at USD 2.85 billion in 2021. It is projected to reach USD 10.26 billion by 2030, growing at a CAGR of 15.3% during the forecast period (2022-2030). 

A warehouse management system (WMS) is a collection of computer programs and procedures that allow businesses to monitor and manage their warehouses from the moment an item is received until it is shipped out. An effective warehouse management system can reduce distribution delays, speed up product deliveries, and save money. The software can manage simple activities with limited resources and complex, high-tech warehouse procedures. Third-party logistics providers, business-to-business distributors, and other manufacturers are potential customers for WMS software.

When it comes to managing the flow of commodities from point A to point B, a warehouse management system (WMS) is indispensable. For example, if raw materials are not supplied properly, or parts are missing in a warehouse, the supply chain could be slowed down or disrupted. WMS plays a crucial role in guaranteeing the efficiency of these procedures by keeping tabs on stock and ensuring that items are kept, sorted, transported, and tracked correctly.

Market Dynamics

Global Warehouse Management System Market Drivers

Growing Automation in Distribution Channels

In the current environment, automation is a critical component that businesses implement across all industries. Distribution businesses worldwide are increasingly concentrating on increasing automation levels to cut costs, boost throughput and efficiency from an existing distribution route, and eliminate labor concerns and other issues. Distribution channels are going through substantial changes due to automation, changing how the sales process works. With automation, problems like gaining access to data insights, managing inventory and sales processes, and learning about competitors are now more straightforward. In order to run more effectively, businesses are now embracing technologies that rely on social media, big data, and predictive analysis.

Additionally, augmented reality and artificial intelligence (AI) are accelerating the automation rate in warehouse operations while correcting faults brought on by erroneous human interactions. These cutting-edge tools help companies advance because they facilitate a better understanding of consumer wants and demands.

Global Warehouse Management System Market Restraint

Increasing Data Security Threats

Data security is crucial in the supply chain and distribution industry. WMS services are accessible on both user premises cloud. Cloud data security has been a top concern for those who make decisions. The perceived risk associated with cloud computing is greater than the actual risk. Due to the aged equipment and the company's mix of technologies, on-premise provides a more significant threat than the cloud. Compared to the contemporary technologies employed by cloud providers, aging infrastructure is less safe and secure. Contrary to on-premise systems, cloud infrastructure is constantly monitored. The growing demand from customers for data security is causing software vendors to increase the security of WMS.

Global Warehouse Management System Market Opportunities

Expansion of E-Commerce and Omnichannel Fulfillment

E-commerce businesses rely heavily on warehousing and shipping facilities to transport goods from retailers and production facilities to end users in a shorter time. Due to the rising popularity of online shopping, which has various advantages like convenience, low cost, a wide range of options, and short lead times, there has been a surge in demand for warehousing in recent years. Real-time warehouse management system software solutions are increasingly used due to the significant shift in consumer purchasing behavior for effective order picking, packaging, processing, shipment tracking, and route planning. Additionally, the demand for groceries has steadily increased as more grocery stores have started investing in warehouse management systems.

Regional Analysis

The global warehouse management system market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

Europe Dominates the Global Market

Europe is the most significant revenue contributor to the global warehouse management system market and is expected to grow at a CAGR of 12.3% during the forecast period. The primary forces driving the WMS market's progress in the European region are the development of warehouse management systems and increased consumer awareness of cloud-based WMS. Due to extensive networks of third-party logistics (3PL) providers and significant international distribution and warehousing organizations, the WMS market is quickly growing in North America.

Asia-Pacific is anticipated to develop at a CAGR of 15.8% over the forecast period. The Asia-Pacific area is price-sensitive, and businesses employing WMS technology considerably choose SaaS. Manufacturers are paying close attention to the model's benefits, which include lower entry costs and risks, cost-effective expansion, access to the best technology, and dynamic and advanced software capabilities. The demand for end-use items is rising in developing countries due to customers' growing purchasing power. In addition, the uninterrupted supply of goods positively impacts the need for WMS. Moreover, SaaS is highly favored by businesses employing WMS technology because the Asia Pacific is a price-sensitive region. Manufacturers are paying attention to the model because of its benefits, including lower entry costs and risk, cost-effective expansion, access to the best technology, and dynamic and advanced software features.

North America is anticipated to grow steadily during the forecast period. The development of WMS and growing public awareness of cloud-based WMS are the main forces propelling the local market in North America. North America, led by the U.S., generated the second-highest revenue share. Large-scale businesses drive market growth in North America with global distribution operations and storage and vast networks of third-party logistics (3PL) providers. Additionally, the substantial presence of ERP providers in the U.S. contributes to the overall expansion of the local market. The nation also has a strong demand for food and drink, necessitating a constant supply from warehouses as it improves process efficiency, uniformity, and quality control.

Segmental Analysis

The global warehouse management system market is segmented by component, deployment, application, and function.

Based on Components, the global market is bifurcated into software and services.

The services segment is the highest contributor to the market and is expected to grow at a CAGR of 14.9% during the forecast period. In 2020, the services category had the most significant revenue share (82%+) in the overall WMS market. The consulting, system integration, operation, and maintenance services are all included in the services category. Third-party vendors also offer warehouse management services. Vendors either sell the software to the client without the service or give it to them as a service, allowing the client to concentrate on their primary business operations.

The expansion is primarily due to the growing use of WMS software by small and mid-sized enterprises (SMEs) worldwide. The program is hosted through a cloud-based computer system. In addition, factors including increasing consumer disposable income and increased demand in the manufacturing and retail sectors are anticipated to drive category expansion. Additionally, WMS software is frequently used by enterprises as a tactical tool to satisfy the specific customer requirements of their supply chain and distribution channel. It can be a standalone system or a supply chain execution suite component.

Based on Deployment, the global market is bifurcated into on-premise and cloud.

The cloud segment owns the highest market share and is expected to grow at a CAGR of 16.0% during the forecast period. Cloud-based technologies have changed the way that organizations operate. WMS reduces the upfront expenditures of businesses and significantly boosts warehouse productivity when it is put on the cloud. Due to the significant reduction in user and data theft over time, cloud implementation is just as safe as an on-premise system. Companies can now provide a WMS solution tailored to the client's needs.

Since the introduction of WMS, on-premise deployment has gained popularity. However, it is expected to grow slowly because of its hallmarks, such as massive servers and substantial maintenance expenditures, ultimately increasing the company's expenses. Compared to cloud-based technology, the up-front expenditures and ownership of operating an on-premise server are astronomically high. In addition, compared to cloud-based solutions, the setup procedure for on-premise solutions is drawn out and time-consuming.

Based on Application, the global market is bifurcated into transportation and logistics, retail, healthcare, manufacturing, food and beverage, and others.

The manufacturing segment is the highest contributor to the market and is expected to grow at a CAGR of 14.9% during the forecast period. Initially, the manufacturing companies integrated their ERP and WMS programs. To fully oversee the supply chain, they integrated logistics and transport management systems. Additionally, the manufacturing sector's supply chain management is becoming more effective and efficient thanks to the adoption of cloud-based technology.

The rise in popularity of e-commerce websites and rising consumer disposable income, particularly in emerging markets like China and India, are both responsible for the expansion. Logistics and supply chain firms are quickly using WMS to enhance their processes and boost warehouse productivity. The segment will grow as people become more aware of the advantages of having a well-integrated WMS, such as effective warehouse operations to meet the surge in demand.

Based on Function, the global market is bifurcated into Labor management systems, analytics and optimization, billing and yard management, systems integration and maintenance, and consulting services.

The systems integration and maintenance segment owns the highest market share and is estimated to grow at a CAGR of 15.0% during the forecast period. WMS carries out tasks like receiving and putting away goods, optimizing order picking and shipping, and providing recommendations for inventory replenishment. Order-picking functionality is one of the essential components of a warehouse management optimization suite created to automate the paper-based picking process. Picking and material handling are influenced by various elements, such as order type, warehouse layout, client needs, and product velocity. A WMS with a broad field of applicability is preferable to one that can accommodate fulfillment requirements regardless of particular warehouse peculiarities.

Recent Developments

• June 2022- Blue Yonder, a leading digital supply chain and omnichannel commerce fulfillment provider, had been positioned by Gartner as a Leader in the recently released 2022 Gartner Magic Quadrant for Warehouse Management Systems (WMS) based on the “Ability to Execute” and “Completeness of Vision” axes.
• September 2022- Leading supply chain visibility company FourKites announced a USD 10M investment from Mitsui & Co., Ltd. to expand FourKites’ offerings across the Asia-Pacific region. This investment encompasses the first phase in an ongoing strategic relationship between FourKites and Mitsui, which the two companies intend to formalize by the end of the year.