WMS or ERP?
4 questions to consider

October 12, 2021

Over time, many companies run into the logistical limits of their ERP system in the warehouse. For example, due to changed order profiles, e-commerce orders, shorter lead times, more volume due to growth or too few pick locations to be able to process the growing assortment.

These companies can either purchase another, more extensive, ERP system with an inventory module or switch to a dedicated WMS. The differences between an ERP stock module and a dedicated WMS are large. However, not every warehouse operation requires detailed management of the processes. Therefore, an ERP stock module can suffice for a limited range and a limited number of logistics flows. 

Which questions should you ask yourself when choosing between an ERP software with stock module and a dedicated WMS system? Keep on reading to find out. 

Before we jump in, let’s first understand what WMS and ERP mean.

What is a WMS?

A WMS (Warehouse Management System) controls the use of space and all movements in the warehouse. This is how the system ensures that the right people and machines are at the right time and in the right place to work. The dedicated WMS does this in function of different parameters, such as logistics item properties (stackability, refrigerated), storage requirements (large or small, enclosed space), and rotation (fast or slow running, items on order). By also taking into account the pick history, order book and variations in order size, the WMS can also process sales orders with goods from different zones in the right direction. Or assign goods/packaging to a zone that better matches on the importance of the product.

What is an ERP?

With an ERP (Enterprise Resource Planning) the activities of all departments in an organization are being automated, including accounting, relationship management and inventory management. It is actually an integrated all-in-one solution that ensures that all employees work in one application. The stock module of an ERP manages the stock, and has a limited possibility to support logistics in a warehouse with one pick location per item. An ERP also offers a limited support to optimize pick performance by batch methods, slotting or walking routes through the warehouse.

About MWG’s Software Solutions

Our proprietary software includes Warehouse management & shipping modules. It gives you complete access to and visibility over your entire supply chain. Developed as a modular system, it allows customers to use specific applications or the entire site. Our in-house software, systems analysts & engineering experts work closely with your team to ensure implementation deadlines are met & exceeded. Regardless of the scale of your organization, the Maurice Ward Group IT platform will enhance your supply chain & drive continuous improvement in order to bring the costs down. Find out more about our TOMS™ Trackload Online Management System and ULMS™ Ultimate Logistics Management Solution.

ico-toms

TOMS™
Trackload Online Management System

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ULMS™
Ultimate Logistics Management Solution

Can e-commerce be optimized in my warehouse?

E-commerce has increased enormously as a result of the pandemic: for food/near food, the growth percentage is over 50 percent in 2020. For DIY, garden and home & living, the increase percentages are even above 100 percent. Many companies that did not think about online sales before COVID-19 have switched to online sales in a short time.

Web orders in the non-food industry are often orders with only a few lines. In some companies, the orders with one line and only one pieces are even the majority. Because e-commerce order profiles are clearly different from order profiles of a B2B environment with many order lines and multiple pieces per line, e-commerce orders require different logistics handling in the warehouse in order to process them efficiently.

With a small to medium-sized warehouse, you can collect multiple line orders directly into the right customer box. If this involves collecting for several customers at the same time, this results in a higher picking density and therefore a better picking performance. In many warehouses it is an advantage to collect single-line orders with one piece as one large batch, whereby greater efficiency is achieved through better picking density. In the case of non-food, the number of single-line orders is often 50 percent of the order file.

Another issue that arises in e-commerce is about the different packaging forms and their storage. A web customer usually asks for a consumer unit, while in B2B there is more demand for cartons or even whole pallets. If you handle both flows of goods in a warehouse, the question is whether you want opened boxes at a large pick location. Because this can lead to errors in order picking and possibly to breakage of fragile products, it is often interesting to organize a separate area for piece picking for all or part of the products.

It is of course an important condition that your application supports such a situation, whether it is a stock module of an ERP or a dedicated WMS.

With all of the above topics, you can ask yourself whether it contributes to improving efficiency and thus reducing logistics costs.

Topic Dedicated WMS ERP stock module
Pick multiple line orders directly into the correct shipping box

++

Yes, the volume of the box will be calculated

+

Employee must calculate what box size is needed
Batching methods for multiple line orders

++

Yes, this will decrease the number of walking meters

--

Not possible because the necessary sorting process is not supported
Depending on the packaging form, multiple pick locations (pieces versus, outer carton)

++

-

Not possible
Single piece picking

++

0

++ Good support with a significant logistical performance improvement | + Performance improvement support | 0 Possible, but does not improve logistical performance |  Limited support | – – No support at all

Do shorter leadtimes cause more stress in my warehouse?

Several online providers advertise ‘ordered before 12:00, delivered the same day’. However, short lead times are not just a logistics service argument for the e-commerce industry. Supermarkets and suppliers to the automotive industry, among others, have been working with lead times of a few hours for some time now.

The questions you should ask yourself are: will there be stress in my warehouse if orders arrive with an (ultra) short lead time? Why does stress arise? Is extra attention needed to prevent the assignment from ending up at the bottom of the stack? And do these shipments have to be registered with another parcel carrier? Based on the delivery time or order type, a dedicated WMS calculates the right priority for all logistics tasks that ensure that the order goes out ‘On Time In Full’. Your order picker won’t even notice that a short lead time order is being worked on.

This keeps the stress away, so that peace returns to the warehouse, which is a precondition for a flexible running warehouse! Wholesale companies deal with customers who place multiple orders in one day. Collecting each order separately is a margin killer from a logistical point of view. Therefore, it is wiser to start collecting as soon as a logistic unit (for example a box) can be filled. This of course depends on the requirements that a customer places on the delivery.

Topic Dedicated WMS ERP stock module
Special manual procedure for short lead time order

0

++

Peace on the work floor by prioritizing short lead time orders

++

0

Only collect multiple orders from one customer as soon as it is logistically responsible

++

-

This option is not possible

How dynamic are my dynamic pick locations?

Of course you use dynamic pick locations in your warehouse for the rapidly changing assortment of your company. And of course you determine the optimal pick location based on the number of picks per item. Determining demand-driven pick locations is an absolute necessity these days: space is money. To use your space cost-efficiently, optimized storage of bulk goods is a precondition. This also applies to the optimized use of your pick areas. But how do you calculate this? Are you extracting your assortment with the pick locations from your current logistics application? And do you then calculate the optimal layout with Excel? This is possible with a limited changing range, but as soon as the range increases, changes more often and the demand is hardly predictable, it is time for an automated solution. The major advantage of an automated solution is that the calculation is performed on-the-fly. If you work with an extract from your logistics application, you often react too late to the changing market situation at the time of decision-making.

It’s nice to know that it’s even possible to do things with less pick locations than the number of SKUs of your total assortment to control your warehouse. Keep in mind that all stock in your warehouse is actually available for delivery.

Topic Dedicated WMS ERP stock module
Able to handle strongly varying assortment and strongly fluctuating demand

++

+

Manually
Cost-effective use of pick locations

++

-

Assortment (number of SKUs) exceeds the number of pick locations

++

-

How flexible can I be when employing staff?

Online sales are difficult to predict as demand fluctuates because online sales are influenced by, for example, social media, festivals and hypes. These unexpected fluctuations in demand affect every link in the chain. The reason for this is that for some time now, companies have wanted to have less safety stock in house, to prevent that stock becomes unsaleable due to a rapid change of ‘hot versus not’. An extra demand from the consumer at the end of the chain therefore has a direct influence on the chain as a whole.

To actually ship the ordered goods on time on top of high demand, you can keep your warehouse open longer. It is also possible to deploy additional staff. However, the disadvantage of this is that it often leads to a dip in productivity when you cannot use it: when the workload is high.

It is important that temporary staff are up and running as soon as possible and know what to do. You achieve this by using standardized working methods, by using a logistics application that assigns the jobs to the right person at the right time and by deploying equipment and applications that are easy to operate.

Because the employees do not need to know where the products are and what packaging requirements a customer has, it is possible that temporary employees without specific knowledge of your company can be deployed quickly. Given that this business logic is present in the logistics application, simplicity is created on the work floor. In addition, during busy periods, the right logistics tasks are assigned at the right time, so that there is peace on the work floor. Unclear assignments and stress due to haste or errors are disastrous for the performance (number of pieces per hour) and the reliability (the stipulated SLAs) of your warehouse.

Topic Dedicated WMS ERP stock module
Temporary employees are easy to deploy

++

0

Manually
Temporary workers do not need to have knowledge of specific customer requirements

++

0

Manually
Product is available to pick despite high demand. Refill orders are ready on time

++

+

Conclusion

Both ERP systems and warehouse management systems form an important part of supply chain management and help organizations with optimal inventory management. The differences between an ERP stock module and a dedicated WMS are large. However, not every warehouse operation requires detailed management of the processes. An ERP stock module can suffice for a limited range and a limited number of logistics flows.

Would you like to exchange ideas about the possibilities of our proprietary software solutions TOMS™ Trackload Online Management System and ULMS™ Ultimate Logistics Management Solution? Then contact us for more info!

Did you know?

The first ever ‘cargo only’ flight was recorded in November 1910 in the USA, using a Wright Model B aeroplane that flew 65 miles carrying a package of silk. The business owner used the pioneering transport more as a PR stunt to celebrate the opening of his store, with the bundle of silk cut into individual pieces and glued onto souvenir postcards.

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