Distribution

ERP VS WMS

People often confuse ERP and warehouse management systems (WMS). They’re different but complementary software solutions that make distribution functions run better. A solid ERP system does both—it has built-in inventory management capabilities and can serve as a complete WMS.

WMSs control warehouse operations and logistics management, including receiving, inspection, acceptance, put-away, picking, and shipping. Essentially, a WMS handles inventory movement and storage while ERP handles inventory movement and management. It accounts for the status of goods and automates company-wide customer service, invoicing, ordering, reporting business metrics, and other operations.

Integrating ERP and WMS delivers powerful results. When goods move within a WMS, stock levels are adjusted, inventory accounts credited or debited, inventory variances accounted for, and customer delivery dates and notices updated.

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Today’s distribution channels include multiple types of organisations: manufacturers, warehouses, shipping centres, retailers, and Internet resellers. Due to COVID-19, routes to market have also shifted. Direct-to-consumer (D2C) has become prevalent—both via a company’s own website and ecommerce sites like Amazon or eBay—enabling customers to buy goods directly from manufacturers. 

Direct Channels for Savvy Distributors

There are many ways to get your products into customers’ hands. As a distributor, your goal is to protect margins and move products quickly to remain competitive. Consider:

• Shopify, Magento, Big Commerce and other eCommerce platforms – eCommerce platforms make it easy for distributors to set up online stores and ship directly to customers. These platforms should be integrated with your ERP system.
• D2C from Amazon, Facebook, eBay and more – These popular shopping sites act as a virtual point of sale for distributors by taking orders and shipping directly to customers. Brick-and-mortar stores also use this method to reduce warehouse costs.
• Direct-to-business (D2B) – If you sell primarily business-to-business (B2B) products, you’ll need a different type of eCommerce site to sell directly to your trusted businesses customers.

Because D2B and D2C now require you to track more information than in the past, you need comprehensive, easy-access views into your stock status, logistics systems, vehicles, and delivery staff—in addition to what you already track. This highlights the need for ERP’s comprehensive tracking and ability to share information across the business.

Indirect Channels

Amazon and other large retailers can also serve as indirect channels for your distribution business. To avoid juggling too many channels on your own, you may choose a third-party logistics (3PL) provider to perform the distribution functions to your widened customer audience.

Whether you handle it yourself or use a 3PL, electronic data interchange (EDI) is vital to success. EDI solutions, such as SPS Commerce, enable distributors to electronically exchange order information with a supply chain partner without manually entering data—effectively automating any process. The result is fast order completion with no data entry errors.

An effective ERP system leverages EDI to integrate your backend data—including sales, invoicing, production, scheduling, and shipping—and eliminate the manual processes associated with sharing data with business partners.

Our distributor customers use this four-step process:

1. A large retailer receives a web order.
2. The retailer’s distributor for the product ordered receives the order into ERP via EDI.
3. The distributor’s EDI automatically starts 3PL fulfilment actions.
4. The 3PL uses EDI to auto-update the distributor’s ERP with customer fulfilment data.

EDI 101: Your Questions Answered

This blog explains how savvy SMB distributors use EDI to beat much larger competitors. You’ll learn why EDI is a must-have in the age of Amazon and the right ERP solutions makes it easy to use in your business.

Read the blog

Why EDI Is Important for Retailers & Their Supply Chain Partners

Read this blog to understand the value retailers place on EDI. It highlights EDI’s benefits for retailers and explains how they save time and money by using it to interact with supply chain partners automatically.

Read the blog

Industry Challenges

Small and midsized distributors face many challenges. The three most common are:

1. Having to lower prices to compete. Wholesale distributors have a history of thin profit margins, but lower-than-expected margins mean you have inefficient work flows, low inventory turns, or redundancies. Without a robust forecasting tool, your inventory will dip and spike unpredictably as market demands change. Product lifecycles can range from several months to a decade, highlighting the need for better forecasting.
2. Inefficiencies from non-integrated software. Many distributors combine accounting applications like QuickBooks with spreadsheets to manage inventory. Others use inventory management applications with weak QuickBooks integration. Because the data in such cases reside in silos, employees must enter identical information into multiple locations to complete tasks and reconcile systems. This wastes time and leads to costly errors.
3. Lack of integration with retailers. Distributors engaged with online and offline retailers, including Amazon, need faster, more accurate invoicing practices. Retailers with Amazon-like models inform distributors of the volume of products sold at regular intervals; the distributor must invoice for the products sold. Add the days outstanding to Amazon’s standard ‘net 60’ payment terms, and you might wait 75 days for payments. Now add the potential for online sales spikes to your cash flow risk, and your business might have to turn down large orders because you lack the cash to fulfill them.

While these challenges are intensified in today’s market environment, modern distribution software lets you handle them with ease.

Inadequate Inventory Management and Control

Robust inventory management helps distributors manage detailed warehouse data while tracking and recording stock movements. If your inventory management solution isn’t integrated with other applications, you can’t obtain reliable, real-time information about incoming and outgoing inventory shipments.

Why Inventory Counting/Stock Checking Is Important for Your Business

This blog explains why manually counting/checking stock is harmful and illustrates the dangers of three common scenarios. It also discusses ERP software for distribution checks and balances, such as detecting discrepancies. Included is a link to an information kit about in-depth inventory management issues and solutions.

Read the blog

Why ERP & WMS Integration is Key for Warehouse Automation

This blog assumes inventory is your most significant asset and explains why accurate measurement and valuation are critical for producing meaningful financial statements. It also describes your main inventory valuation options and the effect the right choice has on profitability, taxes, and strategic planning.

Read the blog

Product Traceability and Industry Regulations

Distributors in the food and beverage and pharmaceutical industries need technologies that support a range of compliance standards, particularly in product tracing. However, implementing product serialization capabilities—a prerequisite for product tracing—is challenging. You must enable collaboration with the stakeholders in your supply chain and share the non-standardized data your supply chain partners need to do business with you.

Lack of Visibility and Poor Reporting

Distributors with poor inventory visibility haven’t integrated real-time or near-real time inventory with their sales and purchasing. Because margins are tight, you need strong reporting to optimize inventory turns and tightly manage days sales outstanding (DSO). Many SMB distributors must manually aggregate data from multiple systems before they can report on it—a time-consuming, error-prone process. Integrated inventory operations eases these challenges.

The 'Next Normal'

Our ‘next normal’ arises from COVID-19 lessons and the need to be prepared for unpredictably shifting circumstances, such as social distancing within distribution operations and an unprecedented shift toward eCommerce.

This will offer three new challenges:

• Gaining better access to real-time information
• Developing D2C routes to market for distributed products
• Adapting working conditions for distance, sanitation, and efficiency

Modern customers want an Amazon-type experience for everything they buy, including always knowing what you have in stock and exact delivery dates.

Warehouse Automation for the Next Normal

Warehouse automation is more critical than ever. Even small operations can benefit from features in modern warehouse management systems, including:

• Bar codes to improve accuracy and speed activities
• Advanced picking schemes for higher worker productivity
• Integrated shipping for faster order cycle times
• Bins and locations that reduce picking time/distance and improve the restocking process
• RFID for compliance with customer-specific labeling and shipping requirements
• Container tracking for updated location knowledge and customs status
• D2C features to get manufacturers closer to customers

When integrated with ERP, a WMS can do so much for SMB distributors in the next normal.

Why ERP & WMS Integration is Key for Warehouse Automation

This blog explains the significant differences between integrating versus interfacing ERP and WMS. It describes where ERP and WMS overlap and the benefits of complete integration within a single platform.

Read the blog

Your Distribution…Simplified

This video explains how to overcome common distribution challenges with a single solution: ERP software for distributors.

Watch the video

Greater efficiency via automated processes and integrated production functionality.

Improved customer service via on-time delivery and fewer shortages/stock-outs, so your customers receive their orders when expected.

Reduced inventory costs via more accurate demand forecasts and improved inventory control.

Higher profit margins via a lean approach to operations and distribution, so you can grow the business without adding overhead costs.

Better visibility via a single, transparent view of operations and inventory across multiple locations.

Faster time to delivery via streamlined order entry processing with real-time available to promise and instant pick-list generation.

The Right Partner

Customisation

Success Stories

Vision33 has helped many distribution companies transform their operational agility and efficiency using ERP. Their customers appreciate the strategic capabilities and success in overcoming daily challenges like inventory management, on-time delivery, and product traceability down to the level of component tracking.

These companies recognized the need for an all-in-one solution to manage every aspect of their warehouses and chose the right ERP solution to improve their distribution operations, including inventory, logistics, and forecasting.

Click on the customer video links to see how you can improve your distribution business with Vision33 and ERP.

- Jody Davis, Customer Service and IT Manager, VIETRI

Get Started

Take the next step by exploring the different ERP systems Vision33 offers. Visit our ERP library to access resources that will help you learn more about how an integrated ERP system can help your manufacturing business. You can also peruse our Explore by Software page.

Then let’s discuss your organisational growth challenges and which ERP solution will help you reach the next milestone in your mission. Vision33 provides the right balance of software and consulting to maximise manufacturing businesses’ investment in transformational enterprise technologies. Speak with a certified Vision33 consultant today about your financial management needs.

Additional Resources

Related Videos

1. How to Process Catch Weight Items in SAP Produmex WMS
2. Efficient Logistics Processes With Advanced Warehouse Management | BEAS
3. Transforming Warehouse Operations Through Data and Mobility | Produmex
4. Optimized Logistics Processes With Advanced Warehouse Management | Produmex
   
   

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1. SAP Business One for Warehouse Management (WMS)
2. Stories From Successful Distribution Companies
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4. PDMX WMS Starter Package
5. SAP Brief: Warehouse and Production Management With SAP Business One
6. Warehouse Management 4.0 - NA

1. Why ERP and WMS Integration Is Key for Warehouse Automation
2. 5 Ways WMS Solves Your Supply Chain Problems
3. How to Create Bin Locations in SAP Business One for an Efficient Warehouse
4. Why Should Your Warehouse Get In on the Ground Level With SAP Business One Cloud?

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