Revisiting the “Best-of-Breed vs. ERP” Debate in WMS

I hate multi-tasking.  Give me one task at a time, and sufficient time to accomplish it, and I’m fairly happy.  But that rarely happens.  Even so, my work life has to be easier than a warehouse manager’s.  Their main job, of course, is to make sure that customer orders are fulfilled accurately and on-time every day.  This alone is  more than a full time job.  But consider all the other things they are often called upon to do: hire and layoff employees; create daily work schedules; ensure that workers are properly trained and that safety procedures are enforced; make sure that all equipment is properly maintained; ensure that the facility is in compliance with all regulatory and environmental regulations; and, if it is near the end of the fiscal year, work on next year’s budget.

I firmly believe all distribution centers should use Warehouse Management Systems (WMS).  But many warehouse managers accomplish the tasks I described above with a combination of word processing, spreadsheets, calculators, a calendar, and a filing cabinet.  And in many cases, this approach is good enough.  In contrast, large companies tend to have Enterprise Resource Planning (ERP) solutions that include Human Capital Management (HCM), Enterprise Asset Management (EAM), Environmental Health and Safety (EH&S), and budgeting applications that could be used to standardize and automate these tasks.  But should these applications be used?  Do they fit the needs of the warehouse?

Sometimes they do, and sometimes they don’t.

Consider a warehouse with forklifts.  You probably wouldn’t want to use an enterprise-class EAM solution to make sure those forklifts are getting preventive maintenance.  It would be too “heavy” a solution and not worth the cost of acquiring extra licenses.  On the other hand,  if you have extensive material handling equipment in your DC, an enterprise-strength EAM solution might be very appropriate.

When does it make sense to use a best-of-breed’s WMS platform that includes light HCM/EAM/EHS/etc. functionality (i.e., “WMS as ERP”) versus using a WMS that is part of an extended ERP solution?  In recent weeks, I’ve talked to product managers at Oracle and SAP (the ERP behemoths) and Manhattan Associates, the largest best-of-breed logistics software vendor.

Let’s first consider “WMS as ERP”.  Manhattan Associates has probably gone further down this path than any other best-of-breed Supply Chain Execution vendor.  Their labor management solution is starting to look a lot like a Human Capital Management application designed specifically for the warehouse environment.  Their LMS is based on engineered standards, so it measures worker productivity, both what workers achieved and what they reasonably should have achieved.  It also has functionality that allows incentives (rewards) to be paid for workers that exceed standard work targets.  Companies can also track whether training activities, or closer supervision of workers, results in improved worker productivity.  Manhattan has also added functionality that allows warehouse managers to look at historical WMS data, combine it with a granular understanding of their warehouse labor productivity, and create budgets that more accurately forecast labor costs for the coming quarter or year.  In the latest release, the solution combines its granular understanding of labor productivity with advanced math to greatly improve weekly scheduling of workers.  In short, Manhattan’s labor management solution is in no way a complete HCM application, but it looks to be just what a manager running a complex DC needs to efficiently and cost effectively run their warehouse.

Now let us look at WMS as part of an extended ERP solution.  SAP is getting good traction, particularly in the food and beverage industry, with their new WMS solution, EWM.  SAP claims that EWM has 80 percent more functionality than their old solution, but a big reason they are winning deals in food & beverage has to do with their other solutions.  F&B companies want total traceability and need to ensure that they are in compliance with health regulations.  Functionality in EHS and across a variety of other logistics and manufacturing applications help them achieve these goals.

Oracle, for example, has won deals in a new vertical for the WMS market, service firms that perform maintenance on planes.  Tighter integration to Oracle’s EAM application, and other aerospace and defense functionality, has helped drive these wins.  EAM workflows such as work requests, material requests, and scheduling can trigger warehouse activities like picking service parts and delivering them to the right location.

When does “WMS as ERP” make more sense than WMS as part of an extended ERP solution?  As is so often the case, the answer is “it depends”.  But it’s clear that the old “best-of-breed versus ERP” debate is too simple.  It is not just a question of deep functionality versus Total Cost of Ownership; there’s another question that needs to be answered:  Where should a particular type of functionality reside?

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