WMS, LVS, ERP: digitalisation of inventory management

Effi­cien­cy and pre­ci­sion are more impor­tant today than ever before. In logis­tics and inven­to­ry man­age­ment in par­tic­u­lar, even small errors or delays have a huge impact on busi­ness oper­a­tions. This is why more and more com­pa­nies are turn­ing to dig­i­tal inven­to­ry man­age­ment — be it through com­pre­hen­sive enter­prise resource plan­ning (ERP), a ware­house man­age­ment sys­tem (WMS) or a spe­cialised ware­house man­age­ment sys­tem (WMS). In prac­tice, WMS and WMS are often used as syn­onyms, but tech­ni­cal­ly they are pre­cise­ly dif­fer­en­ti­at­ed from one anoth­er in VD 3601, among oth­ers.

But which sys­tem is the right one for your com­pa­ny? When is an ERP sys­tem suf­fi­cient for ware­house process­es, and when is it time to switch to a WMS or WMS? In this arti­cle, we take a look at the dif­fer­ences, advan­tages and pos­si­ble appli­ca­tions of the three solu­tions and show you how to take your inven­to­ry man­age­ment to the next lev­el with the right choice.

A man looks at a display of data in a warehouse

WMS vs. WMS vs. ERP: Differences

Dif­fer­ent approach­es can be used to digi­tise inven­to­ries:

These com­plete sys­tems for the entire com­pa­ny con­tain sim­ple ware­house logis­tics func­tions and are ful­ly inte­grat­ed into the sur­round­ing busi­ness process­es (trig­ger­ing goods orders, etc.). They man­age quan­ti­ties aggre­gat­ed at stor­age loca­tion lev­el using fixed stor­age bins sta­t­i­cal­ly assigned in the mate­r­i­al mas­ter. As ERPs are not designed for the actu­al phys­i­cal process­es in the ware­house, they can­not con­trol goods move­ments or process­es or organ­ise ware­house process­es.

Suit­abil­i­ty: SMEs with very sim­ple ware­house struc­tures and few dai­ly stock move­ments

The stand-alone ware­house soft­ware con­trols all basic inter­nal process­es from goods receipt to goods issue. It focuss­es specif­i­cal­ly on effi­cient and detailed stock and loca­tion man­age­ment. There is no in-depth inte­gra­tion into ERP process­es, which is why inter­faces to the ERP are nec­es­sary.

Suit­abil­i­ty: small­er, sim­pler ware­hous­es — scal­able to large ware­hous­es

As spe­cialised sys­tems, WMS focus entire­ly on ware­house logis­tics. They are oper­at­ed as a stand-alone appli­ca­tion or as part of an ERP sys­tem and enable the com­pre­hen­sive con­trol and opti­mi­sa­tion of all ware­house process­es as well as replen­ish­ment. They there­fore sup­port a high degree of automa­tion. They are high­ly scal­able, mul­ti­site-capa­ble and pow­er­ful at peak times.

Suit­abil­i­ty: from small and sim­ple to large and com­plex ware­hous­es with many move­ments and dif­fer­ent types of stor­age, dis­tri­b­u­tion cen­tres

What exactly is WMS?

A WMS maps ware­house process­es such as goods receipt, stor­age loca­tion man­age­ment, pick­ing and despatch vir­tu­al­ly in real time. For exam­ple, it con­trols where exact­ly an item is stored, includ­ing stor­age and retrieval, inven­to­ry man­age­ment and the nec­es­sary mobile scan­ners and label print­ers. Inte­grat­ed mate­r­i­al flow com­put­ers con­trol and opti­mise the asso­ci­at­ed con­vey­or tech­nol­o­gy and auto­mat­ic stor­age sys­tems. Over­all, a WMS makes a sig­nif­i­cant con­tri­bu­tion to reduc­ing costs, increas­ing effi­cien­cy and improv­ing ser­vice — essen­tial for com­pa­nies with grow­ing inven­to­ries.

Advantages of WMS

Com­pa­nies ben­e­fit from the fol­low­ing advan­tages when using WMS:

Higher speed

Intel­li­gent algo­rithms ensure that stor­age space is used effi­cient­ly and the place­ment of items is organ­ised in such a way that fre­quent­ly required prod­ucts can be accessed more quick­ly. This leads to math­e­mat­i­cal­ly opti­mised pick­ing routes and a high­er pick­ing speed. Ware­house man­age­ment sys­tems sup­port var­i­ous pick­ing meth­ods such as pick-by-scan or pick-by-voice, which both reduce the error rate and improve the over­all effi­cien­cy of process­es.

In addi­tion, a WMS offers the option of end-to-end dig­i­tal­i­sa­tion, which increas­es process speed and avoids man­u­al input errors:

  • Use of mobile data acqui­si­tion devices (MDE)
    Scan­ners for ID tags (bar­code, QR code, etc.) cap­ture (ware­house) data quick­ly and error-free by read­ing arti­cle num­bers, stor­age loca­tions or order infor­ma­tion direct­ly from ID tags.
  • RFID tech­nol­o­gy
    RFID (Radio Fre­quen­cy Iden­ti­fi­ca­tion) enables the auto­mat­ic iden­ti­fi­ca­tion of goods by radio sig­nal with­out visu­al con­tact.
  • Opti­mised work­flows
    By math­e­mat­i­cal­ly opti­mis­ing routes and mon­i­tor­ing mate­r­i­al man­age­ment rules (MHD mon­i­tor­ing, FiFo, LiFo, etc.), the sys­tem sup­ports opti­mised process­es and routes.
  • Order pick­ing sys­tems
    These sys­tems can also take over the opti­mi­sa­tion of mate­r­i­al flows and pro­cess­ing sequences for (col­lab­o­ra­tive) hard­ware and sys­tems. This can, for exam­ple, opti­mise the Auto­mat­ic grip­ping, trans­port­ing and assem­bling of goods include. They not only par­al­lelise ware­house process­es and reduce errors, they also relieve employ­ees of heavy or repet­i­tive tasks.

Very good stock accuracy

WMS (and WMS in gen­er­al) ensure a high lev­el of data trans­paren­cy and accu­ra­cy. The risk of stock errors caused by dou­ble book­ings or incor­rect stor­age bin allo­ca­tions is min­imised.

Flexibility through real-time data

With the real-time trans­paren­cy offered by ware­house man­age­ment sys­tems, com­pa­nies can view the cur­rent ware­house (space) sta­tus at any time, track incom­ing and out­go­ing goods in detail for each work step and react flex­i­bly to grow­ing demand or changes in the ware­house struc­ture. This not only improves deci­sion-mak­ing and deliv­ery capa­bil­i­ty, but also cus­tomer sat­is­fac­tion, as deliv­er­ies can be made faster and more accu­rate­ly.

Degree of digitalisation of warehouse processes

The dig­i­tal­i­sa­tion of process­es and com­plex­i­ty takes place in dif­fer­ent stages in the scope of ser­vices:

Stock management chart

In addi­tion to the clas­sic WMS and WMS sys­tems (on-premise and cloud-based host­ing solu­tions), no- and low-code appli­ca­tions have increas­ing­ly estab­lished them­selves on the mar­ket in recent years. They reduce the hur­dle of real­is­ing a com­plex and cost-inten­sive imple­men­ta­tion project, espe­cial­ly for small to medi­um-sized com­pa­nies. A sim­ple graph­i­cal “devel­op­ment inter­face” makes it pos­si­ble to define and test process­es using drag-and-drop actions and to put the soft­ware into oper­a­tion inde­pen­dent­ly.

At the tech­ni­cal lev­el, imple­men­ta­tion takes place with­in the frame­work of the defined sys­tem lev­el at the (IT) process lev­el. The fol­low­ing dia­gram shows the imple­men­ta­tion of the lev­el struc­ture based on VDI 3601.

Technology and integration — advantages and disadvantages at a glance

Sys­tem

Advan­tages

Dis­ad­van­tages

ERP
  • Native process con­sis­ten­cy, often sin­gle source of truth
  • Less IT effort, low­er licence and train­ing costs
  • Sim­pli­fied IT archi­tec­ture due to reduced archi­tec­ture and exist­ing sys­tems
  • Not suit­able for com­plex logis­tics process and ware­house struc­tures
  • No mul­ti-user stor­age pos­si­ble
  • No direct con­nec­tion of auto­mat­ed logis­tics sys­tems pos­si­ble
  • Lim­it­ed dig­i­tal (mobile) logis­tics data pro­cess­ing

LVS
  • Extend­ed ware­house func­tion­al­i­ties com­pared to ERP sys­tems
  • High flex­i­bil­i­ty and expand­abil­i­ty of logis­tics
  • Reduced error rates and greater process reli­a­bil­i­ty thanks to dig­i­tal con­sis­ten­cy of logis­tics process­es
  • Sup­port of pick­ing tech­niques such as pick-by-voice / pick-by-light etc.
  • Inter­face to ERP required
  • Inte­gra­tion and train­ing costs high­er than with a pure ERP solu­tion
  • Often addi­tion­al costs for licences and hard­ware
  • High demands on per­for­mance and sys­tem avail­abil­i­ty
  • Soft­ware archi­tec­ture tends to become more com­plex

WMS
  • Advan­tages as with the LVS
  • Pre­cise inven­to­ry man­age­ment in real time
  • Enables com­plex process log­ic
  • Depend­ing on the soft­ware, cov­er­age of mate­r­i­al flow con­trol sys­tems is also pos­si­ble, which means that the soft­ware archi­tec­ture tends to be more flex­i­ble than that of a WMS. Sim­pli­fied becomes
  • Dis­ad­van­tages as with the LVS

When does it make sense to switch from ERP to WMS?

Diagram of the digitisation of inventory management

Digital warehouse management: what speaks in favour of a neutral consultant

Work­ing with a neu­tral con­sul­tant makes a sig­nif­i­cant con­tri­bu­tion to the struc­tured, effi­cient and suc­cess­ful intro­duc­tion of ware­house soft­ware. It ensures that the sys­tem is not only imple­ment­ed, but also that its poten­tial is ful­ly utilised through a holis­tic process analy­sis. Fur­ther­more, prod­uct neu­tral­i­ty ensures that the most advan­ta­geous vari­ant is imple­ment­ed for the indi­vid­ual appli­ca­tion — be it ERP, WMS or WMS.

Every com­pa­ny has spe­cif­ic require­ments and chal­lenges. A neu­tral con­sul­tant can devel­op a cus­tomised solu­tion that is pre­cise­ly tai­lored to the needs of the com­pa­ny — regard­less of spe­cif­ic brands and prod­ucts.

Before imple­men­ta­tion, the con­sul­tant analy­ses exist­ing process­es and iden­ti­fies areas with poten­tial for opti­mi­sa­tion. This ensures that the sys­tem actu­al­ly increas­es effi­cien­cy and does not just dig­i­talise exist­ing process­es.

Neu­tral con­sul­tants have a great deal of expe­ri­ence in design­ing and opti­mis­ing ware­house process­es. They also take into account the process­es before and after the ware­house in order to keep an eye on the entire sup­ply chain. This means that no new silos or data islands are gen­er­at­ed. They know the proven meth­ods for imple­ment­ing a dig­i­tal ware­house man­age­ment sys­tem such as WMS and can help to avoid typ­i­cal pit­falls.

A con­sul­tant helps to cal­cu­late the total cost of imple­ment­ing a ware­house man­age­ment sys­tem and esti­mate the poten­tial sav­ings. This enables a well-found­ed deci­sion to be made that also makes eco­nom­ic sense in the long term.

Neu­tral con­sul­tants help with the selec­tion of the «right» ware­house soft­ware that is com­pat­i­ble with the exist­ing IT sys­tems (e.g. ERP sys­tems). They help to cus­tomise the sys­tem adap­ta­tions pre­cise­ly to the company’s require­ments.

The migra­tion process of exist­ing data into the new sys­tem is also part of the imple­men­ta­tion sup­port. The aim is to ensure that the inte­gra­tion of the sys­tem with oth­er com­pa­ny sys­tems runs smooth­ly.

An expe­ri­enced con­sul­tant and project man­ag­er brings the sys­tem into pro­duc­tive use more quick­ly. This reduces the time dur­ing which oper­a­tions may be restrict­ed.

Thanks to their expe­ri­ence, con­sul­tants recog­nise poten­tial risks at an ear­ly stage and take coun­ter­mea­sures to min­imise prob­lems dur­ing imple­men­ta­tion.

The intro­duc­tion of a new ware­house sys­tem entails sig­nif­i­cant changes to work process­es. Con­sul­tants sup­port the com­pa­ny with change man­age­ment in order to min­imise resis­tance and ensure a smooth tran­si­tion phase.

Thor­ough train­ing is cru­cial for the accep­tance and suc­cess of the sys­tem. Con­sul­tants spec­i­fy the require­ments for the train­ing pro­grammes for employ­ees to ensure that they can use the new sys­tem effec­tive­ly.

After imple­men­ta­tion, the con­sul­tant con­tin­ues to pro­vide valu­able sup­port in sup­ply chain man­age­ment or Oper­a­tional Excel­lenceto con­tin­u­ous­ly opti­mise the soft­ware and process­es and adapt them to chang­ing busi­ness require­ments.

Efficient warehouse processes with SOLTIC

Would you like to opti­mise your ware­house process­es and imple­ment the right ware­house sys­tem? SOLTIC is your com­pe­tent part­ner in the field of dig­i­tal ware­house man­age­ment. We would be hap­py to put our expe­ri­ence, sys­tem knowl­edge, plan­ning and real­i­sa­tion exper­tise to work for your com­pa­ny. Find out more about our ser­vices in the field of logis­tics solu­tions!

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Portrait Eric Wieser

We look forward to hearing from you.

Eric Wieser
Senior Project Man­ag­er

eric.wieser@soltic.ch

+41 61 551 74 60

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