ERP vs. WMS: What’s the Difference?

The global supply chain software market is expected to showcase an annual growth rate of 4.14%, leading to a market volume of US$ 24.58bn by 2029 [1]. To cope with this growth, building a solid operational framework is crucial for efficient warehouse management.

To optimize warehouse operations and enhance supply chain efficiency, many 3PLs and retail brands in e-commerce have turned to software solutions. The right technology can empower organizations to improve customer experiences and drive business growth. As different companies have varying needs and goals, it’s important to leverage the best software in order to refine business processes.

The two main systems companies gravitate towards are ERP and WMS. Enterprise resource planning (ERP) is a comprehensive system with broad capabilities, covering an organization’s entire scope of business operations. On the other hand, a warehouse management system (WMS) refers to standalone, purpose-built software that covers end-to-end logistics operations, from managing package movement to inventory storage.

While both solutions serve distinct purposes, their complementary functions work hand-in-hand to solve the same problem — maximizing efficiency in supply chain operations. In this article, we’ll offer you:

• An Understanding of ERP
• An Understanding of WMS
• ERP vs. WMS: Key Differences
• ERP and WMS Functionality Comparison
• ERP and WMS Integration and Synergy
• Why 3PLs and Brands Need Both ERP and WMS

Understanding ERP (Enterprise Resource Planning)

An ERP system, or ERP management software, is an “all-in-one” solution that automates cross-departmental business operations. Acting as the central hub for all core business functions, ERP software uses include the automation and improvement of key back-offices processes.

Key Functionalities of ERP Systems

To better determine whether or not an ERP system aligns with your organization’s needs, here’s an overview of the core components of ERP:

• Financial Management

Featuring an integrated finance module, ERP is able to track finance-related data, from billing to general accounting processes.

• Human Resources

ERP systems also integrate human resource functions, facilitating HR tasks such as recruitment, staff training, and payroll management.

• Supply Chain Management

Another significant function is supply chain management, where ERP software oversees inventory control, logistics operations, and resource allocation.

• Customer Relationship Management

CRM tasks are also streamlined for enhanced customer communication, improving sales processes and ensuring proactive customer service support.

Limitations of ERP Software

While ERP management software can facilitate an entire organization’s operations, it only scratches the surface of warehouse functionality. For businesses that work with high-volume inventory, more sophisticated features might be required like advanced picking and packing, warehouse space optimization, and warehouse labor management. These can only be found in a warehouse management system (WMS).

Understanding WMS (Warehouse Management System)

Now with a clearer understanding of ERP, let’s explore the differentiating features of a Warehouse Management System. Recognized as a niche solution, WMS focuses on the optimization of warehouse operations. Used to increase warehouse efficiency, WMS functions cover carrier management, inventory tracking, order fulfillment, and more.

Key Functionalities of a WMS

If your organization handles substantial volumes of inventory, the specialized features of a WMS are better suited to optimize your warehouse processes. Below are four main elements of this advanced warehouse management software:

• Inventory Tracking

With the precise inventory tracking capabilities of a WMS, businesses can monitor stock levels, product location, and the movement of goods.

• Order Fulfillment

Businesses can fulfill orders with efficiency by leveraging WMS software in the management of order picking, packing, and shipping.

• Labor Management

A WMS can also assist in implementing strategies for workforce optimization and resource allocation within warehouse operations by monitoring and reporting staff movement and efficiency.

• Warehouse Optimization

A WMS can help refine end-to-end warehouse processes like stock replenishment and maximize space utilization based on product demand, special storage needs like batch and expiry, temperature control, etc.

Benefits of a WMS

A WMS offers all the essential features that 3PLs and brands need to manage both simple and complex facets of warehouse management. Organizations are able to integrate WMS software with existing ERP systems to boost productivity and add depth to an ERP system’s functionalities. This is especially beneficial for businesses that are looking for a full-spectrum solution to accommodate their growth.

ERP vs. WMS: Key Differences

Looking at ERP and WMS systems side by side, the key point that separates these software is their scope of operations. An ERP system offers a bird’s-eye view of the entire business, serving as an all-encompassing management tool that oversees finance, HR, supply chain, and other functions. On the contrary, a WMS zooms in on warehouse operations. It meticulously manages inventory flow, from receiving goods to shipping them out.

Integration and Synergy

With unique yet interrelated functions, the seamless integration of ERP and WMS systems can help organizations achieve optimal business performance. This combination makes up a robust solution that can help sync relevant data, enhance order fulfillment, optimize resource allocation, and achieve cost-savings in the long run as it maximizes overall efficiency.

Why 3PLs and Brands Need Both ERP and WMS

To truly future-proof business operations and strive towards long-term success, 3PLs and brands with warehouses must leverage the dynamic fusion of ERP and WMS softwares. Here’s why this combination is necessary to improve overall performance, reduce costs, and enhance productivity:

a. Complexity of 3PL and brand operations

Third-party logistics (3PL) providers juggle a complex array of operations. From managing inventory to keeping up with rising order volume, 3PLs require robust systems for effective and speedy logistics processes. Similarly, brands also focus on a variety of operations from production to marketing, selling, and customer satisfaction. To alleviate the stress of inventory management, a mix of ERP and WMS software can help them efficiently manage this aspect of their business.

b. Limitations of ERP systems alone

While an ERP provides a broad view of business operations, they often fall short in granular warehouse management. Without detailed features like real-time inventory visibility and storage space optimization, ERP systems may fail to meet the needs of a growing 3PL or brand.

c. Advantages of Combining ERP and WMS

Integrating ERP and WMS systems creates a strategic synergy that drives 3PL growth and brand’s warehouse management efficiency. By combining the strengths of both softwares, businesses can effectively manage the complexities of their operations, improve customer satisfaction, and gain a competitive edge.

Conclusion

In order to meet business goals, companies must determine whether an ERP system, WMS, or a combination of both, can provide the most value. For 3PLs and organizations aiming to grow and scale their supply chain operations, powerful solutions like Anchanto’s cloud-based Warehouse Management System can empower operations teams to productively manage warehouse processes with ease and precision.

Speak to an Anchanto expert about our comprehensive WMS, equipped with advanced features to assist growing 3PLs and organizations dealing with inventory.

References –
[1] – Statista.com – Supply Chain Management Software – Worldwide