The ecommerce sector has always been at the forefront of technological change. Two technologies in particular which are central to ecommerce are warehouse management and ERP (Enterprise Resource Planning) systems.
These technologies allow business owners to stay on top of orders and manage logistics, whether they be a simple and small-scale drop-shipping operation, or a fully fledged digital first store.
What is warehouse management?
As the name suggests, warehouse management allows business owners to keep track of inventory inside a warehouse. This makes everything from preparing orders to shipping products easier and more efficient. For a business that’s just starting out a “warehouse” might just be nothing more than a personal garage while for scale ups it could be a facility covering thousands of meters square.
Whatever the size of the business, good warehouse management is key to keeping track of orders, inventory, and delivery times.
As businesses scale, much of the warehouse management can be automated, or at least streamlined with proprietary software designed to help with warehouse management. These software tools are called WMS (Warehouse Management Systems) and, when used well, they’ll know every single detail about your warehouse items from picked items, received products, deliveries due and shipments.
The software normally utilises a barcode scanner system to keep track of what’s coming in and going out of a warehouse. More advanced WM systems automate some of the tasks of warehouse management, like bringing up items to a processing table, or putting them on a tray in the delivery area.
Enterprise Resource Planning Explained
ERP, or Enterprise Resource Planning, is an all-in-one integrated system for managing a business’s manufacturing and distribution departments. Essentially, ERP is business management software designed to help manage and sometimes even automate crucial processes including; order processing, Financial analysis, customer relationship management, budgeting, forecasting and payroll and human resources.
And even: warehouse management. That’s right, most ERP software have a warehouse management module or functionality, which makes this type of software enticing for companies with an ecommerce venture.
But there’s another benefit to ERP software. While spreadsheets remain a tried and tested means of analysing orders an ERP allows for the collection of data on all of your business processes. This in turn leads to more informed decision making, and better insight into company processes.
All of this functionality comes with a price tag however, so investing in ERP software will need to be balanced against projected returns on this investment.
Second of all, ERPs don’t have functionalities to support a lean inventory management process. This means business owners will need to remain hands-on with procurement, even if shipping has been automated.
ERP vs WMS: Which One Should You Choose?
While the benefits of an all-in-one system, and the data gathering guaranteed by an ERP is enough to make it a smart choice for most businesses, it might be more efficient for some companies to go for a WMS.
An ERP is the best option for business that are scaling up and are willing to make substantial investments in growth. Smaller businesses may find this investment too much and, even if budgets allow for the investment, smaller enterprises may not be able to use it to its maximum potential.
For start-ups and smaller enterprises a WMS is the better choice and is something that can be upgraded in the future if needed.
ERPs can help a business grow with much more than warehouse management. From payroll to customer service, an Enterprise Resource Planning system is a sure fire way to upgrade an ecommerce business. For smaller business however, that have yet to scale to a level where investing in an ERP is justified, a WMS remains an excellent means of streamlining processes - leaving business owners more time to focus on growth strategy and product development.