How to Create a Warehouse Management System for Your Logistics Business

A Warehouse Management System (WMS) is software that manages inventory, warehouse workflows, material movement, and order execution as part of a broader supply chain and logistics tech stack.

WMS provides real-time updates on inventory levels, status of shipment, and order fulfillment to streamline your company’s logistics and reduce errors. The system also enables enhanced efficiency, cost control, and end-to-end visibility in supply chain management.

Look at the diagram below to understand how WMS deals with the major warehousing processes.

Picking the right WMS is determined by your business size, structure, and operational needs. Some solutions operate independently, while others are embedded in larger systems to manage workflows.

You can select one of the types of Warehouse Management Systems according to your business needs and operational requirements:

Custom warehouse management associates perform countless functions within a warehouse depending on what’s most needed. It may involve picking and packing goods, tracking inventory, scanning and tagging items, completing invoices, etc.

Let’s explore some other warehouse operations to automate:

• Order processing. When a customer places an order, the WMS automatically verifies inventory levels, allocates items for the order, and updates inventory in real-time.
• Inventory tracking. RFID and barcode scanning enable a WMS to track real-time inventory movements, reducing manual tracking.
• Quality control. The WMS can automate quality control checks, triggering alerts and notifications for items not meeting quality criteria.
• Shipping and labeling. When an order is ready, the WMS automatically generates shipping labels, packing slips, and necessary documentation. It also selects the most suitable shipping carrier based on predefined rules.
• Returns management. The warehouse management system automates return authorization issuance, item inspection, inventory adjustment, and the refund or replacement process based on pre-set return policies.

After determining which warehousing processes to optimize, you must also specify the intricacies of the WMS operating mechanism to maximize the benefits of WMS implementation.

A custom Warehouse Management System delivers four core benefits for growing logistics operations: higher operational efficiency, lower operating costs, scalable warehouse control, and end-to-end visibility across inventory and order flows. WMS software development lays the foundation for stable, predictable logistics performance.

Faster order processing allows you to handle higher order volumes and reduce manual delays that impact customer satisfaction. In practice, WMS can help streamline picking, packing, shipping, and other workflows across daily warehouse operations.

Through automation of picking, packing, sorting, restocking and other operations, your company can lower overall operating costs while maintaining consistent service levels in modern warehouse management environments.

Smart slotting algorithms and dynamic location management improve the use of warehouse space and allow your business to scale from a single warehouse to multiple facilities without losing operational control.

Real-time inventory tracking provides a holistic view of inventory flow, helping prevent stockouts, overstocking, order fulfillment delays, and data discrepancies across warehouse operations. This level of transparency is a core requirement when choosing the right warehouse management system for complex supply chain operations.

When you develop a warehouse management system, you should remember that choosing the appropriate WMS technology is essential for improving warehouse processes, increasing efficiency, and ensuring accuracy in inventory management. Moreover, understanding key user roles within the system will enable smoother implementation and continued success.

The warehouse manager is the key player who supervises all facets of the warehouse operation. The managers work on keeping the operation running smoothly, looking for resources and processes to optimize the workflow and minimize operational expenses for your company.

Warehouse managers need real-time dashboards and configurable KPIs to monitor custom warehouse management system’s performance across all locations. They also require clear, real-time visibility into inventory, order, inbound, and outbound flows directly within the system UI. Without custom logic, reporting often becomes static, delayed, or disconnected from actual warehouse performance, making it difficult to identify bottlenecks and take timely action.

The duties of a supervisor include planning, organizing, and overseeing the daily activities of warehouse workers to help them complete their assignments accurately and efficiently. Supervisors rely on task-based UI views within warehouse management system software that show workloads, priorities, and staff availability in real time. In generic systems, task assignment rules and exception handling are often too rigid, causing delays when workflows deviate from predefined scenarios.

Order pickers and packers play a crucial role in the custom warehouse management software development process by selecting suitable items and packing orders for delivery to individuals. Mobile devices enable warehouse pickers to scan barcodes, access warehouse management systems dynamically, and update the stock and order status in real-time.

As packers follow an order on a screen, they check the proper goods in the appropriate package and label them to be shipped when items are in stock. The packing screen simplifies printing ship labels, creating packing slips, or matching what has been shipped with the orders.

Pickers and packers need fast, minimalistic mobile UI optimized for scanning, clear instructions, and error-proof validation steps to support an efficient warehouse. Without custom logic, standard WMS interfaces often overload users with unnecessary data or fail to adapt to different picking strategies, increasing error rates and training time.

The receivers and clients are the roles that help activate warehouses. Receivers perform inbound logistics by accepting, inspecting, and storing incoming shipments. Users (such as 3PL warehouse managers and B2B wholesale buyers) request access to showing inventory reports and search for available-to-promise data and the number of orders.

These positions collaborate to keep a warehouse functioning efficiently. Receivers require streamlined inbound screens for inspections, discrepancy logging, and location assignment, while clients need restricted, read-only UI access to inventory and order data in custom warehouse management systems. Without tailored access rules and workflows, inbound errors and data mismatches often propagate downstream and affect fulfillment accuracy.

Clearly defined user roles are essential in WMS system development to ensure consistent data handling and coordinated warehouse operations across all locations. A well-designed warehouse management system maintains data accuracy across staffing, inventory availability, shop floor activities, while systematically identifying discrepancies and supporting their resolution.

Let’s look through the list of the core WMS functionality modules.

This module streamlines accepting and recording incoming inventory. It verifies that received goods match purchase orders and determines optimal storage locations. Additionally, it ensures thorough inspection and validation of item quality.

Mobile access is a core part of warehouse management software development, enabling warehouse staff to work with real-time data directly on handheld scanners and mobile devices. Mobile WMS supports barcode scanning, task confirmation, and intuitive warehouse navigation across multiple warehouse locations, even when deployed as an on-premise system with strict connectivity and security requirements.

It maintains accurate stock levels and optimizes space utilization. It enables real-time inventory tracking and systematic stock counting. Additionally, it provides recommendations for reorder points and storage locations.

! Kindly note that instead of creating an inventory management module for your warehouse system, you can also proceed with the separate inventory management software development, and then integrate it with your WMS. The separate inventory management software allows you to streamline and optimize your warehouse operations, ensuring that inventory levels are accurately tracked, as well as reducing the risk of stockouts or overstock situations.

This module provides detailed reports tailored to warehouse needs. Users can create custom reports and forecast trends using historical data. As part of warehouse management software development, predictive analytics helps optimize staffing and anticipate demand fluctuations.

The order fulfillment and management module enhances accuracy, speed, and customer satisfaction in order processing. It captures and records orders in real time while classifying customers by priority. High-priority orders are processed promptly to improve service.

Warehouse optimization focuses on balancing space usage, workforce allocation, and task sequencing to optimize warehouse operations as order volumes grow. At this stage, that’s where a custom warehouse solution makes a difference, allowing teams to build warehouse workflows that include labor planning, guided putaway, and yard management as part of broader management capabilities tailored to real operational constraints.

It improves order fulfillment accuracy and efficiency, guides warehouse staff through the picking process and enables multi-order picking. Additionally, this module automates shipping, including label generation and tracking.

This module is one of the core features of a warehouse management system, ensuring seamless integration with ERP platforms and third-party applications used across the supply chain. The system enables real-time data exchange with suppliers and customers, and the system can also support electronic document exchange for automated transactions and process coordination around the warehouse environment.

Choosing the feature set for your future WMS is complex and responsible, as your business performance and success depend on this choice. You can facilitate this task and contact us for an in-depth consultation. Our domain experts will guide you on how to create a warehouse management system and make an entire WMS feature set based on the needs of your shipping company.

Building a warehouse management system requires more than feature planning. It requires a clear understanding of warehouse workflows, system integrations, and long-term scalability. Below is a practical step-by-step approach we, as logistics software development vendor, use in custom WMS projects to reduce implementation risks and ensure predictable outcomes

Many warehouse management system projects fail because development starts before teams understand how the warehouse actually operates. Relying on assumed workflows, incomplete data, or generic process models undermines efficient warehouse management and leads to mismatched features, poor adoption, and costly rework.

To avoid this, review current warehouse operations before starting WMS development. Analyze how inventory moves through the warehouse from receiving and putaway to picking, packing, and shipping. Collect accurate data on stock accuracy, order volumes, exception rates, and manual touchpoints that affect optimized inventory management.

This step requires input from warehouse managers, supervisors, and floor staff to identify bottlenecks, non-standard workflows, and operational constraints that the system must support. Clear visibility into warehouse activities supports realistic system planning and resource allocation. It also helps define requirements, select the right warehouse management system features, and estimate the budget for development before implementation begins.

A comprehensive evaluation process is important to go through when selecting a reliable WMS development partner for creating your warehouse management software.

Here are some factors to choose logistics vendor that you should keep in mind:

• Use professional websites like Clutch to research and identify potential logistics IT partners that have experience developing logistics solutions.
• Check if they have a deep understanding of supply chain software, especially how the solution aligns with more extensive logistics functions.
• Examine the experience of each possible IT partner verifying for case studies or success stories related to their previous work on warehouse management. If you use SAP Extended Warehouse Management at your company, ask the provider if they have worked with that platform seamlessly.
• Choose a logistics IT partner offering uninterrupted support of and updates for the developed warehouse management software.
• Choose partners experienced to implement the latest technologies including AI, ML, blockchain, and IoT to take the most out of your warehouse’s digital transformation.
• Look through the client testimonials to know more about your future WMS development partner.

Here is what one of our clients from the logistics domain says about cooperation with the Cleveroad team and project delivery.

Share your operational needs and requirements in terms of user roles and key features with your chosen logistics vendor. Based on this assessment, the vendor’s team will specify the functionalities needed, such as real-time inventory tracking, barcode scanning, automated picking routes, order processing, or demand forecasting with AI support.

Providing clear goals about your logistics processes, integration needs and mobile access will help ensure that the final business solution meets your goals and improves overall productivity.

Collaborate with your logistics IT partner to develop custom warehouse management software. Taking the predetermined requirements and feature list, the development team will implement it in increments while testing everything along the way. Robust project management on the vendor's end is necessary to keep the development going and you are updated to review and provide feedback. A WMS has to perform perfectly in the physical world: at this point, a mistake can trigger chaos for entire supply chains.

A well-developed warehousing system not only ensures operational efficiency but also provides centralized control over your entire inventory ecosystem. WMS software development offers advanced warehouse management features such as real-time tracking, automated workflows, and seamless integrations across complex logistics environments.

Utilizing code scanners enhances accuracy within the warehouse, reducing errors and improving productivity. These capabilities help you efficiently manage warehouse operations and optimize logistics at scale.

We asked our Logistics Solution Architect, Vadym Khalimendyk, to tell more about how Cleveroad performs warehouse system development. This is what he said:

Moreover, if required, the vendor’s developers integrate your WMS software with third-party logistics systems like the following:

• Enterprise Resource Planning (ERP) software development
• Transportation Management System (TMS)
• Warehouse inventory management software
• Supplier collaboration systems
• Order management software development
• Data Analytics and Business Intelligence (BI) Tools
• Voice Picking and Augmented Reality (AR) Solutions
• E-commerce platforms, etc.

However, if you already have a warehouse management system and need to upgrade it with modern technologies and new functionality, you can also use our legacy systems modernization services.

A well-implemented WMS software allows for effective warehouse management and smooth daily operations. The development team installs the warehouse management system, integrates it with your existing logistics systems and configures user access.

However, launching a WMS is not the final stage of the project. Seamless connectivity between systems must be continuously monitored and adjusted to support inventory tracing, order fulfillment, and warehouse-wide operations as processes evolve. Staff training is equally important, since proper system adoption directly affects accuracy, efficiency, and consistency across different warehousing activities and daily workflows.

For complex warehouse environments, ongoing collaboration with the vendor often remains necessary after go-live. Developers may support performance tuning, workflow optimization, and further integrations with ERP or logistics systems as operational requirements change. Regular performance reviews, user feedback, and data-driven adjustments help ensure the WMS continues to deliver value over time rather than becoming a static system.

Let’s discuss the most widespread challenges of WMS software development and what you should know to solve them effectively.

On WMS development, it is important to address a list of technical requirements to achieve efficiency, scalability, and smooth operations. It should be able to store and process large amounts of data quickly, and its design should support scaling as performance needs grow. Interoperability is crucial as it allows data to flow without barriers across all supply chain systems.

In the case of using enterprise data warehouses, it should enable the uniting of data from multiple sources in a centralized manner along with advance analytics support for the process optimization and decision making.

Running a warehouse involves considering many rules, laws, and regulations that are the basis that helps perform a custom warehouse management software smoothly. We will closely examine these essential rules, decomposing them in a way that’s easy to understand. Let’s also cover everything from keeping employees safe to protecting the environment and managing inventory properly.

This table mentions only the most common regulations you need while developing WMS software. However, it should be noted that there are more specific regulations (e.g., foods, pharmaceutical ones) you need to comply with depending on the goods stored in your warehouse.

Dealing with warehouse management system development challenges requires not only a skilled logistics IT vendor’s help but also a budget for implementing technological know-hows and paying the specialists for their services.

A WMS handles sensitive business data, so security must be a top priority. We can protect your warehouse management system with robust encryption, access control, and real-time monitoring. Moreover, we define different user roles, implement multi-factor authentication, and run regular security audits to help identify and deal with potential vulnerabilities before they can be exploited. We secure the system and make it resilient by protecting operations, preventing data leaks, and ensuring compliance with the industry regulations.

By the way, Cleveroad obtained ISO 27001 standard certification that proves our ability to manage data security risks when developing warehouse management software for you.

Dealing with custom warehouse management software development challenges requires not only a skilled logistics IT vendor’s help but also a budget for implementing technological know-hows and paying the specialists for their services.

How does AI help in manufacturer warehouse management? The AI-integrated custom warehouse management system allows companies to perform predictive learning, error reduction, and customized operation optimization. The correct AI solutions accelerate the speed of warehousing operations, and improve efficiency.

We’ll help you explore the most essential AI technologies to empower your warehouse operations.

AI in custom warehouse management directly affects how quickly and accurately customers receive information about orders, inventory availability, and delivery timelines as part of broader management and logistics workflows.

• Order status intelligence

Customers often request frequent updates on order status and delivery timelines, which creates additional workload for support teams when handled manually. A generative AI assistant can retrieve real-time data from the WMS and transportation systems and automatically generate accurate, context-aware responses. This approach speeds up customer communication and reduces the number of incoming support inquiries across shipping management processes.

• Available-to-promise accuracy

Inaccurate stock visibility often leads to overpromising and delayed deliveries. To address this, machine learning models analyze inventory flow and demand patterns across warehouse management processes and continuously refine availability calculations. As a result, companies can make more reliable order commitments and improve customer trust through more accurate delivery expectations.

AI reduces the cognitive and operational load on warehouse employees by guiding daily tasks and minimizing manual decision-making in warehouse management software development initiatives.

• AI-assisted picking and task guidance

Warehouse staff often lose time navigating complex warehouse layouts and switching between picking tasks. AI-assisted task guidance addresses this by analyzing real-time warehouse conditions and recommending optimal picking paths and task sequences across different warehouse zones. By reducing unnecessary movement and decision-making, this approach shortens picking cycles and helps lower error rates during order fulfillment.

• Automated exception handling

Inventory mismatches and process exceptions frequently require manual investigation, which slows down daily operations and distracts staff from core tasks. AI-based exception handling detects anomalies in inventory data and operational workflows and suggests resolution steps directly within the WMS interface. This way, automated exception handling reduces the need for manual intervention and supports more predictable and stable warehouse operations.

AI enables continuous improvement of warehouse workflows without long analysis cycles, supporting transformed warehouse management at scale.

• Demand-aware replenishment planning

Static replenishment rules often fail to reflect real demand changes, which leads to stockouts or excess inventory. AI models address this by analyzing historical data together with real-time demand signals and dynamically adjusting replenishment logic. This AI-powered enhancement helps maintain balanced stock levels, and limit unnecessary inventory buildup.

• Process optimization insights

WMS development teams often struggle to understand where time and resources are lost across daily operations. AI analyzes operational data to detect bottlenecks, repetitive delays, and inefficient workflows that are difficult to identify manually. With these insights, teams can make faster, data-backed decisions and continuously optimize warehouse processes without long analysis cycles.

While AI-driven use cases like demand-aware replenishment and process optimization can significantly improve warehouse performance, they also influence system complexity and implementation scope, which directly affects the cost of developing a warehouse management system.

The average cost of a custom warehouse management system typically ranges from $70,000 to $250,000+, depending on project scope and requirements. The final price is calculated by logistics software development specialists based on functionality complexity, software type, required integrations, UI design, and software development rates. To estimate a more accurate budget, it is important to define at least the core functionality set or the type of WMS you plan to build before engaging with IT experts.

Kindly note that you do not need to necessarily hire in-house software engineers to build a warehouse management system. You can hire a vast pool of outsourcing logistics IT experts to create a solution to manage your warehouse activities.

We’ve prepared a corresponding table to help you consider the approximate warehouse management system development team composition and outsourcing hourly wages for their services.

Looking through the table, you can see that the rates vary significantly worldwide. For example, developers from North America tend to have a higher rate, but the price does not necessarily reflect the quality of their service. Additionally, looking for WMS development specialists with the necessary skills and expertise in local markets can be challenging. Moreover, it can be an expensive option as you will have to compete for fair salaries.

Central and Northern Europe is recognized for its proficiency in this field. Outsourcing warehouse management software development to Central European countries can result in lower rates and highly qualified developers. Numerous software development companies offer custom software solutions at an average rate of $50 to $90 per hour.

Furthermore, hiring globally allows access to diverse skilled professionals in various technologies, including those in high demand. As an example, one of the largest American tech companies, Google, utilizes outsourcing services for its numerous products and services.

As you can notice, warehouse management software development is a complex process depending on different constituents. So, you should gain the support of a qualified logistics software development vendor to succeed with your WMS development process.

Cleveroad is a skilled logistics IT company with 15+ years of experience in developing custom complex software for logistics providers, retailers, manufacturers, distributors, and wholesalers to improve workflow performance. Our digital solutions also help to enhance collaborations between shipping organizations, their partners, and customers.

Confirming our position as a reliable software development provider, Cleveroad got certified with ISO 9001 2015 standard certification (quality) and ISO/IEC 27001:2013 certificate (security). Moreover, in 2025, we ranked 11th among Clutch TOP-1000 business service providers, were acknowledged as Clutch Global Leader in the Fall Ranking, and obtained a bunch of other prestigious awards.

Working with us, you will get a range of benefits for your logistics business:

• Hands-on experience in creating logistics solutions like Warehouse Management Systems (WMS), Transport Management Systems (TMS), Fleet Management Software, Inventory Management Software, and more.
• In-depth knowledge in the integration of WMS software with external systems or third-party services (e.g., Xero, Salesforce, Google Maps, Logistaas)
• On-demand IT services: creating WMS solutions from scratch, legacy system modernization, IT consulting services, logistics software design, IoT implementation, etc.
• Free Solution Design Workshop with our logistics IT experts: Solution Architects, Business Analysts and Project Managers
• Flexible collaboration models to choose from: IT Staff Augmentation, Dedicated Development Team, Time and Material
• Signing a Non-Disclosure Agreement per your wish to protect your WMS software concept

To prove our expertise, we want to represent you one of our successful portfolio cases created for a logistics company — Transportation Management System (TMS).

Our customer is a long-distance freight transportation and storage company in the United States. To improve their control over shipments and automate route planning, while streamlining warehouse operations, the organization needed to develop a turnkey digital solution. Furthermore, our client needed a smooth connectivity with their current business systems — the CRM and warehouse management system.

The team we formed designed and implemented a TMS platform tailored to the customer’s needs. The system enabled manual modifications and enhanced route planning. We also created an application for drivers to navigate along custom routes easily. Our team also succeeded in integrating TMS with other logistics systems to maintain data integrity and prevent duplication.

As a result, our client received a tailored TMS that reduced shipment losses and improved delivery times. By operating within a unified TMS environment, our client achieved their business goals and effectively increased profits.

Start benefiting from our hands-on experience in Logistics by building resilient and functional custom warehouse management software to optimize the space in your fulfillment center.

Cleveroad team has designed a demo version of the Warehouse Management System, so you can view how the WMS system works on the example.