Listen, ecom kids. In the interest of keeping it real… well, there’s no cutesy comparison or inside joke that can soften the reality check we’re about to drop.

Setting up an ecommerce business is overwhelming. Worse than overwhelming. For an operations management newbie diving into the warehouse world for the first time, all the acronyms, tools, and “suggestions” from random internet searches can make you feel like you’re drowning. Or maybe like you’d rather be.

Our team knows the feeling. Every day at Goods, we work with ecommerce clients as they try to recover from a gutsy, poorly planned jump into the management pool… headfirst. Sometimes it’s not pretty.

As career tech nerds and logistics experts, Goods doesn’t shy away from messy operations or deep water. No matter how scary the dive, it’s our sworn duty to make sure you come up swimming.

That’s why we’ve written this little guide to introduce you to your two best friends in ecommerce operations management: Enterprise Resource Planning (ERP) and Warehouse Management Systems (WMS). We’ll demystify them step by step, delete the confusion, and show you how the right ERP and WMS can save your business from going under.

Let’s start in the kiddie pool with the most basic of questions:

1. What is ERP?
2. What is WMS?
3. What can they do for me?
4. How do I pick the right one?

ERP AND WMS, EXPLAINED

Feeling burnt out after reading a bunch of hyper-technical explanations about how to manage your warehouse? Or maybe you’re reeling after attending a dozen demos of “tech solutions” that seem to complicate more than they solve?

Take a step back with Goods to the basics.

To fight back against all the tech lingo and embrace simplicity, we like to imagine that every business is a seaworthy sailboat. As your boat rides the seas of trade and commerce, ERP and WMS are the riggings that enable you to steer the ship in the right direction.

The right ERP and WMS will allow you to turn your sails in time to take advantage of lucky winds. They will also help you change course to avoid nasty icebergs, rocks, sea monsters, and other beasts of ecommerce.

Metaphors are a nice place to start, but we need concrete info too.

FIRST QUESTION: UH, “ERP”?

Quick answer? It’s Enterprise Resource Planning—shortened to ERP. In the simplest terms, it’s a type of management software. ERP software integrates all the day-to-day functions of a business into an organized, more sensible system.

For ERP purposes, “day-to-day functions” usually involve the management of these departments and needs: financial, procurement, project, risk, compliance, and supply chain.

Robust ERP software also often includes “enterprise performance management” tools, which offer more insight into the business’s financial situation so you can plan and budget with confidence.

In many aspects, ERP is a business’s brain—the smart center of its nervous system.

SECOND QUESTION: AND WMS IS…?

Warehouse Management System. Almost self-explanatory. Almost.

Allow us to explain the rest. WMS is shorthand for the software that businesses use to keep tabs on their warehouse operation. But that description doesn’t do WMS justice.

A WMS that pulls its weight will oversee every little item that flows in and out of every logistics site you manage. Breaking it down another step, that usually means inventory management and pick-and-pack tasks, but it also includes shipping outbound orders and receiving inbound orders.

WMS is a lifesaver for the warehouse team. By keeping stock organized and accounted for, it helps warehouse workers on the floor and in oversight positions. With the right WMS, you’ll never lose track of your stock, accidentally send out expired goods (yikes), or waste time hunting down mislaid items.

THIRD QUESTION: DEFINITIONS AREN’T GOING TO PAY MY WAREHOUSE BILLS, SO HOW WILL ALL THAT HELP ME IN MY EVERYDAY WORK LIFE?

You remember the ship and sails metaphor, right? Like strong riggings, ERP and WMS work together to make sure you’re always moving forward. But they’re not identical twins—it’s better to think of them as two distinct pieces of company equipment. Each has its own roles and responsibilities.

We point this out in order to answer a popular question in advance: Nope, they’re not interchangeable. In fact, many business owners start with ERP and then augment their operation with WMS as they grow, add logistics sites, and increase the complexity of their inventory situation.

If your operation is of a size and logistical complexity to merit using both ERP and WMS—and that’s probably a lot smaller than you think—then we strongly encourage you to do so.

(Which makes sense… because you wouldn’t cut one of your riggings without expecting massive consequences for your ship’s stability. Please don’t try that it home, or we’ll have to send out our special task team of aquatic eggheads to save you, and we know they’ll never stop bragging about it.)

KEEP SAILING: WHICH SYSTEM FITS YOUR SHIP?

Still skeptical about the individual value of each type of system? We get it. Maybe it will help our case to go over the main similarities and differences between WMS and ERP software.

SIMILARITIES

1. Data is Ground Zero: ERP and WMS are powerful systems, but they’re functionally useless without good quality data. You wouldn’t feed a marathon runner a diet of barbeque chips and cola and expect them to win a race; don’t feed your software junk either. Always use accurate info that represents the real, honest state of your operations. As mama said: no data silos, no holding intel hostage from your other internal teams, and no fudging! (Though we know you’d never do that.)
2. Scalability: ERP and WMS aren’t just fancy toys made for enterprise operations with huge logistical labyrinths to comb through. Whether you’re a tiny startup or one of the big dogs in your industry, high-quality ERP and WMS should scale to meet your needs today and So make sure to find a solution that can grow to fit your business five years from now and beyond.
3. Real-time or Bust: One of the main roles of both ERP and WMS is to keep your team informed about what’s happening with your business right now. It doesn’t help your pick and pack squad to know stock ran out three weeks ago—they need insights into inventory fluctuations by the minute.
4. Integration Means Everything: A good, adaptable, strong ERP and WMS marriage will play well with the assorted software and systems you already use to manage your op. Keep a list handy, and make sure your choice of software can integrate with—or replace—all your favorite tools. Don’t wait until onboarding day to find out that your integrators can’t make your must-haves work with their system.

DIFFERENCES

1. Scope and Specialty: You might think of ERP as a jack-of-all-trades software; it juggles many different departments, functions, et cetera. WMS, on the other hand, is a standalone software that always specializes in the warehouse world.
2. Complex vs. Comprehensive: Building on our last point, because WMS focuses on warehousing, these systems tend to be more specialized and more capable of handling complex warehouse needs. Generally speaking, ERP software is more comprehensive in its offerings. Think breadth (ERP) versus depth (WMS).
3. Cost and Charges: It’s everyone’s least favorite topic, but do understand at the outset that maintaining either system will incur costs. Depending on the complexity of your operation, you may find WMS options are costlier due to the need for special integrations and specializations. This isn’t always the case, though, and you should keep in mind that ERP costs can vary wildly depending on the scope, scale, and speed of your implementation plan.

GOODS TEAM TIPS FOR CHOOSING THE RIGHT SYSTEM

If it feels like the waters are rising and the pressure is on, take a deep breath and stay floating. We’ve summoned our team of Goods experts to offer their best one-sentence pieces of advice for picking a suitable ERP and WMS for your needs.

Some questions to ask yourself as you tread water and consider your options:

• Flexibility: Can this solution adapt to my business through changes (both natural and unusual), or is it as rigid as a plank of wood?
• Scalability: Will this solution grow with me starting wherever I am now, even if that means building a worldclass operation from my eyestrain Excel sheets? (Sorry, Excel! We love you, really. Just not for this.)
• Hidden Costs: Do I understand the real cost of this solution, including implementation services, third-party integrators, and special integrations I may need?
• Complexity: If I add more warehouse locations, logistics sites, or sales channels, can this solution keep up with me or will it drop like an anchor and hold me back?
• Incompatibility Issues: Is this system able to elegantly incorporate all the tools I currently use to run my business—and if not, can it replace them with something better?
• Real-time Sync: After everything is integrated and onboarding is over, does this system offer real-time information on my business? (Don’t accept anything less!)
• Genuine Value: Do I see how adding this solution will improve my end-to-end process and make life better for my customers?
• Team Input: Does my team like the solution, especially the experts who will be using its more complex functions every day?
• Reporting and Insights: Are all my reporting and analytics worries covered by this solution, and can I customize my reports to fit my needs, even if those needs change over time?
• Ease of Integration: Really, honestly, truthfully, in my secret heart of hearts… do I think this solution is going to be more trouble than it’s worth, and do I trust the people who made it to help me when I run into a problem?

CONCLUSION

At Goods, we sometimes describe a messy ecommerce operation as a boat getting pulled into a whirlpool. It looks calm enough from the outside, but sloppy guesswork and poor recordkeeping will eventually cost you—and maybe even suck your team into a nasty spin from which you can’t escape.

Dramatic, yes. But we’ve seen it happen to far too many promising businesses in the SMB space.

It’s why we’re so adamant about the importance of picking the right software for your business. A good WMS + ERP combo can clean up your operations, improve your decision-making, and make sure you don’t find yourself going toe-to-toe with a giant squid.

We hope our guide has given you a firm, simple, easy dock from which to launch your ERP and WMS expedition. Stay safe out there, and if you ever feel like you’re sinking, don’t hesitate to send us an SOS. The Goods nerds are always ready to paddle out and toss you a lifeline.