WMS or ERP? Which Is Right for Your Business?
Choosing the right software solution to manage and streamline your warehouse processes is essential to productivity and efficiency. Without a proper management system in place, your warehouse cannot function in a way that works for your team and your customers. The two main options for warehouse management include the traditional warehouse management system (WMS) and enterprise resource planning (ERP). Although they have some similarities, these two systems are distinctly different and have their own benefits. Here’s what you need to know about each of them, and how to find out which is the best option for you.
What Is WMS?
As mentioned before, WMS stands for warehouse management system. This system is used to manage the storage, order processing, and movement of inventory in your warehouse. It helps you track the progress of each item at each stage: receiving, picking, packing, and shipping. With this real-time data, you can optimize based on historical trends and information. You can make better decisions during peak times and slower times. With WMS, you can reduce shipping errors, which account for 54% of returns. It also establishes a seamless link from order processing and logistics to the physical movement of the product out of the warehouse. The very best WMS will allow you to seamlessly connect your e-commerce platforms, marketplaces, accounting platforms, shipping carriers, and more.
Pros of WMS:
- Adaptable to the needs of each business
- Focuses on real-time operations—changes and grows with your inventory
- Makes your warehouse efficient and productive with multi-functional components
- Reports help you predict your inventory needs, even during high peak events
- Lower risk investment
Cons of WMS:
- You will need to set aside time to update and set up your warehouse locations with the WMS
- WMS only covers your order fulfillment, inventory, and warehouse management
What Is ERP?
The second option for your warehouse management is enterprise resource planning, or ERP. Both small and large businesses can use this to stay competitive and efficient with the way they store and access information. ERP seeks to achieve this by streamlining all processes and information into one solution. WMS focuses on the warehouse inventory alone, while ERP automates every department in your organization including inventory, service, sales, human resources, purchasing, customer relationship management (CRM), material requirements planning (MRP), financials, and products. ERP contains some of the same capabilities as WMS as well, but they are not as thorough. With ERP you can track inventory and get information about when items are picked, packaged, and shipped, but it focuses on creating a streamlined flow of information between all areas of business.
Pros of ERP:
- Streamlines all platforms
- Makes the warehouse functions seem like a “free bonus” since it includes all processes
- Able to automate different aspects of your business—increases productivity and efficiency
Cons of ERP:
- May cost more in implementation and in the long-term
- May not be as flexible in terms of sharing data with vendors
- Lacks an in-depth look at inventory and reporting to maximize warehouse space
- Rigid and transactional because they operate across multiple departments
Which Management System Is Right for You?
The benefit of having two options is that you can choose the right system for your goals, challenges, and budgets. A few aspects to keep in mind before you choose the right system for you include the following.
Consider the long-term goals of your business. What is required to get you there? Take time to define the measurable outcomes you hope to achieve and the functional requirements your business needs to get there.
You should also consider the technical requirements for storing and moving your products. What equipment do you need to integrate? This assessment will help you avoid problems related to your storage and delivery processes.
Return on Investment
Finally, you should calculate the return on investment (ROI) of each system by matching the costs of your long-term goals and needs to the implementation and integration costs. Consider how the increase in productivity will affect your bottom line. Each operations area of your business will be affected by your software, so it is important to carefully assess the pros and cons to make the best decision.
Get Help Managing Your Manufacturing Process with LSS
Both systems are important aspects in helping you manage your supply chain, but to meet your goals in the best way possible, you need to decide which of them is best for you. It is important to note that you can set up one of these systems on your own, or partner with a third-party logistics provider who can offer you these systems and more.
Lean Supply Solutions can help you if you are looking for a 3PL company with the latest technology and software systems. We are aware of the rising trends in the logistics industry and always strive to stay up to date. We commit to being aware of our clients’ operational challenges as they arise and help them get the most out of their supply chain processes. Our 3PL and 4PL, packaging, and supply chain management can streamline your processes for better success, as we deliver your products to your customers on time and help you achieve consistent, accurate, and quality results. To learn more about outsourcing to our 3PL distribution team or to ask any questions, contact us.