Difference between Warehouse Management System (WMS) and Enterprise Resource Planning (ERP) System

Difference between ERP and WMS

An Overview  Introduction  Enterprise Resource Planning

1  The WMS Functional Area  Benefits Of WMS  ERP v/s WMS

 The ERP Functional Area  Benefits Of An ERP  Warehouse Management System

 Which System Is Right For Your Business  Conclusion

Introduction

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• Businesses that are seeking an IT tool for inventory handling, the term Warehouse Management System is used • Where as for integrating all business activities the term Enterprise Resource Planning software is used.

• Both of them have different meaning, but still they are often used interchangeably.

• Although few of the ERP softwares have WMS capabilities, yet they are not SAME and there are areas that set them a way apart.

• Hence it is important to understand the definitions and the differences between both the terms.

• Let us understand the difference between both the technical solutions present in the market on multiple parameters.

Enterprise Resource Planning  Enterprise Resource Planning is an all in one solution that targets smoother operational flow across the organization from start to finish.  ERP automates the activities across all departments in an organization including finances, sales, purchases, inventory, and other business operations.  Also helps in focusing about order taking, raw materials procurement, scheduling operations, production floor management, handling inventory records and financial data keeping.  ERP itself is an integrated one big platform for all business activities that also helps in translating data into decision making information.

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The ERP Functional Area  Research & Development – Reduce the time and efforts invested on R&D of new formulas/recipe and create innovating ideas to your business and have a competitive edge over others.  Master Production Scheduling (MPS) – Focuses on planning part of production, forecasting, resource planning, material availability et al.  Material Resource Planning (MRP) – Plans procurement based on the production plans and future demand.  Sales – Facilitates order to cash cycle and manages operations related to sales activity such as sales order processing, sales return, order entry, work order posting, managing customer/prospect information, etc. Also, keeps a track of picking, packing and shipments, contracts, pricing, discounts, taxes, terms and more.

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The ERP Functional Area

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 Formulation – Manages formulas and recipes with effective version controls, automatic formula sizing, UoM of weight and volume for ingredients, instant roll back capabilities and material substitution features.  Purchase – Make effective procurement decisions and ensure timely material availability. Evaluates your best vendor by comparing multiple parameters such as time, delivery, lead time and pricing. Also, supports contract management, manages direct delivery orders and landed cost.  Quality Control (QC) – Ensures a strict movement of materials as per cGMP norms. Well-defined QC tests are applicable at different phases of production to maintain quality standards. Also, ensures smooth audits and easy recalls.

The ERP Functional Area  Production – Virtually consolidates batch information to boost efficiency, reduces gap between planned and actual production operations. It also keeps you a step forward in manufacturing capabilities and processes.  Finances and Accounting – Get real time financial insights and analyze your financial activities through reports.

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Benefits of ERP Streamlined critical business operations

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Integrated information

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Advanced forcasting and reporting

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Better interdepartmental collaboration

Improved productivity Increased operational efficiencies Decreased cost of manufacturing Enhanced data security

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Stand ahead of market competition

Improved regulatory compliance

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Superior scalability

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Reduced wastage and cost savings

Improved customer experience

Warehouse Management System

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 Warehouse Management Software is known to support warehouses and distribution centers for best-in-class inventory management making routine functions of a warehouse go easy and smooth .

WMS assists in handling all inventory functions such as daily planning, storage and movement of materials into, within and out of a warehouse.  Offers optimization of inventory on real time basis and are usually standalone systems needing support from additional software for over all performance delivery of a manufacturing unit.  Warehouse management helps in managing the storage place for raw materials, industrial goods and assembled goods.  A WMS can always be a part of an ERP.

The WMS Functional Area An effective and efficient WMS executes following functions successfully :  Inventory location assignments, which accounts for assigning respective storage location to the incoming goods  Cross Docking Management  Put-away, picking and allocation optimization  Order picking and fulfillment  Warehouse capacity management by ordering enough for the capacity of warehouse  Radio Frequency (RF) capabilities for data management  ABC Classification of materials on the basis of shelf life, expiry dates and quality grades.  Optimum labor utilization by assigning timely labor duties

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Benefits of WMS

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 Improved inventory precision  Increased warehouse productivity  Processes orders faster

 More order accuracy

 Improved picking & shipping accuracy

 Increased volume of outbound shipments; doubles your orders per day

 Order specific put away and picking

 Improved employee productivity and low personnel costs  Low TCO compared to alternatives

ERP v/s WMS

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• Both WMS and ERP software systems are the backbone to any business - without them, the business wouldn't be able to function.

• WMS is mainly used to manage the movement and storage of inventory . It tracks the movement of each and every inventory item such as picking, packing, shipment and receiving.

• ERP automates business process across all departments of business facilitating the flow of information between all functional areas.

• The key differentiator between both of them is that, WMS is niche and specific, whereas, ERP is on a grander scale.

Differences

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I. On the basis of feature set WMS

ERP

- End to end support to entire warehouse process about every stock item packed, picked, received and shipped.

- Takes care of inbound transaction such as Goods receipt PO, Sales return - Tracks all outbound transaction such as delivery, purchase returns, pick lists, etc.

- Monitors internal material movement such as w/h transfer, bin transfer, LPN management - Records adjustments and counting like Goods Issue and receipt, Physical or spot count - Scrutinizes production floor activities - Generates labels and reports in a systematic format

- Integrates all business activities such as planning, purchasing, finance, sales, engineering etc. Regulates the flow of information amongst all .

- ERP helps in record keeping and conducting data analysis to have effective plans - ERP helps manage BOM and routings for same finished goods with different assembling - ERP caters the requirements of projects from its initial stage to completion. Material, labor and production costs can be optimized - With Cloud ERP, business becomes more flexible and dynamic as you gain access from anywhere with the help of internet and unique credentials

Differences

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II. On the basis of Point of application WMS - Offers centralized inventory management with tracking of inventory levels and stock locations.

- It could be a standalone application but needs other modules in support or could be a part of an ERP system as well.

III.WMS On the basis of Flexibility - Only for warehouses, more flexible towards real time inventory movements, data entries and stock updates.

ERP - Targets complete organization by facets of operations that include product planning, development, manufacturing, sales and marketing.

- An Integrated application that supports all module.

ERP - Best suited for all types of industries as they create a linear environment relying towards logic based transactions with chronological manufacturing operations.

Differences

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IV. On the basis of functionality WMS

ERP

- In depth functionalities of warehouse helps to easily access real time inventory information.

- Provides a broader view for all the departments, may or may not involve in depth functionalities towards warehouse.

Which system is right for your business ?

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Deciding between an ERP and WMS system for your business could be a tough decisions. You should consider following things before making a choice : • Clearly define the long-term goals of your business – Define the measurable goals that you want to achieve and analyse the functional requirements that your business needs from a management solution to attain those goals.

• Examine technical conditions of your business – Before deciding between both the solutions, you should examine the requirements of storing and moving a products that depends on the type of business you have. You should keep in mind that no matter which system you choose, it should guarantee uninterrupted receipt & invoicing , storage, movement, delivery and dispatching of goods etc.

• Determine the return of investment (ROI) of each system – Analyze the necessary functionalities of your system, and match them against the implementation/integration costs to determine the ROI for your system. Once you have estimated your ROI, your decision about whether to implement WMS or ERP becomes much clearer.

Conclusion • Although, you cannot determine which system is best but both the systems are potentially valuable solutions for businesses.

• ERP is a complete package solution, at times it fails to provide the advanced inventory management capabilities required for business.

• The traditional ERPs donot provide functions specific to warehouse management and thus, organizations need an advanced tool to improve their warehous operations.

• On the other hand, WMS are standalone systems which require additional modules to function smoothly. They could be called as a subset to ERP, but you still cannot work with having just one, as both go hand in hand complementing the functionalities of each other.

• Now, you know the differences between the two solutions, you will be able to determine which would be the best fit for your company’s unique needs.

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About BatchMaster

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 30+ years of experience

 7 offices round the globe

 ERP solutions for small to mid-sized industries

 Available in 3 languages- English, Chinese, and Spanish

 SAP B1 and Microsoft certified solution  Over 40,000 users worldwide  Headquartered in California, with footprints across the world  A global presence with offices in 3 continents- North America, Australia, and Asia

 Original developer of formulation system in ERP  Consistent record of never exceeding implementation time of 350 to 500 hours

18 Contact us to get the best solution for your business needs.

• Visit us on – www.batchmaster.co.in • Refer our White paper for a detailed view about Difference between Warehouse Management System (WMS) and Enterprise Resource Planning (ERP) System • Read the blog to know what are the 5 reasons a company must have a WMS If you still have any query, write to us on : sales@batchmaster.com Choose your system wisely and implement it to make your business perform extraordinarily.