WMS vs ERP: What's the Difference?

As we note above, ERPs usage is broad and may include project management, supply chain management, and payroll management (among others).

In comparison, a WMS is a tool that’s been built to automate, streamline, and improve day-to-day warehouse operations. Each feature has been developed with the warehouse in mind. For example, you can use a WMS to track your inventory levels in real time, employ automated picking-and-packing technology, and track warehouse KPIs.

Let’s take a look at the main benefits and drawbacks of a WMS.

The benefits of a WMS system

What are some of the main benefits of a WMS system?

The first benefit is full visibility into your inventory. With a WMS, you’ll always know exactly what stock you have. You won’t need to delay orders, frustrate clients, and drag down customer satisfaction levels due to not having the stock you need when you need it. You’ll also be able to track your inventory across the warehouse; throughout the entirety of the fulfilment process.

Another main benefit of a WMS system is that you can use it to automate and improve your essential warehouse processes including receiving, putaway, storage, picking and packing, and fulfilment. For example, you can use a WMS to automatically create pick lists, immediately identify the best layouts and ways to optimize storage, and import orders from your order management system.

The automation supported by a WMS system delivers a number of advantages including reduced costs, higher productivity by saving employees time and reducing manual mistakes, and improved efficiency and faster order fulfillment.

Drawbacks of WMS systems

While many WMSs offer integrations, WMSs can sometimes be difficult and expensive to integrate with other warehouse systems. However, if you’re using an ERP, it's a great tool for centralising your data and connecting siloed platforms and systems, allowing you to easily share data between your WMS and other systems.

Another drawback of a WMS is that it may offer less insights into specific processes. Take product returns. While you can use a WMS to track when previously-shipped inventory lands back in your warehouse, it won’t give you insights into why the product was returned.

As such, you can use an ERP to enrich the already-vast amount of data you get on your inventory and warehouse processes. An ERP typically includes Return Merchandise Authorisation modules that deliver information on incorrect orders or product details. An ERP’s integration with your customer data platform can give you information on any customer complaints or requests. This data works seamlessly with the data in your WMS to provide you with a 360-degree view of your inventory, orders, and warehouse processes.

The benefits of ERP

The first essential benefit of an ERP is its ability to centralise your data and integrate your essential business systems. Imagine you can access all the data from your main platforms and systems from one dashboard. With an ERP, you can integrate and use data from a number of tools such as your CRM, marketing software, project management tools, AP automation software, and your WMS. This gives you instant visibility into every aspect of your business and allows you to share important information between systems.

The second main benefit of an ERP is in-depth data analytics. When you have instant access to all the data you need, you can make smarter, data-informed business decisions more quickly and efficiently. Many ERPs offer impressive data analytics capabilities, providing in-depth insights into both historic and real-time data that businesses can act on.

The third main benefit of an ERP is greater efficiency. You can use an ERP to uncover inefficiencies across departments and correct them. Many businesses use ERPs to automate key processes and tasks such as accounting, order fulfilment, and operations.

Drawbacks of ERP systems

As an ERP brings together your main systems and converts and integrates data from across your business, they can take time to set up and come with a noticeable learning curve.

Another downside to an ERP is their upfront cost. ERPs can cost over £100 per user per month. You also need to factor in initial installation and onboarding costs, maintenance and upgrade fees, and the expense of monthly consultancy and support.

But while an ERP system can be expensive, remember that, just like a WMS, it can also potentially save you a substantial amount of money in the long run by automating your processes and bringing greater efficiency to your business. 

One of the other main drawbacks of an ERP system is that the more you centralise your data, the more all of your companies data may be at risk as it has a higher likelihood of being lost or breached by a cyber criminal. With only one system to access and all your company data accessible, your data is more vulnerable to cyber threats like ransomware.

But don’t let this downside stop you from enjoying the benefits an ERP offers, you can use security best practices like data encryption and multifactor authentication to help secure your system and help protect your data. In addition, by spreading your data out among other systems such as a WMS, you can also ensure you still have access to the information you need in case of a data breach or loss.

To decide between an ERP and WMS, first create a list of your key business needs and compare these to the use cases and pros and cons of each system we’ve covered above.

If your main focus is to improve warehouse operations, a WMS offers a deeply specialised solution, designed to improve and automate warehouse processes from receiving to shipping.

While a WMS system offers depth, an ERP system delivers breadth. If you want to integrate your data and improve operations across tasks or departments then an ERP could be the right tool for you.

While you may see more benefit to one system than the other, as we highlight above, both systems work well together, enriching your data and automating and bringing greater efficiencies to different processes throughout your business.

Let’s wrap up our analysis of a WMS vs an ERP. Both WMS software and ERP systems often become mainstay tools that are essential to businesses’ day-to-day operations. Both tools can offer greater efficiency, help you cut costs, and improve productivity by giving you new insights into your operations and automating your processes. While a WMS is specialised software that you can use to overhaul and improve the entirety of your warehouse operations, an ERP system is a brilliant tool if you want to improve efficiency and productivity throughout your company.

At Mintsoft, we’ve developed a best-in-class WMS with over 150 integrations, helping warehouses across the country improve warehouse operations and reduce their operating costs. Head over to our WMS page to find out more.