Enterprise Resource Planning (ERP) and Warehouse Management Systems (WMS) software are essential tools for automating business processes. However, they are different. It is possible to use the two interchangeably, but they are not the same thing. Therefore, businesses have to be careful when looking for inventory management software to achieve their goals.
Companies that implement one incorrectly may have difficulty achieving their targets, which results in additional costs. Let’s look at each software system, consider how it works, and highlight the key differences in each business software.
WMS (Warehouse Management Software)
The primary purpose of the warehouse management software (WMS) is to simplify the daily activities of warehouse activities including, receiving, put away, storage and shipping. Typically, warehouses are a hive of activities, and without a viable system, operations can easily fall into disarray.
Having reliable software specially designed to cater to warehouse operations can help save on time, cost and create efficiency within a business. WMS software is essential in modern logistics, tracking of inventory, and the integration of staff activity to create an optimum business operating environment.
Statistical data shows a positive trend in the reliance of major industry players on the WMS software. Studies from 2015 highlight an 85% share of respondents using the WMS system to facilitate logistics within the USA. About 93% of US-based logistics companies used WMS software to manage their distribution processes in 2017, reaching its peak. (Source)
W. Edwards Deming discusses the importance of having a functional management system. In one of his statements, he states that “ 85% of the reasons for failures are deficiencies in the system and not of employees. The role of management is to change the process rather than pestering the employees to do better”. In essence, warehouse and logistics managers need to adopt a working system that can easily adjust to their business needs in a modern operating environment.
What are the minimum features that you should look for in a Warehouse Management system?
Modern weight management systems (WMS) are often stand-alone systems that require additional modules, such as customer management and accounting. For the system to work cohesively with other operations, it could be essential to consider the following requirements.
- Labor utility
- ABC classification
- Utility classification
- Warehouse capacity management system
- Cross-docking management
- Inventory location systems
Enterprise Resource Planning (ERP) software
Enterprise resource planning software (ERP) integrates different business departments to provide an all-in-one solution to everyday business challenges. The software is especially useful in handling accounting, marketing, logistics, procurement, project, and risk management across the business’s entire supply chain.
The use of enterprise resource planning (ERP) software is essential to the success of any business enterprise. The software creates a real-time analysis of the different business processes for effective control and management. Adopting quality ERP software can help reduce costs and maintain a healthy business operating environment.
The ERP software sector projects continuous growth over the next few years. Statistics indicate that the reliance on ERP software systems could propel the industry to over 97 Billion dollars in the United States alone by 2024. A study from the year 2019 valued the software at just above 90 billion in market share. The trend can continue to rise over the next five years culminating in a 7 Billion increase in market share.
Enterprise resource planning (ERP) has plenty of perks for modern businesses. Some of the key benefits include enhanced business reporting with better reporting time. The platform also offers a single source of truth by creating an integrated database of all essential business information. Another plus includes efficient customer service, reduced costs, improved cash flow, etc.
ERP software is an investment of time, money, and other business resources. However, the software creates standardization where it becomes easy for management to charter and formulate strategic plans using reliable data.
Masaaki Imai highlights the importance of having a standardized system in business operations. It is impossible to improve any process until it is standardized, he says in one of his statements. In a process that keeps shifting from here to there, any improvement will be nothing more than a variation that is occasionally used but mostly ignored. One must standardize, thus stabilize the process before making any improvements.”
Before incorporating ERP software within a business, organizations must meet some fundamental requirements, including:
- Training of employees
- Aligning businesses with IT
- Cooperation with trusted external partners such as software vendors
- Consideration for future integrations
What is the difference between WMS and ERP software?
The primary difference between warehouse management systems and enterprise resource planning relates to its use, integrations, and the need for support.
ERP software presents itself as the complete package, in that a firm using the software has a broader reach in terms of scope of application. Warehouse management systems focus more on logistics, and warehouse inventory thus requires support from other applications to formulate a cohesive operations mechanism.
Additional differences include:
Some ERP software systems might not offer the best choice for product tracking. Older ERP systems offer limited tracking options compared to WMS systems of the same caliber. Modern logistics companies might be better off opting for a standard WMS software if product tracking is an essential aspect of the business.
Even so, there might be issues in integrating both ERP and WMS software in such a case.
There is a continuous shift from transaction-based logic owing to the need for more real-time analysis of business processes. Older ERP versions offer a linear perception of business operating environments, which is not always the case in modern dynamic business models.
Businesses that are constantly affected to change are better of with a WMS system or an ERP system that accommodates priority changes.
Deciding on the best choice for your firm can be difficult, but if you have a proper understanding of the business structure, its operating environment, and the training structures of your staff. Choosing between an ERP model or a WMS software shouldn’t be all too complicated. It’s better to consult with a reputable software company for any queries, concerns, and issues relating to the offered products.
SAP business one is an ideal software for businesses. It offers a comprehensive solution to small and medium enterprises and deals with the different aspects encompassing purchasing, inventory, sales, accounting, reporting, and analytics. Call us today to help integrate critical functions seamlessly in your organization.