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What is the Difference Between WMS and ERP Software?

ERP & WMS: Services


When speaking with businesses seeking inventory management software, the terms Warehouse Management System (WMS) and Enterprise Resource Planning (ERP) software is often used interchangeably. Although ERP software has warehouse management capabilities, they are not the same, and there are areas that set them apart. It's important to understand the definition and difference between these terms when talking to software providers.
Both WMS and ERP software systems are the backbone to any distribution and wholesale business - without them, the business wouldn't be able to function. This blog post aims to educate you on the similarities and differences between warehouse management and ERP software.



A Warehouse Management System (WMS) is mainly used to manage the movement and storage of inventory within a warehouse. It tracks the movement of each inventory item such as the item being received, put-away, picked, packed and shipped. The key differentiator between ERP and WMS is that WMS systems provide intelligence on optimizing inventory movement within your warehouse based on real-time information. Users can generate reports to indicate the optimal location for each item to be put-away based on historical data and trends, and the system helps dictate where product should live within a warehouse based on bin and shelf utilization.

Additional functionality includes:

  • The ability to set up stocking and non-stocking locations in order to show the true count of inventory, while at the same time separating product available and product already allocated to an existing order

  • The ability to set up stocking location priorities and ratings for more efficient picking

  • Precise movement tracking of product – from shelf, to cart, to specific stations etc.

  • Cross docking features which provide employees the ability to receive and ship product without putting it away

WMS are often standalone systems to manage warehouse operations and they lack accounting, customer relationship management and other functionality associated with an ERP system - thus WMS typically integrates with an ERP system. Most small businesses do not require true WMS functionality as many ERP solutions will have built-in warehouse management functionality that is appropriate.



Enterprise Resource Planning (ERP) Software

ERP on the other hand, automates business processes across all departments of a business including accounting, order entry and processing, purchasing, inventory management, warehouse management, eCommerce integration and customer relationship management. The main purpose of ERP software is to facilitate the flow of information between all functional areas of a business. What begins to become confusing is that many ERP systems have many of the same capabilities as WMS software and contain various levels of inventory management and warehouse management features. For example, an ERP system will have functionality for tracking the process of inventory items being received, picked, packed, and shipped and the ability to manage bin and shelf locations, but not be able to make warehouse layout recommendations. If your business requires inventory management along with accounting, order entry and contact management, chances are you are looking for ERP software. Essentially, ERP software will have WMS functionality but on a smaller scale.


Both help with this!

Both ERP and WMS are a part of supply chain management and aim to help businesses manage their resources in the most economical way possible. They report information based on real-time data in a variety of ways and can be managed on-premises or in the cloud. Each system and module come with its own price tag - starting from a few thousand, to upwards of hundreds of thousands. Although ERP software will include some WMS functionality, the features provided will not be as robust as that of a full WMS – however, for small-medium size wholesale and distribution businesses, ERP software is frequently all that is required.

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Efficiencies and ROI

Warehouse management software can be several times more expensive than ERP software and so make sure you use the correct terminology when speaking with vendors – the need for warehouse management, shipping, receiving and inventory functionality is different than the need for true WMS software. Not every warehouse needs a WMS - they're designed for complex operations and the initial and on-going costs are quite expensive. Many ERP systems have the main functionality of WMS systems at a lower price-point. A proper ERP system should be able to accommodate most inventory requirements including basic warehouse management at a far more affordable price. There are different levels of inventory management software and it's best to understand business needs when searching for systems.

ERP & WMS: Services

One of the most significant benefits that comes from ERP software is automation. Automation can be implemented across all business aspects in some shape or form. Whether this is your sales orders, updating stock levels, or parts of your CRM, ERP software can take away tedious day-to-day tasks from business owners and employees. This gives the opportunity to focus time and effort on growing and scaling your business. 

Data in digestible and convenient formats 
When dealing with large amounts of data coming from your business, it can be challenging to understand what is happening as a whole and within specific departments. ERP removes this issue by condensing and formatting data into digestible chunks that can be analysed quickly and accurately. 

A newfound sense of control for multichannel retailers 
One of the biggest reasons ERP software is adopted is to help manage multiple sales channels. It helps bring control and balance to a previously chaotic business model. Having information and data all flowing through one central source makes it simple to manage and oversee all business aspects.


Save on costs and reduce waste 
It can be challenging to keep track of orders in/out and managing stock levels from your warehouse without an ERP solution in place. This is especially prominent when dealing with large quantities of products. It can lead to stock being unused or sold for a fraction of the intended price. Having a system that helps automate many of these processes while also giving easy to view reports about stock levels, suppliers, and current orders/backorders. 

By knowing this data, you can make critical decisions surrounding purchasing, replenishing, and marketing.

Different types of ERP solutions
ERP solutions are now commonly split between on-site and cloud-based. The choice of solution is heavily dependent on the needs and infrastructure of a given business. Cloud-based systems tend to be ideal for SME-sized companies who need the flexibility to work from anywhere, any device, and at any time. On-premise options supply a level of robustness and functionality that benefits enterprise-sized businesses that deal with large quantities and a variety of sales channels. 

ERP & WMS: Services


Critical Elements

•    Multiple sales channels in one area 
•    Returns management
•    Courier management 
•    Accounting functionality 
•    Reports management 
•    Integrations with world-leading companies
•    Built-in CRM 
•    Promotions 
•    Backorder management 
•    Handle purchase orders and delivery notes 

Additional elements 
•    In-depth UDA filtering system 
•    Size colour style – easily setup product variations
•    Include bespoke applications with the system 
•    Pick, pack, and despatch
•    Directly link HHT’s to the system 
o    Can be implemented with your businesses current warehouse location software
•    Built-in EPOS
•    In-depth supplier management 


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