The Difference between Warehouse Management Systems and Enterprise Resource Planning

Choosing whether a warehouse management system (WMS) or an enterprise resource planning (ERP) system is right for your company can be a daunting task. In order to make the best decision possible, it is essential to know the facts about each of these solutions. WMS and ERP have some similar functionalities, but there are also large differences between the two that you will need to consider when making your decision. Knowing the similarities and differences between the two solutions will allow you to determine what functionalities your enterprise needs and accurately estimate what sort of ROI you may have with either solution.

What is a warehouse management system?

Warehouse management systems control the movement and storage of your enterprise’s inventory. Your WMS will know every stock item received, picked, packed, and shipped. Warehouse management systems use barcode scanners, mobile computers, wireless LANs, and radio frequency identification (RFID) technology to accurately track the movement and storage of products to intermediate storage locations, or to a final customer.

A warehouse management system also directs and optimizes stock put-away based on data gathered in real-time. A WMS can then be used to generate reports that reveal the optimal location for every item based on historical trends and data.

Warehouse management systems are a “stand alone” solution. This means that the system needs other supporting software for additional aspects of your enterprise’s business, such as accounting and customer relationship management.

What is enterprise resource planning?

Enterprise resource planning is a suite of integrated applications that automates company activity across all departments. This business management software is utilized to collect, store, manage, and interpret data from product planning, cost and development, manufacturing, marketing, sales, inventory management, shipping, and payment.

Enterprise resource planning is an integrated and all-in-one solution that has most of the capabilities of warehouse management systems, such as tracking the course of inventory items picked, packed, and shipped.



The Primary difference between a WMS and ERP

The primary difference between warehouse management systems and enterprise resource planning is that a WMS is a standalone system that needs support from other additional software, and ERP is an all-in-one solution. However, unlike warehouse management systems, ERP does not offer the optimization of inventory based on real-time information. ERP does not have the ability to generate reports based on historical trends and data that identify the best location for each stock item.

Making the choice

Deciding whether an ERP system or a warehouse management system would better suit your enterprise, your budget, and your long-term goals can be tricky. You should consider two critical things before making your choice:

  • Clearly define the long-term goals of your business, including measureable outcomes that you would like to achieve, and the functional requirements that your enterprise needs in a management solution to reach your identified measurable outcomes.
  • Take what you have determined to be your long-term goals and the necessary functionalities of your system, and match them against implementation and integration costs to determine the return on investment for each system.

Once you have accurately estimated your return on investment for each solution, your decision about whether to implement a WMS or ERP system will become much clearer.

WMS and ERP systems are both potentially valuable solutions for your company. Now that you know the differences and similarities between the two solutions, you will be able to more accurately determine which would be the best fit for your company’s unique needs.