Deploying enterprise level systems to manage and maintain inventory has become extremely crucial to run business operations and to ensure continuity of the supply chain in the modern world. Timely customer fulfilment is highest in demand and a key parameter to measure efficiency of the business process. Terms like enterprise resource planning (ERP) and warehouse management system (WMS) are often used interchangeably. However, there is a difference between ERP and WMS, although ERP may have capabilities to manage the warehouse, there are limitations in terms of capturing entire warehouse operations. In order to differentiate between ERP and WMS, it is important to acknowledge their purpose and definition.

Both ERP and WMS play a crucial role in maintaining the distribution and supply chain. WMS is a system used to manage, capture and control physical operations of the warehouse. It displays inventory status on real-time basis along with various reports to measure the KPIs. The core features of WMS include:

• Master data setup for locations (Bins, MHE, Docks etc.), SKUs, customers and suppliers
• Receiving and putaway operations with built in location suggestion algorithm
• Allocation of SKUs based on rules like FIFO, FEFO, FMFO and LIFO for customer orders
• Guided putaway and picking operations based on walking pattern
• Inventory reconciliation methodologies like Stock taking and cycle count
• Managing exceptions like damage, shortage, excess during operations
• Handing operations on hand held terminal (HHT) with embedded scanners enabling users to track live locations

Modern WMS also provides advanced functionalities like 3PL billing, wave picking, replenishment forecasting, yard management, cross docking and cross stuffing, kitting and resource management (human, machines and materials).

ERP system are module based centralised systems for capturing and processing information across various departments of business including finance, accounts, production, purchase, inventory management, HR, sales and marketing to maintain information integrity and facilitate flow of information across various functions. Modern ERPs accommodate basic Inventory management functions at higher levels; however, functions like location management, operations management and tracking are not part of the inventory management module.

ERP has all in one solution to help streamline entire business; however, it may get expensive as the company grows along with the user base and implementations of additional module. A WMS is a specific purpose software used for managing operations at the warehouse and optimizing inventory. Although ERPs are designed and configured with respect to the business goals, they may take longer time for implementation depending on the modules and size of the organization. Whereas for WMS implementation, can be completed in shorter timeframe. Best of WMS systems in the market are capable of integrating with ERP system, CRM or accounting system, however, they can be implemented as a standalone system.

ERP and WMS handle different functionalities. However, to realize the organizational goals it is ideal that both the systems work in conjunctions.


This article has been written by Gurudatta. If you wish to speak to the author on this topic, you can contact him at [email protected]






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