What is an ERP?
An ERP system is a software designed to streamline information between a company’s processes. The aim is to avoid repetitions, imbalances, and discrepancies between warehouse departments.
Employing an ERP system in a facility is a step towards the digital transformation of logistics. It can take most baseline warehouse functions and help you start to automate processes.
How exactly does this work?
Getting started with a warehouse ERP usually involves significant data collection around your current operation, inventory, and orders. You can employ the ERP to track inventory locations, overall orders, and limited KPIs around order pick, pack, and other fulfilment needs.
With an ERP system, you can also organise warehouse stock rudimentarily, setting alerts for low stock levels to ensure proper procurement. Consequently, you’ll leverage your useful space much better and can prevent mistakes and delays in operations, including order processing.
Using ERP solutions in the warehouse provides a more holistic view of operations. ERPs using warehouse data can better understand the total cost of each product — storage fees based on average days on hand, special shipping costs, how often they’re returned, additional labour needs, and much more.
An ERP can help your business run its warehouse more efficiently, independently or as part of a broader technology stack that includes a warehouse management system.
How is an ERP different from a WMS?
ERP systems provide you with a broad range of applications throughout your business. They are strong in some business functions but only sometimes offer deep functionality across all fields. WMS, on the other hand, has a very niche purpose.
Warehouse management systems are a “stand-alone” solution. This means the system needs other supporting software for additional aspects of your enterprise’s business, such as accounting and customer relationship management.
ERP is an integrated and all-in-one solution that has most of the capabilities of warehouse management systems, such as tracking the course of inventory items picked, packed, and shipped. ERP is a suite of integrated applications that automates company activity across all departments. This business management software collects, stores, manages, and interprets data from product planning, cost and development, manufacturing, marketing, sales, inventory management, shipping, and payment.
However, unlike warehouse management systems, ERP does not offer the optimisation of inventory based on real-time information. ERP cannot generate reports based on historical trends and data that identify the best location for each stock item.
Choosing whether a warehouse management system (WMS) or an enterprise resource planning (ERP) system suits your company can be daunting.
You should consider two critical things before choosing between ERP and WMS :
- Clearly define the long-term goals of your business, including measurable outcomes you would like to achieve.
- Take what you have determined to be your long-term goals and the necessary functionalities of your system and match them against implementation and integration costs to determine the return on investment for each scenario.
Once you accurately estimate your return on investment for each solution, your decision about implementing a WMS or ERP system will become much more straightforward.
In this article, we’ll mainly be focusing on ERP systems. This leads us to our next question –
How do you decide which ERP system is best suited to your requirements?
There are various parameters or variables that you can take into consideration to help decode which ERP is best for you. You can narrow down your options based on the level of importance you associate with each of these parameters.
- Price: The amount you’re spending on your ERP must match the benefit it provides you. Don’t buy an overpriced ERP if it’s not something you require. Research the market and find the ERP that fits your expectations and price range.
- Company Size: Not all ERP systems are curated for the same type of company. The size of your company can help you narrow down the ERP most suited to you. Certain ERPs are suited for bigger companies, while others are suited for small companies just taking off.
- Platform: Make sure that your ERP system is compatible with all your devices. Certain ERPs might not work on Windows, Linux, or other platforms.
- Ease of use/setup: If you want your ERP set up on a quick short-term basis – as a trial – it is better to go with an ERP that is easy to use. Complicated ERPs can be beneficial in the long run but take some time to get used to.
- Integration: Sometimes, your ERP might not satisfy one or two requirements. In these cases, it might be better to integrate your ERP with other smaller business applications than change your system altogether. Some ERPs offer higher levels of integration, while others don’t.
- Customisation: Finding a good quality that matches all your requirements to the T is nearly impossible. Every ERP requires a small amount of modification to become perfect for you. The level of customisation plays a huge role in your ERP system. An ERP system that allows high amounts of modification will enable you to curate your ERP to match almost all your requirements.
Major players in ERP software
- SAP S/4HANA:
SAP S/4HANA is designed to enable companies to take advantage of the opportunities offered by digitisation – especially with significantly faster data processing, real-time analyses, and new technologies. In addition, SAP can be improved and automated by numerous SAP add-ons. For example, SAP has created an innovative tool that provides applications for the Internet of Things, artificial intelligence, and extensive data analysis, among other things.
The system’s high speed also means that machine failures or stock shortages in the warehouse can be detected and rectified earlier. Companies can thus prevent costly interruptions to production.
However, SAP HANA is only compatible with and thus will run only on SAP or SUSE Linux-certified hardware. It creates an issue for all the users who want to run it on any other hardware, as the licensing prices are very high.
Also, using hybrid solutions of HANA, like running it partly on the cloud and partly on-premise, causes many issues. Usually, developers who continue with their old ways of working with database technologies are not able to use SAP HANA to its full potential.
- ERPnext
ERPnext is a lot simpler to use as compared to SAP. It has a practical and easy-to-use interface that you can implement by yourself. It provides you with comprehensive features, saving you the time and money required while investing in add-ons. It provides a flexible and centralised platform that streamlines all your requirements and ensures your processes run smoothly. It has different packages you can choose from – one of them being free- based on your needs.
Overall, this system can only perform a few high-level or complex functions. It is not very suitable for large industries. It is relatively new to the market and hence needs more company trust.
ERPnext is a viable alternative for businesses seeking an affordable, modular, reliable ERP system. Albeit small, it has a growing community of users who can provide support if needed.
- Odoo
The best thing about Odoo is its flexibility. Odoo offers users a bouquet of more than 35 modules customised according to their requirements. Be it Accounting, Human Resources, Inventory, Manufacturing, and Logistics, Odoo ERP integrates all the modules so that users can easily keep track of products from their manufacturing till their delivery.
Another advantage of Odoo is that it doesn’t have a fixed pricing tag. There are various options for you to choose from. Users can avail it via pay per use scheme or can just invest in the modules they require.
If you don’t need the complete package, there is also a community edition that is free to use.
One of the major disadvantages of Odoo is its complicated set-up structure. Odoo ERP is intricate in structure and may be challenging to build or implement according to your business necessities. It is almost only possible to customise Odoo with a dedicated team of professionals.
Due to its complex structure, the implementation process can bring considerable loss in terms of time and costs as it disrupts routine operations. Depending on the team for Odoo ERP development outsourcing and other consultants, the development and implementation processes can take months to years.
- NetSuite
The primary feature of NetSuite is its moldability. It can be customised according to the needs of its businesses. With Netsuite customisations, organisations can build new functionalities, workflows and process business demand according to the exact business needs of the users.
Netsuite is also highly flexible allowing easy integrations with great precision and accuracy. Moreover, it provides real-time data visibility enabling businesses to track their customers. Users can record and analyse all sorts of data – from contact information to purchase history and brand preferences. This helps companies better understand customer behaviour and make informed decisions in the future.
However, while extremely beneficial, the customisation process is highly sophisticated. This demands proper maintenance and support quite regularly.
Also, as the system resides on the cloud, Netsuite is expensive for some small-scale companies.