When businesses look to streamline their operational processes, they’re probably motivated by the need for better efficiencies and adding revenue to the bottom line. They often know that investing in technology is the most practical solution. Depending on their business type, organizations normally have the option of choosing and implementing an enterprise resource system (ERP) or a warehouse management system (WMS) as the vehicle for forging a path for future company growth and profitability.
What’s the difference between an ERP and a WMS?
Not every business needs a WMS, but most could benefit from an ERP – and that’s why ERP systems are designed for the many. ERP and WMS systems are similarly at the heart of an improved supply chain management strategy. Where they differ is that an ERP platform usually has components that will automate business processes across the board, such as customer management, accounting, purchasing, inventory management, etc. An ERP system only offers warehouse management as one of its modules, and therefore the capabilities are limited.
Distributors, retailers, and other organizations that rely heavily on warehouses or distribution centers to drive success are usually not well-served by standalone ERPs. Here are five reasons why.
- A WMS is purposely designed for warehouses. A warehouse management system lives in the physical world of receiving, storing and shipping goods; ERPs are in the world of purchasing and sales. Just as you probably wouldn’t ask your salespeople to find inventory discrepancies, you wouldn’t ask your ERP to perform cycle counts. A WMS generates real-time data that can be used to optimize the movement and storage of inventory as well as deliver the more efficient management of personnel and materials. An example of how a WMS can improve a company’s bottom line is by using it to reduce costly shipping errors… which always comes with the positive byproduct of increasing customer satisfaction.
- A WMS incorporates important checks and balances. An ERP will need software modifications to provide the checks and balances needed for an efficient warehouse; a WMS has this functionality at its core. With a WMS, organizations always know what’s in the warehouse, exactly where it is, when it will expire, and who’s handling it – in real time. A good WMS is also designed to challenge the warehouse to continuously raise the bar by establishing, meeting and beating its unique metrics… and then starting the improvement process again. Protecting the status quo is a weak strategy for any business trying to remain competitive in today’s market.
- A WMS (at least, a good one) offers free lifetime upgrades. A good WMS grows with a business (and conversely, can allow the organization to choose a simpler path should the business change or divide into smaller units). To do this, software upgrades need to be included in the purchase…for free, and for life. Most ERP vendors don’t offer this. Additionally, a good WMS will always be innovating to offer its customers new or improved features such as inbound logistics and manifest shipping capabilities – all at reasonable cost and with seamless integration into the original business systems.
- A WMS delivers useful performance metrics. Gaining insight into an organization’s operations is the single greatest tool for increasing business efficiency and profitability. A good WMS offers multiple metrics reports, charts and employee performance tracking tools that shine a spotlight on the warehouse or DC, clearly illustrating the processes and people behind them that work well, and those that don’t. Users will know immediately if new methods are increasing efficiency and boosting sales.
- A WMS can integrate with an ERP (but not necessarily the other way around). An organization with an ERP-based warehouse solution in place can outgrow it or become dissatisfied with the vendor. When that happens, selecting a WMS that will integrate with an existing ERP platform (such as Infor, Epicor, SAP, Dynamics, etc.) is the answer. For example, SEA Wire and Cable is the nation’s leading supplier of mil-wire, cable and wire harness accessories for aerospace military appplications. The company had an Epicor Prophet 21 ERP system in place, but it could not easily handle detailed information for SEA’s inventory, such as revisions, expiration dates and associated documents – all requirements for military-grade manufacturing. After trying to achieve this type of granularity for three years, the company decided a purpose-built WMS would better suit its needs. PathGuide’s Latitude WMS was able to integrate with SEA’s existing ERP to develop the enhancements needed for the company’s unique systems and processes.
The decision to choose a WMS over an ERP really depends on the organization’s complexity and needs. Distributors, suppliers, retailers, ecommerce vendors, and more would be best served by selecting a product that is purpose-built for large and diverse inventory types and designed by people who thoroughly understand the warehouse world.