What is Warehouse Optimization Software (WOS): Difference Between Warehouse Management System (WMS)

Summary

Warehouse Management Systems (WMS) are used to organize and control the daily work inside a warehouse or distribution center. Their main job is to track when inventory arrives and leaves, where it’s stored, and how to keep things running smoothly. In contrast, Warehouse Optimization Software (WOS) builds on top of a WMS to make operations more efficient. It uses advanced optimization modules and data to improve the entire warehouse operation flow. WOS doesn’t replace a WMS but works with it to help warehouses run faster, smarter, and at lower cost.

What Is a Warehouse Management System (WMS)?

A Warehouse Management System (WMS) is software that helps run the daily operations inside a warehouse. It keeps track of where every item is stored, how orders are picked and packed, and what tasks each worker is doing. Its main goal is to make warehouse processes more accurate, faster, and easier to manage.

A WMS acts like a digital control tower for the warehouse. It shows what’s going on, so managers can make sure everything runs smoothly, from receiving goods, storing them in the right place, picking them when needed, packing them correctly, and shipping them out on time.

What Is Warehouse Optimization Software (WOS)?

Warehouse Optimization Software (WOS) goes beyond the basics of a Warehouse Management System (WMS) by using advanced algorithms, data, and simulations to make warehouse operations like picking, slotting, and packing more efficient.

While a WMS focuses on tracking and managing tasks, WOS focuses on making those tasks smarter and more productive. It helps tackle common challenges like low picking productivity, rising shipping costs, labor shortages, and outdated, static processes for packing and slotting. In addition, WOS simplifies data capture by enabling teams to collect, digitize, and share operational data in a mobile and customizable way. Whether it’s simple data capture or advanced mobile dimensioning and AI module components, teams can customize workflows without IT involvement.

How Does WOS Work?

1. Operational Optimization

WOS integrates directly with existing warehouse management systems (WMS) to improve day-to-day tasks. For example, instead of pickers following basic business rules during picking proposed by WMS logic, WOS applied advanced routing and batching algorithms cut walking distances on the warehouse floor by 20 - 50%.

In parallel, WOS’s mobile data capture platform feeds the WMS with accurate master data, such as item measurements, counts, photos, checklists. Master data stays up to date and accurate, allowing planning and execution to stay in sync and work from one source.

2. Strategic Optimization

WOS acts as a warehouse digital twin, a virtual version of your warehouse that allows you to simulate changes and test improvement ideas before implementing them.

• See the difference between as-is picking logic and the optimized.

• Simulate new warehouse layout or slotting strategy's impact on picking productivity.

• Calculate the ROI potential by applying advanced batching or slotting optimization.

Capabilities of WOS:

• Picking Optimization: Advanced routing and batching algorithms that reduce walking distances by 20–50% on the warehouse floor.

• Cartonization: Determines the optimal box size and quantity during packing based on product and packaging dimensions.

• Pallet Building: Creates stable, full pallets by consolidating orders into the optimal number of pallets, improving fill rates, and reducing transport costs.

• Pick & Pack Optimization:  Guide pickers along the shortest path and provide clear packing instructions during pick tours. Get new workers to perform efficiently on day one.

• Mobile Data Capturing: Digitizes and centralizes operational data collection through customizable mobile workflows, including mobile dimensioning, visual recognition, label scanning, cargo inspections, checklists, return handling, and compliance management.

• Sales Order Planning: Calculates the number of boxes or pallets required at the order-entry stage.

• What-If Scenarios:  Simulate warehouse changes like layout, slotting strategies, and equipment choices

• Warehouse Heatmaps: Shows activity levels and congestion zones inside your warehouse.

Differences Between WOS and WMS

The Need for Warehouse Optimization Software (WOS)

Many warehouses today are under pressure from two sides: rising operating costs and outdated processes. The three main cost drivers for the warehouse & distribution industry, labor, warehouse space, and shipping, are increasing.

In the U.S., average wages in the warehousing sector reached $25.62 per hour in May 2025, up over 6% year-on-year (U.S. Bureau of Labor Statistics). Meanwhile, EU transport and storage labor costs rose by 4.1% in the first quarter of 2025 alone, according to Eurostat. Industrial rents across Europe grew by 2.5% in 2024 and are forecast to continue rising due to limited supply and sustained demand (CBRE, 2025 European Logistics Outlook). Shipping prices are also climbing: USPS will raise its Ground Advantage rates by 7.1% in July 2025, while DHL Express has already announced a 5.9% average price increase for 2025, impacting cross-border e-commerce costs across the EU.

Despite these growing costs, many warehouses still rely on outdated processes or basic WMS logic and manual workflows.

• Standard warehouse management systems tell workers what to pick and where to go, but they do not calculate the fastest or most efficient way to complete the task. As a result, workers often follow snake-pattern picking routes, wasting valuable time and energy walking across the warehouse.
• Packing is manual, with little guidance, which leads to using the wrong box sizes, wasting packaging materials, and shipping air. Pallets are often under-filled, which means more pallets are shipped, more space is used, and more money is spent.
• Slotting, deciding where to store each item, is frequently based on static rules or Excel heatmaps that become outdated quickly.
• Warehouses depend on temporary workers, who often need weeks or months of training to reach full productivity. Without tools that guide them, these workers struggle, and operational output suffers.
• Outdated and expensive methods like manual measuring, static dimensioners, pen & paper, and scattered data across spreadsheets and emails slow down operations and are prone to errors.
• Managers often lack a practical way to identify areas for improvement or test operational changes across the warehouse. As a result, they rely on external logistics consultants—which can be costly—or resort to trial-and-error methods that risk unnecessary delays and expenses.

In this environment, relying solely on manual processes or static system logic makes it harder for warehouses to stay competitive. Tools like Warehouse Optimization Software (WOS) offer a way to respond to these challenges—by using advanced optimization modules to identify inefficiencies, support workers with clearer guidance, and evaluate potential improvements before making changes.

How Do WOS and WMS Work Together?

Warehouse Optimization Software (WOS) doesn’t replace a Warehouse Management System (WMS); it improves it. A WMS is your execution engine. It helps you run the warehouse by managing inventory, coordinating daily tasks, and keeping everything organized and traceable. WOS acts as a layer on top of the WMS. It analyzes operations, identifies inefficiencies, and recommends smarter ways to work.

Two-way Data Flow

The two systems link through an API. The WMS supplies the WOS with operational data; WOS applies its optimization logic; then WOS sends the optimized result back to the WMS.

Beyond day-to-day optimization, warehouse optimization software introduces the concept of strategic simulation through a digital representation of the warehouse. Virtual model that allows teams to define constraints, such as aisle types, one-way or bi-directional, restricted zones, and simulate different scenarios, like comparing current picking routes to optimized ones, test slotting strategies, or layout changes. The goal is to estimate the impact of these changes on performance metrics such as walking distance, congestion, and throughput, before making any changes in the actual warehouse.