WMS & ERP Systems: Differences In Features And Business Needs

Both Warehouse Management System (WMS) and ERP System can transform your warehouse activities, but they have distinct offers for different business goals. Here we provide you with a guide to understand how each system works, and then determine which one is the best solution for your warehouse operations. Grab a cup of coffee and dive in!

Explaining Warehouse Management System (WMS) & ERP Systems

1. What is ERP or WMS?

An Enterprise Resource Planning System (ERP) provides a single source of truth that integrates and manages key business activities, including supply chain, finance management, sales and marketing, to human resources, projects, and so on. Its centralised database allows real-time data transfer across multiple departments, helping businesses achieve strategic long-term goals: better operations, collaboration, and decision-making.

A Warehouse Management System (WMS), the ERP's counterpart, is a specialised software developed and tailored to organise and improve warehouse operations. It is utilised to manage and improve order fulfilment, inventory control, staff efficiency, and warehouse environment optimisation. Using a WMS, businesses can increase the efficiency of stock movement, inventory tracking accuracy, and warehouse operations activities.

2. Differences in key features

WMS is set apart by its capacity to simplify warehouse procedures and offer real-time stock visibility. WMS assures that warehouse activities are carried out efficiently and precisely by employing features like barcoding, RFID tagging, sensors, and location tracking systems. Here’s how a WMS works at its core:

• maintains and optimises inventory levels to avoid shortages and excess.
• maximises picking and packing to minimise errors and improve order fulfilment.
• organises logistics to guarantee more precise and quick deliveries.
• tracks items using technology to improve accuracy and lower losses.

ERP systems are not built with only warehouse operations management features in mind. Even though they have stock control features, these are less warehouse-feature-rich than those found in specialised WMS. These systems are characterised by their capacity to automate manual tasks, centralise data, create a seamless data flow, and deliver real-time insights to improve departmental visibility. Here’s how an ERP works at its core:

• integrates data from multiple departments (i.e. logistics, human resources, finance, etc.).
• simplifies daily business activities via a single platform.
• improves communication throughout the business using shared data.
• gives real-time data insights to make decisions more quickly and wisely.

Adapts to your business as it grows thanks to the modular architecture.

Let's start with a summary of key areas where ERP and WMS are comparable:

Understanding The Unique Needs For WMS or ERP

1. Common goals for WMS implementation

You may realise that your traditional warehousing processes are no longer effective due to the higher complexity of order fulfilment, inventory control, and space usage. A WMS is ideal for this situation. It can greatly increase your productivity, accuracy, and control over your warehouse activities by automating essential procedures and offering real-time data visibility. The following examples of business goals proving that you can go for a WMS:

• More accurate & better inventory control: a WMS gives real-time inventory visibility into locations and levels, avoiding stockouts and overstocking.
• Optimised order fulfilment: With wave picking and pick path optimisation features, WMS systems help cut down on order picking times and enhance total fulfilment speed. 
• Better warehouse layout & storage usage: WMS systems optimise your storage capacity and help reduce wasted space.

2. Common goals for ERP implementation

The development of ERP systems evolves around resolving data silos challenges. The ERP addresses those challenges by integrating key business functions like finance, HR, manufacturing, and CRM into a single database. Here are some examples of business goals that encourage you to go for an ERP:

• Automated business procedures & improve data visibility: Using an ERP as a centralised data system helps streamline workflows and removes data silos across departments. This encourages better collaboration and interaction throughout the business.
• Better financial practices: ERPs offer a comprehensive view of data and provide advanced analysis, planning, and budgeting features. This in turn improves financial control and reporting.
• Better customer service: ERPs enable companies to improve sales values by accurately updating order status and combining sales, inventory, and order fulfilment data.

Integrating ERP with WMS Systems: How So?

1. Are WMS features of ERP ideal for your business?

ERP systems include basic warehousing capabilities, but it does not mean that they specialise in warehousing. While these systems offer inventory control features, they are typically less feature-rich than dedicated WMS software. It’s more advisable to opt for an ERP with built-in WMS features if you’re in the following cases:

• You're not using a separate WMS: The WMS features in your ERP could be enough if your warehouse operation is relatively simple (i.e. moderate inventory quantities and simple picking procedures).
• You don't need advanced features: Advanced functions like robust cycle counting, RFID integration, wave picking optimisation, and advanced yard management might not be available in basic ERP packages. The core WMS features of an ERP could be good enough if you have basic warehousing practices with simple layouts and a modest amount of SKUs.
• You prefer an easy-to-use system: If your staff is more familiar with the ERP interface, leveraging an ERP with built-in warehousing features can reduce inconvenience and the requirement for further training.

2. ERP & WMS custom integration approach

Integrating WMS and ERP is a useful strategy if your business needs both a specialised warehouse solution and a complete resource planning system. This integration involves establishing a connection between the WMS and ERP to seamlessly exchange data, allowing for data synchronisation between the two. There are two common integration approaches:

• Self-integration with APIs: The majority of modern ERP and WMS offer APIs that allow data transfer and integration between the two platforms. You can start the integration process by searching for third-party apps with the relevant integration features.
• Custom integration: Custom workflow integration is highly recommended for companies with complicated requirements. This approach demands great technical skills, so you can partner with specialised ERP experts to plan for the integration success.

The Next Step: Understand Your Business Processes & Goals

Considering the unique needs, procedures, and objectives of your company, you may need to choose between an ERP, a WMS, or a mix of both. The most important step to take now is to perform a comprehensive evaluation of your company's requirements, existing infrastructure, and expansion strategies.

To gain more insightful information for this decision-making process, consider consulting with Havi Technology, carrying out an in-depth investigation, and analysing success key factors from similar business cases.