It has been around long enough to be considered one of those “classic debates”: ERP warehouse management module or best-of-breed warehouse management system? One would think that by now this debate would have been settled. The facts and opinions have been examined for well over a decade, surely there must be a clear winner by now. If only it were that simple.
There are many reasons why this debate persists. One of the primary reasons is that companies are made up of departments and people that often have differing, or even conflicting, priorities. Sprinkled in among these differences are often strong opinions. Opinions are not easily altered and the people that hold them didn’t get to where they are by quickly letting go of theirs in the face of debate.
Another key factor that keeps this debate fresh is the expansion of the dilemma to small and medium size companies. Early in the debate, most of the buzz was around SAP and Oracle ERP versus tier 1 best-of-breed warehouse management systems (WMS). Today, many ERP providers to small and medium businesses (SMBs) are also venturing down the path of expanding their suites to include warehouse management functionality.
Although still playing catch-up, the likes of SAP and Oracle have made gains in the last few years and are closing the functionality gap versus best-of-breed warehouse management systems. Due to a later start, the same cannot be said of ERP providers to SMBs. In this space there still exists a significant gap with respect to warehouse management system functionality. If the debate were solely focused on functionality, it would be short-lived for SMBs. Since there are other factors to consider, the debate endures.
The operations team will ultimately use the system to run their business so their primary focus will be on the system’s functionality. They will be looking for a system that not only meets their complex requirements today, but also a system that will enable them to grow, meet new requirements in the future, and that will provide tools to differentiate themselves from the competition.
The operations team will also be looking for a system that will ensure gains in operational efficiency. Maintaining the status quo in this area will be unacceptable. Systems implementations are difficult as there is a learning curve with new technology. Without the real benefits of increased operational efficiency and cost control, operations may resist the change and therefore adoption will be hindered. There will be the pervasive feeling of having fixed something that wasn’t broken.
So let’s take a closer look at functionality. ERP providers to SMB’s are in the early phases of creating warehouse management functionality. Naturally, any software company that is building a new product is going to start with the foundational elements. Just like constructing a building, if there isn’t a sound foundation, then anything else built on will be of no value. This is an important point. While it is clearly necessary to have a solid foundation and it is the correct place to start, it is not where the core value will be delivered from the system.
As an example, take picking rules. A best of breed system will have dozens of different rules that can be applied in each operation. These rules have been built up over time from implementations of the system across many industries and customers. This functionality not only provides a much higher level of flexibility, but it also provides the assurance that the functionality has been exercised and proven in the field many times
Contrarily, an SMB ERP has far fewer options in this area so the customer has a choice, they can make do with the existing functionality and forego the operational efficiency gains; or, they can implement customizations or workarounds each of which will increase cost and risk.
The list is actually quite long when one scrutinizes the functionality gaps between an SMB ERP warehouse module and a best-of-breed warehouse management system.
The following highlights those that will have the biggest impact on the operation:
ERP: Single Level; often only pallet.
Best-In-Breed WMS: Multiple levels; including nesting (i.e. case on pallet and eaches in cases).
Business Impact: Multi-level container management enables varied movements to be created and executed in warehouse and provides the ability to ship customers in multiple units of measure . With multi-level, ASN information can be provided to customers since item level container detail will be available.
ERP-Generally a single sortable code on locations to define pick paths.
Best-In-Breed WMS-Dozens of pre-existing picking rules as well as the ability to create user defined rules. Some examples include, both Wave and Batch Picking.
Business Impact: Advanced picking rules enable increased efficiency and inventory accuracy through order batching, optimized pick patterns, and proper execution of inventory strategies (i.e. FIFO).
Put Away Logic:
ERP-Usually a single primary put away location for each product.
Best-In-Breed WMS-Advanced put away logic and the ability to create user defined rules.
Business Impact: Advanced put away logic ensures better space utilization and increased efficiency through the ability to top off pick locations, segment inventory across zones, and comingling of products.
Value Added Services :
ERP-No ability to preform value added services in base products.
Best-In-Breed WMS-Numerous value added service capabilities such as Kitting/Light Manufacturing.
Business Impact: The ability to provide value added services for customers fosters innovation, provides operational flexibility and is a key differentiator.
ERP-Not available in base product
Best-In-Breed WMS-Integrated functionality in warehouse management systems such as Dock Scheduling, Transportation Optimization, LTL/Parcel Shipping Integration
Business Impact: These are key inventory tools in delivering value from the warehouse management system through increased efficiency, and reduced errors from the manual processes
These are but a few important examples where functionality gaps exist. As highlighted in the introduction, if it were solely functionality based, the decision would be easy. However, there are other key stakeholders, so the discussion must move beyond functionality. For the system to deliver value and foster confidence with the operations team, it must function without failure and have near 100 percent up time. That is where the IT team comes into the discussion.
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