WMS Vs. ERP Software: Differences, Benefits, & How To Choose The Right Solution

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As your ecommerce business grows, managing operations becomes more complex. From inventory tracking to order fulfillment and financial planning, the right software can streamline processes and fuel growth.

There are two key systems, warehouse management systems (WMS) and enterprise resource planning (ERP) software, that can help optimize supply chains. However, each system serves distinct functions. Understanding their differences and how they complement each other is crucial for building an efficient tech stack.

We’ll break down WMS vs. ERP, their unique benefits, and how to choose the right solution to improve efficiency, profitability, and customer satisfaction.

Side-by-side: WMS vs. ERP

Warehouse management systems (WMS) and enterprise resource planning (ERP) systems are the two main software solutions that help brands manage their ecommerce operations. While both are designed to streamline processes and improve efficiency, they serve different purposes and offer unique benefits.

Warehouse management system

A warehouse management system (WMS) is a software application that helps ecommerce businesses optimize their warehousing and fulfillment operations. It focuses specifically on managing inventory, tracking stock levels, and automating key processes within the warehouse.

In the day-to-day, a WMS is used for:

• Receiving and putaway of incoming inventory
• Organizing and tracking stock across multiple locations
• Picking, packing, and shipping orders
• Managing returns and exchanges
• Generating reports on inventory levels, order volumes, and more

By specializing in these warehouse-specific tasks, a WMS enables ecommerce brands to achieve greater accuracy, speed, and efficiency in their fulfillment workflows. It provides real-time visibility into inventory levels, helps reduce errors and stockouts, and streamlines the entire order fulfillment process from start to finish.

Enterprise resource planning system

An enterprise resource planning (ERP) system, on the other hand, is a comprehensive software suite that integrates various business processes across multiple departments. It serves as a centralized platform for managing financials, human resources, supply chain, manufacturing, and other core functions.

Typical day-to-day operations handled by an ERP include:

• Order processing and invoicing
• Accounting and financial reporting
• Inventory management (at a higher level than a WMS)
• Demand forecasting and planning
• Resource allocation and scheduling

By consolidating these disparate processes into a single system, an ERP provides a holistic view of the business and enables better decision-making through data-driven insights. It helps break down silos between departments, automate manual tasks, and improve overall operational efficiency.

It’s worth noting that some ERPs offer built-in or add-on warehouse management capabilities, blurring the lines between the two systems. These “ERP warehouse management systems” aim to provide a more comprehensive solution for businesses looking to manage both high-level operations and granular warehouse processes within a single platform. However, the depth and specialization of these built-in WMS modules can vary widely between different ERP vendors.

Key differences between ERP and WMS systems

While both ERP and WMS solutions play crucial roles in optimizing supply chain operations, they serve distinct purposes and offer unique benefits. Understanding the key differences between these systems is essential for making informed decisions about your tech stack and ensuring that your business has the right tools to support its growth.

Scope and functionality

One of the primary differences between ERP and WMS is the scope of their functionality. ERP systems are designed to handle a wide range of business processes, including finance, human resources, procurement, and supply chain management. They provide a centralized platform for managing these disparate functions, enabling better decision-making and resource allocation across the organization.

In contrast, WMS solutions focus specifically on optimizing warehouse operations and inventory management. They offer specialized features and capabilities tailored to the unique needs of fulfillment, such as

• Real-time inventory tracking
• Financial management
• Picking and packing optimization
• Human resources
• Shipping and receiving workflows
• Procurement
• Returns processing
• Supply chain planning
• Barcode scanning and RFID integration
• Customer relationship management

By concentrating on these core functionalities, WMS solutions can drive significant improvements in warehouse efficiency, accuracy, and productivity.

Cost and ROI factors

Another important consideration when comparing ERP and WMS is the total cost of ownership and potential return on investment. ERP systems tend to be more expensive upfront, with higher licensing fees, implementation costs, and ongoing maintenance requirements. However, they also offer a broader range of benefits that can impact multiple areas of the business, potentially justifying the higher investment over time.

WMS solutions, on the other hand, are generally more affordable and can deliver a faster ROI by targeting specific pain points within the fulfillment process. For example, ShipBob’s WMS has helped ecommerce brands like Earthley achieve measurable improvements in productivity and shipping speed:

“ShipBob’s WMS has more than doubled, if not tripled, our productivity in terms of labor hours. Our average days-to-ship is now only 0.8 days, so most packages are shipping same-day or next-day, with rare exceptions. We’ve cut 4 days of lead time because orders are getting processed, fulfilled, and shipped more efficiently.”

Ben Tietje, Co-Founder and CEO of Earthley

By streamlining key workflows and reducing errors, a well-implemented WMS can generate significant cost savings and operational efficiencies that directly impact the bottom line.

Suitability for different businesses

When deciding between an ERP, WMS, or combined approach, it’s important to consider the unique needs and characteristics of your business. Factors like company size, product complexity, industry, and growth projections can all influence which solution is the best fit.

For smaller ecommerce brands just starting out, a standalone WMS may be sufficient to manage fulfillment operations and drive early-stage growth. As the business scales and requirements become more complex, integrating the WMS with a broader ERP system can provide greater visibility and control over end-to-end supply chain processes.

Larger enterprises with multiple product lines, channels, and geographies may benefit from a more comprehensive ERP solution that includes built-in WMS capabilities. This all-in-one approach can simplify IT management and ensure seamless data flow across the organization.

Ultimately, the right choice will depend on a careful evaluation of your current challenges, future goals, and available resources. By assessing these factors and partnering with experienced providers like ShipBob, you can build a tech stack that supports your unique needs and sets your business up for long-term success.

How a WMS can enhance your ERP system

While ERP systems offer a comprehensive view of your business operations, integrating a specialized WMS can significantly enhance your fulfillment capabilities and drive even greater efficiency. By leveraging the strengths of both systems, you can create a powerful, seamless workflow that optimizes your supply chain from end to end.

Phased vs. all-in-one approach

For many ecommerce brands, implementing a WMS before scaling into a full ERP can be a smart, cost-effective strategy. By focusing first on streamlining your warehouse operations, you can achieve immediate efficiency gains and lay the groundwork for future growth.

This phased approach allows you to control costs, minimize risk, and prove the value of your technology investments over time. As your business expands and your needs evolve, you can then layer on additional ERP functionality to support broader business processes like financial management and resource planning.

Real-time data synchronization

One of the key benefits of integrating a WMS with your ERP is the ability to maintain real-time inventory visibility across both systems. By ensuring that stock levels, order statuses, and other critical data points are always in sync, you can make more informed decisions and respond quickly to changing market conditions.

This real-time data flow can help reduce stockouts, improve demand forecasting, and ultimately enhance customer satisfaction by ensuring that products are always available when and where they’re needed. With a clear, up-to-the-minute view of your inventory and fulfillment operations, you can optimize your supply chain and stay ahead of the competition.

Advanced fulfillment capabilities

Beyond basic picking and packing, a robust WMS can enable sophisticated fulfillment tasks that may not be possible with an ERP alone. For example, ShipBob’s WMS supports advanced capabilities like returns automation, custom packaging, and kitting, allowing you to create a more personalized, efficient customer experience.

By integrating these advanced features with your ERP, you can unlock new opportunities for growth and differentiation. Whether it’s offering custom gift sets during the holidays or streamlining your returns process to improve customer loyalty, a WMS-ERP integration can help you deliver added value and stand out in a crowded market.

Blueprint for seamless integration

Of course, integrating an ERP with a WMS is not without its challenges. From mapping data fields to training users on new workflows, there are many technical and operational considerations to keep in mind.

To ensure a smooth integration, it’s important to create a clear roadmap that outlines key steps like data synchronization, testing, and gradual feature rollout. By taking a strategic, phased approach, you can minimize disruption to your operations and ensure that both systems are working together seamlessly.

In the long run, a well-integrated ERP-WMS system can deliver significant benefits, from improved data analytics to more streamlined processes. By laying the groundwork for continuous improvement and optimization, you can create a supply chain that is agile, responsive, and ready for whatever the future may bring.

ERP vs. WMS: How to choose the right solution for you

Selecting the right software solution for your ecommerce business can be a daunting task, but it’s crucial to ensure that your chosen system aligns with your current challenges, goals, and available resources. When deciding between an ERP, WMS, or a combined strategy, consider the following factors:

Scalability and future-proofing

As your business grows, your software needs will evolve. It’s essential to choose a solution that can scale with you, especially if you have plans for global expansion or anticipate significant increases in order volume. Look for systems that offer flexibility, customization options, and the ability to add new features or integrations as needed.

Implementation approach

Depending on your budget, resources, and timeline, you may opt for a partial or phased implementation. This approach allows you to prioritize critical functionalities and gradually roll out additional features over time. By breaking down the implementation process into manageable stages, you can minimize disruption to your operations and spread out the costs associated with training and system setup.

Integration capabilities

Seamless integration between your ERP and WMS is key to unlocking the full potential of both systems. When evaluating solutions, consider their ability to connect with your existing tech stack, including ecommerce platforms, accounting software, and shipping carriers. A well-integrated system will enable real-time data synchronization, reduce manual data entry, and provide a holistic view of your operations.

Vendor support and expertise

Choosing a software provider is more than just selecting a product, it’s about building a partnership. Look for vendors with deep expertise in ecommerce logistics and a proven track record of helping businesses like yours succeed. Consider factors such as customer support availability, training resources, and the vendor’s roadmap for future product development.

By carefully evaluating these factors and aligning them with your unique business needs, you’ll be well-positioned to choose the right solution (whether it’s an ERP, WMS, or a combination of both) to optimize your operations and drive long-term success.

How ShipBob’s WMS complements leading ERPs

At ShipBob, we understand that ecommerce businesses need a flexible, scalable tech stack that can adapt to their evolving needs. That’s why our best-in-class WMS is designed to seamlessly integrate with popular ERP solutions like NetSuite, ensuring a smooth flow of data and a unified view of your operations.

Seamless ERP & warehouse management system integration

One of the key challenges of integrating an ERP with a WMS is ensuring that data flows seamlessly between the two systems. With ShipBob, you don’t have to worry about custom development or complex integrations. Our WMS comes with direct integrations for leading ecommerce platforms like Shopify and Amazon, as well as inventory and order management systems.

By connecting your ERP and WMS through ShipBob, you can eliminate data silos, reduce manual data entry, and gain real-time visibility into your inventory levels and order statuses. This level of integration is essential for businesses looking to optimize their supply chain and make data-driven decisions.

Enhance your existing warehouses with ShipBob’s proprietary WMS

For ecommerce brands that already have their own warehouses in the U.S., ShipBob offers a powerful solution: our proprietary WMS. By implementing ShipBob’s WMS in your existing facilities, you can gain access to advanced features and capabilities that may not be available through your ERP’s built-in warehouse module.

With ShipBob’s WMS, you can:

• Track inventory levels in real-time across multiple locations
• Optimize picking and packing workflows to reduce errors and improve efficiency
• Automate shipping processes and reduce manual data entry
• Gain insights into key performance metrics like order accuracy and fulfillment speed

By leveraging ShipBob’s WMS alongside your ERP, you can create a highly efficient, data-driven fulfillment operation that supports your business growth.

Shed the fulfillment headache with ShipBob’s outsourced fulfillment network

For ecommerce brands that are looking to outsource their fulfillment operations entirely, ShipBob offers a global network of 60+ fulfillment centers. By partnering with ShipBob, you can tap into our world-class logistics infrastructure and expertise, without the need for your own WMS or warehouse.

With ShipBob, you get:

• Real-time visibility into inventory levels and order statuses across all fulfillment centers
• Two-day shipping to customers across the U.S., with the ability to split inventory across multiple locations
• Seamless integration with your ERP and ecommerce platforms, ensuring a smooth flow of data and orders
• Dedicated account management and support from logistics experts who understand your business needs

By outsourcing your fulfillment to ShipBob, you can leave the complexities of logistics and fulfillment to us and focus on what you do best — growing your business.

Whether you’re looking to enhance your existing warehouses with a powerful WMS, or outsource your fulfillment entirely, ShipBob has a solution that can help. By integrating our technology and expertise with your ERP, we can help you create a supply chain that is agile, efficient, and ready for growth.

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This article originally appeared on ShipBob and is available here for further discovery.