Enterprise resource planning (ERP) system suppliers are known for offering tightly integrated software suites for back-office functions like order management and financials, but until fairly recently, they haven’t been known as leading vendors of warehouse management system (WMS) software. That has changed, however, as the biggest ERP vendors have steadily built up their WMS and other supply chain execution (SCE) software offerings and sales.
Now, not only do the biggest ERP vendors who often sell to large enterprises offer advanced WMS, but a few of the ERP vendors that focus on small- to medium-sized enterprises (SMEs) are also enhancing WMS. That’s quite a change from the WMS capability SME-focused ERP vendors used to offer, says Dwight Klappich, a research vice president with Gartner.
Until relatively recently, WMS modules from SME-focused ERP vendors tended to be little more than “bin locating systems” with some bar coding support, says Klappich. This allows users to locate inventory in a storeroom or on a rack in a warehouse, generate a pick list and execute a pick, but typically lacks the type of system-directed picking common to more advanced WMS, as well as rules for wave planning and wave picking.
Now this situation has changed, says Klappich. Today, the major ERP vendors have advanced WMS and many extended SCE capabilities. Additionally, a few SME-focused ERP vendors now offer WMS modules that go well beyond bin locating.
Klappich likens the ERP vendors’ improved WMS competency to how automakers have increased the quality of sound systems in new cars. A few consumers today might still opt for custom car audio, but the majority of new car buyers can usually find a factory audio option that meets their needs. “In general, the major ERP vendors are going to offer supply chain execution that perhaps is not full best-of-breed in all areas, but that is good enough for the vast majority of companies,” says Klappich.
But just where is the cut-off point between basic warehouse execution and an advanced WMS, and what might draw a SME to an advanced WMS in the first place? The answers to those type of questions require a closer examination of the WMS function sets SME-focused ERP vendors are offering and also hinge on the complexity profile of the SME organization looking for a WMS solution.
“It’s not just about size, but complexity,” says Klappich. “You could be a mid-sized electrical parts distributor, but have complicated warehouse requirements because distribution is your business. So, you might be a $200-million-a-year company, but need an advanced WMS.”
WMS can be assessed under a five-level stratification model spanning from simple bin tracking solutions at level one to advanced WMS with extended capabilities at levels four and five, says Klappich. At level five, the WMS also needs proven interfaces to automated materials handling systems and a track record for success in highly automated facilities. The larger best-of-breed vendors, such as Manhattan Associates, JDA and HighJump, are on the highest strata, while SME-focused ERP vendors were generally once at the lower two levels.
There are exceptions to where ERP vendors lie on this stratification today, notes Klappich, with a few mid-market ERP players having enhanced their WMS solutions up to a solid level three or higher. At levels three and above, says Klappich, WMS includes features such as system-directed picking and putaway, extended rules and features for wave management, and support for methods such as batch picking and crossdocking. The more advanced WMS at levels four and five also have capabilities such as slotting optimization and task interleaving, as well as proven interfaces to automated materials handling equipment.
The bigger best-of-breed WMS vendors also offer labor management system (LMS), yard management system (YMS), and transportation management system (TMS) solutions. While some large ERP vendors have expanded into these extended SCE areas, says Klappich, SME-focused ERP vendors generally do not offer the same breadth and depth of LMS, YMS, and TMS functions that can be had from the best-of-breed providers.
While complexity needs can drive the need for advanced WMS for a SME’s warehouse, the size of the operation does play a role in terms of the need for extended applications, says Klappich. For example, in a very large scale warehouse with 300-plus workers, solutions such as LMS have a stronger payback proposition. “The bigger companies are usually going to push automation as far as they can because of scale,” says Klappich.
For many mid-sized companies with distribution centers, a WMS from an ERP vendor may fit the bill, agrees Bruce Eicher, a managing partner with Envista, a consulting firm that has an implementation practice for Microsoft’s ERP and WMS solutions. Eicher says that today, WMS/SCE from a major ERP vendor such as Microsoft might not be as deep as the best-of-the-best-of-breed solutions, but it’s “85% of the way there with a few outliers.”
For example, says Eicher, an ERP vendor typically can’t offer a full-blown LMS that analyzes trends and recommends labor efficiencies, though its WMS might generate some labor metrics. Or, the ERP vendor might have a TMS option, but not one with every possible mode of transportation covered or prebuilt integration to parcel carrier systems. On the other hand, says Eicher, solutions such as Microsoft AX now offer system-directed picking, and support for wave management, batch picking, crossdocking, and other WMS functions many facilities need. That’s a change from just a few years back, says Eicher, when getting that level of WMS usually meant integrating ERP to a best-of-breed solution.
A WMS from a mid-market ERP vendor also may be capable of working well with automated materials handling solutions. For example, says Eicher, Envista helped Vincennes University Logistics Training and Education Center (VU LTEC) deploy Microsoft’s WMS and integrate it with a pick-to-light system and a voice picking system. The center has a working 40,000-square-foot working warehouse that processes books for a book donation organization.
The integration factor
The main advantage ERP vendors can boast to prospects is that their WMS offerings are already integrated with the ERP solution. While consulting services may be needed to properly configure the vendor’s WMS to a DC’s specific processes, the work of integrating ERP’s order and inventory data schemes with WMS already has been done by the ERP vendor.
With WMS from an ERP vendor, says Jack Logan, a senior customer account executive with Epicor Software, the end user organization “has everything under one roof, and it’s all working off the same database” model used for ERP, which takes away the integration issues.
Modern integration technologies such as Web services has made integration to third-party packages easier, Logan says, but going with an ERP vendor’s WMS also simplifies who to turn for support. “You only have one throat to choke, if you will, rather than finger pointing,” says Logan.
At NetSuite, a cloud-based ERP vendor which has many application partners for extended functions, the company acquired a SCE partner called eBizNET, whose WMS was built to work with NetSuite’s cloud architecture, in the fall 2014.
The move, says Ranga Bodla, distribution industry lead at NetSuite, is consistent with NetSuite’s strategy of having in-house applications for key supply chain management functions, while still maintaining partnerships with best-of-breed vendors. “We like to provide at least some level of native functionality, but we are still very partner friendly and might have three of four partners for a given category,” says Bodla.
Sid Geddam, former CEO for eBizNET and now vice president and general manager for WMS at NetSuite, says that with WMS now under NetSuite’s wing, there is closer alignment of application enhancements and how those might impact business processes that span application boundaries. “There are [WMS and ERP] features that interact with each other. For example, how exactly does an order drop into a warehouse management system, or what happens when an exception takes place in a warehouse, and how does that impact the order? These are some of the things you want to build into the application suite natively rather than have customers deal with on a one-off basis,” says Geddam.
Brian Stein, CEO of Syspro USA, agrees that Web services and eXtensible markup language (XML) make integration of ERP to best-of-breed solutions less of an issue, though not every third-party vendor has these integration methods. That’s why it’s important, he contends, for ERP vendors to vet partner solutions to ensure they integrate easily with ERP, while offering customers a choice of more basic warehouse execution within the core suite, or more advanced solutions.
Syspro’s ERP users have multiple WMS choices, says Stein. This includes some base warehouse functionality within the ERP suite, a lower-end WMS, and an advanced WMS. Syspro “OEMs” the WMS solutions from a partner called CSoft, but Stein says they are pre-integrated solutions that understand the business rules and objects in the ERP suite. “We’re giving you multiple options of what you can use for WMS, from a simpler solution, all the way to a full-blown WMS,” he says.
Stein estimates about 60% of customers are looking for a more advanced WMS, while 40% want a scaled-down solution. Across the board, however, Syspro’s WMS users want electronic data interchange (EDI) functionality as part of the solution. “The smaller manufacturers distributing to bigger companies might not need all of the advanced WMS features, but if they are selling to a GE or a Walmart, they need EDI,” he says.
SAP, while known for selling its ERP system and its Extended Warehouse Management (EWM) solution to larger enterprises, also has a SME solution set sold through channel partners called SAP Business All-in-One. Within this program, a customer can opt for All-in-One’s standard “WM” WMS module that was SAP’s most advanced WMS offering before EWM, or separately license EWM, says Richard Kirker, SAP solution manager of warehouse management solutions.
The WM module is a robust WMS, says Kirker, but lacks some of the functions available in EWM such as slotting optimization and labor management. Some mid-sized companies might be fine with WM, says Kirker, while others opt for EWM. In some cases, an All-in-One customer uses EWM for its main DC, but WM as the WMS for smaller warehouses, he says. “So it is a scalable set of choices, including being able to scale down to the smaller side,” says Kirker.
The bigger picture
ERP vendors can also offer e-commerce modules that integrate with ERP and from there to WMS functions. For some companies, part of the appeal of getting WMS from an ERP vendor is that they can also get an e-commerce platform from the ERP vendor. As the move to omni-channel fulfillment intensifies, this bundling might help ERP vendors.
“With the whole omni-channel world we are moving toward, there are many interactions happening, and many touch points in terms of where goods need to move,” says Bodla. “And as that complexity increases, the benefits of having all of these functions together within a single architecture—e-commerce, ERP, and warehouse execution—gets multiplied.”
Of course, the best-of-breed players still have plenty of appeal when it comes to mid-market companies facing complex execution challenges. Larger mid-sized companies facing multi-mode, global fulfillment challenges, and with enough budget to cover integration, might opt for best-of-breed SCE solutions, says Eicher. “A lot of this is driven by the need for the most advanced functions,” he says. “And, if they need a lot of those, and it’s a global operation, that’s what really sways things toward best of breed.”
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