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ERP vs. WMS: differences, synergies, and integration

An enterprise resource planning (ERP) system is a comprehensive tool covering all aspects of business management. A warehouse management system (WMS), meanwhile, is designed to manage all logistics operations within a warehouse. The two solutions perform separate yet complementary functions, and integrating them helps improve supply chain performance and efficiency—which is vital to boosting competitiveness and customer satisfaction.

 

Key differences between ERP and WMS systems

ERP: the enterprise management tool

An ERP system—or enterprise resource planning system—is an integrated piece of software that covers all aspects of enterprise management:

  • Financial management: tracking financial flows, billing, general and cost accounting, assets, management control, financial consolidation.
  • Sales management: quotes, orders, pricing and discounts, etc.
  • Procurement and purchasing: supplier management, purchase orders, incoming goods, stock management and valuation.
  • Production management: production planning and tracking, resource management, scheduling, quality, etc.
  • Human resources: staff administration, payroll, time and task management, recruitment, training.
  • Project management: planning, budget tracking, resources, etc.
  • Business intelligence: reports and dashboards.

An ERP system is designed to provide a central, integrated overview of all information, helping to break down data silos and make it easier to share information between departments.

WMS: the logistics performance optimization tool

WMS software, meanwhile, is designed to manage and optimize all operations in a logistics warehouse. The WMS features notably cover the following areas:

  • Incoming goods: receipt of incoming goods, quantity and quality checks.
  • Storage: optimization of storage locations, special storage zoning.
  • Stock management: real-time tracking of quantities and locations.
  • Order picking: management of manual or automated picking, packing, and consolidation.
  • Shipping: organization of loading, printing of shipping documents, management of loading docks.
  • Returns management: inspection, re-stocking or scrapping.
  • Reports and dashboards: warehouse performance reports, key performance indicators (KPIs).

Should you choose an ERP, a WMS, or both?

Is an ERP system ideal for warehouse management?

Software such as SAP, Oracle, Sage, Microsoft Dynamics, and Infor include stock and warehouse management features. For some companies, these features may be all they need.

But ERP systems are known for their lack of flexibility. In a fast-paced market, a specialized piece of software such as a WMS system offers greater adaptability, giving businesses the responsiveness and agility they need to manage their logistics operations while gaining an all-important competitive edge.

In factories, an ERP system is perfectly adequate for managing low-volume production tasks that operate to strict schedules and involve only a handful of components. A warehouse management system, however, can handle complex production lines involving a high volume of parts, raw materials, and semi-finished products, where granular, real-time line-side replenishment is a must.

In any event, an enterprise resource planning system lacks the extensive warehouse management features found in a dedicated WMS system, such as multiple picking methods; advanced, integrated transportation features for optimizing shipping and truck fill rates; or a labor management system (LMS).

 

ERP WMS module or dedicated WMS software?

Many companies—of all shapes and sizes—are wondering whether to use their ERP’s WMS module or a dedicated WMS to manage their logistics operations.

Below are some questions you can ask to determine which option is right for you:

  • Does your company handle large volumes of orders and stock?
  • Do you find it hard to manage some supply chain operations with your ERP system?
  • Do you experience stock or order-picking errors?
  • Do you need to optimize your shipping processes and cut delivery lead times?
  • Are returns frequent, and do you find them difficult to process?
  • Are you making optimal use of the storage space in your warehouse?
  • Do you require granular traceability of incoming goods, storage, and shipments within your warehouse—by batch, expiration date, or serial number?
  • Do you need to improve your line-side replenishment processes?
  • Are you looking to make better use of your human and material resources?
  • Could some processes in your warehouse be automated to boost productivity?

 

Benefits of a WMS over an ERP system

If your company has advanced warehouse management needs, or if your business is growing quickly or its needs are constantly changing, you may want to consider a warehouse management system—a specialized piece of software that offers a range of benefits once deployed within a logistics platform:

  • Enhanced productivity and operational efficiency
  • Real-time, granular tracking of stock levels
  • Faster and more reliable order picking
  • Optimized use of warehousing space
  • End-to-end traceability of all tasks
  • Maximized and orchestrated use of resources (operators, mechanized systems, robots, or cobots)
  • More line-side space
  • Responsiveness and agility to cope with changes.

What’s more, WMS software vendors provide a dedicated product roadmap and a steady stream of upgrades and new features in order to keep pace with the latest market challenges and trends.

Synergies between WMS and ERP systems

In many areas, WMS and ERP systems operate in synergy in order to boost overall supply chain performance. Some examples:

 

Stock level optimization

The WMS software provides the ERP system with precise information about the quantities of products available across all logistics sites. This information can be used to adjust supplier procurement or production operations, allowing the company to maintain its overall stock at just the right level—neither too high (which would unnecessarily immobilize capital) nor too low (which could lead to stock shortages).

In the manufacturing sector, the warehouse management system provides the ERP system with an exhaustive overview of stocks of raw materials, components, semi-finished products, packaging, and finished products.

 

Incoming goods

The enterprise resource planning system sends the WMS details of scheduled incoming deliveries, based on information provided by suppliers and/or production sites. The warehouse management software then informs the ERP system once goods have been received and the products have been added to warehouse stock.

 

Order picking

The ERP receives incoming orders and instructs the WMS system to pick these orders. The WMS software then manages the entire order-picking, packaging, and shipping process. Once the order has been picked, it transmits this information to the ERP system, which can then update the shipped order status and trigger the invoicing process.

 

Faster, more reliable replenishment

Having the WMS and ERP systems working in synergy provides the all-important agility needed to cope with sudden changes in demand. For instance, if stock of a fast-selling product is running low, the warehouse management software will inform the ERP system, which can then increase production output or place replenishment orders with suppliers.

A WMS system also confers additional benefits for factories:

  • Making line-side replenishment more reliable by getting materials and semi-finished products to the production lines when they are needed
  • Helping to plan ahead and avoid disruptive shortages

 

Traceability of logistics flows

The warehouse management system provides complete traceability of all production logistics flows, from incoming component deliveries to finished product shipping.

 

Transportation cost control

The WMS software can use data provided by the ERP system’s purchasing module to compare carrier costs. Unlike the enterprise resource planning system, the WMS system can simulate the volumes to be transported, group goods according to the chosen carrier, and maximize truck fill rates.

 

Financial monitoring and reporting

The ERP system analyzes the data provided by the WMS software. This information can be used to identify potential improvements and opportunities to leverage economies of scale across the entire supply chain.

WMS and ERP integration

The ERP and WMS systems constantly share information. Effective integration between these two pieces of software is therefore critical to data exchange. The keys to successful integration include:

  • Ensuring seamless interoperability between the ERP and the WMS, through dedicated connectors, APIs, and web services, or through exchange databases.
  • Mapping the data, determining which data needs to be exchanged automatically between the two systems, and deciding which software holds the master data for each process.
  • Determining the frequency of data synchronization between the ERP and WMS systems for each logistics process (e.g., in real time for orders and stock shortages, at regular intervals for stock levels, or occasionally for inventories).
  • Guaranteeing the security of the data exchanged between the two systems.

Comprehensive logistics information system: ERP, WMS, TMS, and more

Aside from the ERP and WMS, a comprehensive logistics information system also includes other specialized software components, such as:

  • A transport management system (TMS), which plans, executes, and optimizes transportation operations. The TMS encompasses a wealth of functions, from planning and optimizing routes and controlling transportation costs, to selecting carriers and tracking deliveries in real time.
  • An order management system (OMS), which manages the entire life-cycle of a customer request, from order placement, processing, and prioritization, through to delivery.
  • A manufacturing execution system (MES), which manages and oversees production processes in real time, and provides complete traceability of production operations.

When operating as an integrated, synchronized whole, the ERP, WMS, TMS, OMS, and MES provide companies with end-to-end visibility and greater control of their logistics operations.