When you are looking for a means to manage your inventory or warehouse, you will most likely come upon two terms: WMS and ERP. Sometimes these terms are used interchangeably, but they are actually two different solutions with various capabilities. While both a WMS and an ERP could benefit your SMB greatly, one may be better for you than the other. How do you know which one to choose?
Keep reading to find out.
What is a WMS?
A warehouse management system (WMS) is primarily used wherever there is inventory that has to be moved within and outside of a warehouse. A WMS is used to validate inventory that comes and goes, as well as optimize the movements and provide real-time data. You can track all historical data and strategize according to the trends you see.
Main Functions of a WMS
- Used for shipping, receiving, picking, and packing
- Assists with barcode and RFID tag scanning and monitors the movements of all those scanned items
- Inventory tracking from origin to end-user
- Warehouse layout planning
- Recommends inventory locations and strategies to reduce expired products, stock-outs, backorders, and errors with shipments
- Synchronizes data with an ERP, when available
What is an ERP?
Also known as enterprise resource planning software, an ERP is designed to manage all processes within your business, including orders, payment processing, transactional records, warehouse and inventory management, and customer relationship management. ERPs are used to generate a flow within the workplace since manual data entry is eliminated. ERPs can also be integrated into a WMS, strengthening both warehouse and inventory management functions of both.
Main Functions of an ERP
- Limited functions for picking, packing, shipping, and receiving
- Inventory location tracking
- Manufacturing and production
- Accounting and finances
- Contact management
- eCommerce integration
- Reporting
- Invoicing
What Are The Differences Between a WMS and an ERP?
How do you know whether an ERP or a WMS is the right move? Consider the things each system does differently. An ERP is made to automate many—if not all—of the departments in your business. For example, SAP Business One has modules that share data with one another. Those modules include human resources, accounting, manufacturing, sales and orders, customer relationships, inventory, and more. ERPs are meant to facilitate flow and better communication throughout your business, all the while increasing functionality and eliminating mistakes.
This may sound very similar to a WMS, and it is. However, a WMS is solely focused on warehouse management. While the WMS may sync with your ERP, it cannot handle accounting, HR, and like departments.
A WMS is considered a standalone solution for businesses dealing with inventory and shipments. For this reason, many businesses will employ both an ERP and WMS at the same time. Although enterprise resource planning systems are often touted as the all-in-one solution, they can be bolstered by the real-time data gathered from the WMS you use.
Similarly, ERPs may have many functions, but it is a jack-of-all-trades, not the master. Therefore, if you need more optimization within the warehouse, you will need a WMS that has everything you need, including picking and packing, sales tracking, and reporting on your inventory movements. Warehouse management systems are also better with slotting than ERPs.
Deciding Whether to Choose a WMS or an ERP
Here are some considerations to keep in mind when making your choice:
- What are your long-term business goals? Knowing what you would like to achieve goes a long way. If you would like to enhance warehouse management and collect real-time data on your inventory, a WMS is going to be right for you. However, if you have a business that needs to be streamlined across the board, then an ERP with “lite” ERP functions may be better.
- Which system has the best ROI? Both systems can have incredible ROI, but they don’t always cost the same to implement and operate. Also, while one solution may be cheaper at first glance, you must consider the training involved, as well as the functions.
- What needs to be improved in your business? Most businesses have something that could use fixing. What is that for you? If you have an ERP, but your warehousing processes are failing, then you may need a flexible WMS instead. Want data to effectively manage inventory flow? Choose a WMS like Agility from Wisys. Similarly, if errors are causing financial mistakes, an ERP like SAP Business One is the wiser option.
Tailored WMS and ERP Solutions From WiSys
Both WMS and ERP systems are important throughout the supply chain, especially for up and coming SMEs. No matter the goal, there are functions in both WMS and ERPs that suit your needs. In the end, deciding between one or the other depends on what you want out of the system. If you need a 360-degree view of your business, an ERP like SAP Business One may be right for you, while a WMS can help automate your warehouse. The power move, however, is to utilize both.
WiSys has tailored and scalable solutions for your business. If you have been looking to get more out of your ERP or have been searching for a WMS like Agility, give us a call at 770-955-3530. One of our team members would love to hear about your business.