We each have our own specialties. When it comes to people, different skill sets make the world go round. When talking about company-wide operations and logistical planning, differentiated systems make the entire enterprise run smoothly. Knowing what tools your company needs to carry out successful manufacturing, distribution, and fulfillment activities is critical to your ongoing success. Integrating those tools together into a seamless whole is what makes your enterprise a well-oiled machine.
Two of the most important tools in your repertoire are your warehouse management system (WMS) and your enterprise resource planning (ERP) software. According to Oracle, 49% of companies that utilize tools like an ERP enjoy increased productivity, and 95% saw a tangible improvement to their full range of business processes. While each serves its own essential purpose, what happens when you properly integrate core function from the two? How will it affect your company’s logistics?
Understanding the Key Differences Between WMS and ERP
To the untrained eye, certain functions of WMS and ERP might seem alike. Given that some top names in the enterprise resource planning space like Oracle and SAP offer ERP solutions with WMS already integrated, there can be a certain level of overlap between the two services. Understanding the benefit of full integration between the two helps to understand what each system involves.
What is WMS?
A warehouse management system is software that helps keep track of all the logistical considerations in your warehouse. Those considerations can include, but are not limited to:
Warehouse capacity management
Record keeping functions
Many WMS systems also include advanced functionality that assists with order management tasks such as managing backorders and scheduling retail orders for routing.
In other words, a WMS system helps you to keep track of operations on the fulfillment side of the business. Its central concern is inventory management, and you may even hear WMS referred to as an inventory management system instead. To understand the primary difference between WMS and ERP, it’s helpful to think of WMS as a hyper-focused solution, one that is sometimes included in larger enterprise resource planning systems.
What is ERP?
Enterprise resource planning, on the other hand, is designed to integrate operational and logistical functions of a business across the entire enterprise. In other words, it aligns all departments into the pursuit of core business goals. Some of the more prominent functions of an ERP include:
High-level planning functions
Warehouse and fulfillment
An easier way to understand ERP is to consider it the system that ties all other systems together, allowing them to communicate, creating seamless logistics across your enterprise.
The Advantages of Integration
Supply chains reach far and wide, often stretching outside the confines of your own business to encompass the service of colleagues and third-party logistics. ERP might be able to unify your internal business, but what about the logistical aspects of your business, such as supply chain management? That’s where WMS comes in.
People have come to expect a lot out of modern fulfillment. We live in the age of two-day shipping where lead times are non-existent. The average customer is used to the streamlined operational model employed by big-name e-commerce players. Even the smallest mom-and-pop merchant has to approach logistics and fulfillment aggressively in order to keep up.
Integrating warehouse management with resource planning is not only the next logical step for growing companies, it is a matter of survival and a certified best practice. Integrating the two services is a necessity for companies that wish to scale with a growing business.
On top of scalability, integration also helps to prevent costly data redundancies —or worse, data silos— that drain time and resources from your operations. Allowing your resource planning software to parlay with your supply chain functions helps your company to address shifts in the market with speed and agility.
Bridging the Gap Between the Two
How does a company go about integrating the two if they don’t already employ an out-of-the-box solution that includes a bundled version of WMS? A case study could be made out of big names providers —SAP, Oracle, MS Dynamics, and IFS— who fold warehouse management functions into the top levels of their resource management services. But if you intend to integrate your existing ERP solution with a new and discrete WMS system, the trick is to adopt the right mindset and find a suitable intermediary software.
Communication is the key driver. The success of your integration efforts is entirely dependent on how well you get each individual system to “talk” to each other. This includes making sure that information flows both ways, and that the key metrics present in each system update in a synchronous fashion. If inventory levels are tracked in both your warehousing system and in your resource planning, a change in one must reflect upon the other in real-time.
To set up a proper level of communication, certain information is required¹, including:
A comprehensive list of inventory data
Order and shipping information
Receipt of goods and supplies
In order to facilitate the interchange of these key data points, you may need to employ an API, EDI, or another intermediary that can translate information between the two. API stands for “Application Programming Interface,” while EDI stands for “Electronic Data Interchange.” EDI enables a standard format between two businesses, software, or entities and is capable of transferring large amounts of data quickly and securely. API allows different software to communicate directly with one another. While there are many subtle differences between the two, both are viable solutions to help your WMS and ERP work together.
The Sum of the Parts
Logistics is a complicated business. There are lots of moving pieces involved. One on hand, there are the ancillary office functions that make your business work, like HR, finance, and sales. On the other, there are your core business activities which can include fulfillment and distribution. For your business to operate seamlessly and as a single entity, you’ve got to employ the right tools. WMS and ERP are both necessary elements to streamline your logistical operations.
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