White Paper: Warehouse Management Solutions: Embedded Or Best-Of-Breed?

As manufacturers and distributors come under rising pressure for faster fulfillment of product orders and outstanding customer service, they increasingly ask the question, "Would a warehouse management system1 (WMS) help us better manage and automate our warehouse and fulfillment operations?" Often, they are finding that a WMS would, indeed, provide the benefits they seek. Your company may be coming to the same conclusion.

As you begin to examine the various WMS offerings, you encounter the dilemma of whether a stand-alone WMS simply integrated with an ERP solution or a WMS module that is part of a broader ERP suite would be your best choice. According to the AMR Research Alert, Major ERP Vendors Eying the WMS Market, March 7, 2003, "For ERP users, the decision to automate the warehouse will become increasingly complex as the capabilities of the ERP WMS gradually begin to come on par with what WMS-based vendors have to offer."

Not long ago, the embedded versus stand-alone WMS decision was made easier because standalone systems generally provided broader WMS functionality than what was found in ERP systems. Fortunately, this is no longer the case. Some leading ERP vendors have closed the gap with stand-alone systems. In addition to closing the functionality gap, these embedded WMS solutions provide benefits beyond what stand-alone or best-of-breed (BOB) solutions can in terms of integration, the ability to have one vendor relationship versus multiple, an overall lower cost of ownership, and more.

The functionality question causes confusion in the minds of WMS seekers because WMS-based vendors (often called best-of-breed [BOB]) continue to purport that their systems are functionally superior to WMS applications embedded within ERP solutions. The market is realizing that this no longer holds true. In a recent research paper from META Group, the analyst group reported that "Most companies will continue to benefit from conducting comprehensive evaluations that include both ERP and BOB solutions. Currently, we find that the marginal differences in core functionality – even across BOB solutions – is such that core functionality alone will not differentiate solutions, so companies must look to more intangible evaluation criteria (e.g., ease of use, look and feel, flexibility, tailorability, domain expertise, price) to further distinguish solutions and vendors."