Best practices for ERP and WMS integration

In this expert tip, learn how to successfully integrate a warehouse management system with an ERP system.

Imagine that after a thorough analysis of current distribution processes and systems, your company has decided to move forward with selecting a warehouse management system (WMS). No doubt, for many organizations the availability of more sophisticated warehouse functionality -- beyond what is offered in the standard ERP -- is the right answer. Often, this is the case in high-volume and highly automated distribution facilities.

However, now comes the really tough part: Not only must a company select and implement the best-fit WMS software, but, in addition, it faces an even bigger challenge of making sure any WMS integration works with other systems, particularly any existing ERP software. 

Depending on the overall footprint of the ERP system within the business, most manufacturers have a need for integrated item information, customer orders, inventory, shipments and visibility of incoming product. The degree to which this integration is necessary and exactly how it is implemented will vary based on business needs. But without this integration, there is a significant amount of manual processing needed to keep data in-sync and to provide the necessary visibility.

When selecting a WMS, software functionality and the cost of the package should be the primary drivers of any decision. Nevertheless, the feasibility, time and costs to integrate a proposed WMS suite should also be a major consideration during the evaluation. The reason is that WMS integration with other systems is rarely as seamless as the salespeople claim.

Integrated WMS versus interfaced

First, it is important to get some terminology straight, since integrated and interfaced do not have the same meaning. While there are many examples of ERP and WMS software systems that are truly integrated, most third-party or best-of-breed WMS products are interfaced instead.

Integration implies that most software programs use a common database and most information is updated in real time. Interfaced usually means the ERP system and WMS run on separate databases, and perhaps on separate servers. In this case, duplication of a certain amount of business data is unavoidable, as well as additional implementation costs.

Interfaces are usually accomplished with batch export and import programs that physically transfer data between systems, or a middleware product designed for this purpose. Some of these programs may be included with the WMS or ERP package. Even if provided, one should expect to encounter interface complexities and the need for custom interface development and, occasionally, interface issues that negatively impact the business. Also, using a middleware product to link the systems together will likely be a separate purchase.

WMS purchase strategies

When selecting warehouse management software and reviewing the level of out-of-the-box integration with ERP, you'll see most packages fall into one of the three categories. Of course, these should be considered along with the software functionality and other cost trade-offs associated with a given WMS, as previously mentioned.

1. Purchase the native WMS module from your current ERP vendor.

In this case, the WMS module was designed and developed by the ERP vendor with the rest of the ERP system in mind. Therefore, the WMS should be inherently more integrated because it uses technologies common to both systems and has fewer previous designs that inhibit developing the best possible integration.

Also, even if this approach does not provide all the functionality required, in some cases modifying the software to address a few major limitations is a better option than purchasing a best-of-breed WMS and then attempting to write interfaces.

2. Purchase the WMS bolt-on package offered by your current ERP vendor.

More on WMS software

Read about the growing WMS market

Learn WMS integration strategies

Determine the ROI of a WMS upgrade

This option entails a WMS package provided by the ERP vendor that was originally acquired from a third-party vendor and is now offered as an optional bolt-on to the ERP package. This is a very common situation since, over the years, many ERP vendors have rushed to provide a WMS solution to fill this void. In order to make the WMS more compelling to potential customers, it is likely the new vendor spent plenty of time integrating or interfacing the system with its own ERP offering. The result is fewer custom interface programs or middleware required during the implementation of the WMS.

3. Purchase a WMS from a third-party vendor.

The best-of-breed WMS systems often fall into this category. Because it needs higher-end software capabilities, this may be the only valid option for many companies. However, the software will likely cost more to purchase and definitely involves more custom interface expense.

About the author:
Steven Phillips is an ERP professional with over 27 years of implementation experience. He is the author of the book
Control Your ERP Destiny.

Follow SearchManufacturingERP on Twitter @ManufacturingTT.

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