WMS vs ERP: the ERP owns the books, the WMS owns the floor

Two different questions

An ERP answers “what do we own and what is it worth.” A WMS answers “where is it and what happens to it next.” Both questions involve inventory, which is why the two systems get confused, but they are asked by different people for different reasons.

Finance asks the first question at month end and needs one number per item at cost. The warehouse asks the second question every minute and needs a location, a bucket and a movement history per unit. A system built for the first question can hold a quantity; it cannot direct a pick.

What the ERP should own

Purchase orders and supplier terms. Sales orders and customer terms. Cost, valuation, and the general ledger. Planning and forecasting. The ERP is the system of record for documents and money.

What the WMS should own

Locations and what is in each one. The movement ledger: every receive, putaway, allocation, pick, pack, ship, return, adjustment and count as its own row. Ownership: which units are already promised to which order. The scan-first execution on handhelds and benches. The WMS is the system of record for physical stock and the work done to it.

Where they meet

At the receipt and at the shipment. When goods arrive against a purchase order, the WMS records the physical event and tells the ERP the receipt happened, so the ERP can post the cost. When an order ships, the WMS records the physical event and tells the ERP so it can invoice. The document starts in the ERP; the physical event happens in the WMS; the record flows back.

The mistake is letting both systems keep their own quantity. Two quantities always drift, and the drift is discovered at the worst time.

The day the ERP module stops working

It is usually one of three days.

The day a second sales channel opens. The ERP module can hold a quantity but it cannot publish an available-to-promise number that subtracts what other channels have already taken. The store oversells.

The day a second person starts moving stock. Without locations and scans, two people move the same pallet in their heads and the module’s number is whatever the last one typed.

The day a customer asks why an order shipped short. The module shows a quantity. It cannot show the pick that was two units light, who did it, or when.

What to do about it

Keep the ERP. Add a WMS that owns the floor and feeds the ERP the receipts and shipments. Stop typing quantities into the ERP; let them arrive as events. Then the two systems agree because only one of them is counting.

How DockingWare draws the line

DockingWare is an operational ERP built around the warehouse. It keeps the physical ledger and computes every balance from it, and it runs purchasing, sales, pricing, invoicing, receivables and payables, cost and margin on the same ledger as inventory. For the books, it can keep its own ledger, or hand them to QuickBooks Online, which then calculates sales tax and holds the financial statements. Available to promise is computed on the server and published to every connected channel, so no channel has to guess what it can sell.