Why Do You Need a WMS if You Have an ERP?

Many companies use an enterprise resource planning (ERP) system to manage their inventory and warehouse space, often through the use of additional “modules” that extend the capabilities of a given ERP. But are those modules really as good as dedicated warehouse management software?

We’ve found that this is rarely the case. Let’s be clear: ERPs can be a powerful tool for many businesses, especially as they grow and scale. However, the modules that many ERPs use for warehouse management sometimes leave warehouse managers wanting more.

In fact, we often speak with businesses that are frustrated with trying to get more out of their ERP to manage their inventory and ship items on time. Because the ERP is not designed from the beginning with warehouse management in mind, it’s inevitable that the tools they have will lead to reduced productivity, increased costs, and more employees feeling frustrated rather than empowered.

Enterprise Resource Planning vs. Warehouse Management Systems

Before we explore how ERPs perform in a warehouse setting, let’s first look at the differences between ERPs and WMS.

Enterprise Resource Planning Tools

While the exact capabilities of an ERP will vary based on the vendor and the specific software in question, they tend to share the following features:

• Help companies manage a wide range of day-to-day business activities across departments like finance, human resources, risk management and compliance, procurement and supply chain management, and project management.
• Provide insight into these activities to help companies boost performance and productivity.
• Provide a suite of powerful, automatable reporting tools.
• Increasingly integrate with other business tools like CRM and IoT devices to increase visibility and decision-making power.

Warehouse Management Software

While ERPs tend to be very broad, a WMS focuses almost exclusively on the warehouse. Common features include:

• Helps companies track inventory, streamline warehouse processes such as pick and pack, optimize vehicle and personnel pathing, manage omnichannel orders, and shipping rate optimization.
• Provides tools for optimizing the receiving and put-away process that take the business’ rules and warehouse flow into consideration.
• Integrations with RFID systems to automate and streamline inventory management and provide superior real-time information about a warehouse.

Insight into a company's workforce, including information about an individual's response time and productivity gaps, and insight into labor costs and trends.

Overall, an ERP tends to have a holistic view of a company but might also suffer from being a "jack of all trades, master of none." The WMS, on the other hand, is far more granular and customized to the warehouse environment.

Where ERPs Can Fall Short in Warehouses

While not all ERPs are the same, there are a few places where they tend to underperform compared to WMS.

Not Specific to Warehouses

One of the most significant shortcomings of using an ERP to manage your warehouse is that it’s not necessarily built from the ground up for warehouses. Even if you’re using a module or plugin that is designed for inventory management, remember: That module is an afterthought, a piece of software grafted onto an already-designed system. So chances are good that it will miss something important: Up-to-date barcode scanning capabilities, warehouse layout planning, cartonization, stock out alerts…the list goes on.

Another thing to consider is that you may want to upgrade your ERP eventually. But doing so could lead to disruption in your warehouse, which can be costly. With a dedicated WMS, you know you have a tool designed with warehouse workers and warehouse managers in mind…and that isn’t going to be held hostage to upgrades in other parts of your business.

Lack of Dynamic Stock Management

One of the realities of managing a warehouse is that sometimes you’ll receive more of a particular item before you’ve shipped out all of the last batch. Where you place that excess inventory matters. You can confuse your workers and create inefficient inventory layouts if done poorly.

The ability to handle this kind of issue is known as dynamic stock management, and not all ERPs can handle this kind of complexity. Even for those with this feature, it doesn’t mean it’s been implemented in an easy-to-use and effective manner, which can hurt your bottom line. Effective rules for mixing goods in storage are necessary for continued efficient operations.

Inefficient Warehouse Layouts

Optimizing your warehouse layouts is critical for ensuring that your workers and automated equipment are well-utilized without going over capacity. This can be an enormously complicated task in a large warehouse, but one that matters. Getting it right can reduce picking times as well as wear on equipment, all while increasing worker productivity. 

A small increase in efficiency in this area can lead to massive cost savings if they influence what workers do every day. For example, having packing stations close to the shipping area will save steps, day in and day out. And preventing cross-traffic in busy areas can help prevent accidents and delays. Such small changes can add up to larger leaps in warehouse efficiency.

Missed Insights

ERPs connect information across a business to help generate insights. Those business insights are usually developed at the level of the company as a whole. If your warehouse is a tiny part of your overall business, then data from your warehouse might not be that relevant to those insights. But if you have a larger warehouse, or it’s a larger part of your business, then you might be leaving money on the table if you don’t have a tool that’s designed to identify opportunities that are specific to warehouses.

Where ERPs Can Fall Short in Warehouses

Ultimately, not all companies with an ERP solution will also need a warehouse management system. If your warehouse operations are only a tiny fraction of your overall company, or if cutting costs and increasing efficiency in your warehouse wouldn’t significantly impact your bottom line, then there’s no need for standalone WMS. 

That said, most companies with a warehouse benefit greatly from a WMS in terms of increased productivity, improved insight, and reduced costs. And the good news is that you don’t have to choose between having an ERP or a WMS. Infoplus’ WMS features powerful integrations with just about any ERP software package, so you can keep generating the business insights you need while also getting the full benefits for your warehouse through Infoplus. If your company has a warehouse and wants to take its management to the next level, reach out to Infoplus for a free consultation today.