A supply chain ERP system centralizes and manages logistics data, but sometimes has limitations when it comes to inventory management and warehouse operations. Learn about its role, its benefits, and how to complement it with an OMS, WMS, or TMS to ensure reliable operations and support e-commerce growth.
A supply chain ERP system centralizes data related to purchasing, inventory, orders, and procurement to better manage the supply chain. However, when workflows become more complex, its features are not always sufficient to accurately manage warehouse operations.
- What is a supply chain ERP system?
- What are the benefits of an ERP system in the supply chain?
- What are the limitations of an ERP system in the supply chain?
- ERP, SCM, WMS, OMS, TMS: What Are the Differences?
- Why connect an ERP system to a WMS or a logistics solution?
- How does the ERP + Shippingbo integration work?
- How to Choose Your Supply Chain Architecture?
Inventory management, order fulfillment, omnichannel coordination, transportation: To what extent can an ERP system support logistics operations? And in what situations does it make sense to supplement it with a WMS, an OMS, or a TMS?
What is a supply chain ERP system?
An Supply Chain ERP is an integrated management software system that centralizes data and processes related to purchasing, inventory, procurement, orders, and logistics.
Its role is to provide a coherent view of workflows and to facilitate coordination among the company’s various departments. It often serves as the foundation of the information system that supports business, financial, and logistics operations.
What functions does an ERP system cover in the supply chain?
An ERP system in the supply chain operates at several levels:
- Purchasing and Supplier Management: Tracking supplier orders, procurement, and receipts.
- Inventory Management: recording quantities, tracking movements, and calculating book value.
- Order Management: Centralized sales, administrative tracking, and billing.
- Planning: Forecasting merchandise needs and coordinating with production.
- Reporting: consolidation of costs, margins, and performance metrics.
The ERP system thus becomes a central source of information for product data, customers, suppliers, and management operations.
In what situations is ERP most useful?
ERP is particularly useful for companies that want to organize their processes and integrate their business functions.
In particular, it facilitates coordination between procurement, finance, sales, and logistics. Teams work from a shared dataset and have greater visibility into operations.
On the other hand, when a company expands its sales channels, warehouses, or shipping scenarios, operational management sometimes requires more specialized features.
What are the benefits of an ERP system in the supply chain?
The main advantage of an supply chain ERP software is that it centralizes the information needed to manage business operations. This centralization enables more consistent decision-making and helps minimize errors caused by scattered data.
Greater visibility into logistics flows
An ERP system allows you to track orders, procurement, and inventory levels from a single platform.
Managers can identify discrepancies, analyze needs, and anticipate certain challenges. Real-time visibility, however, depends on the available modules and integrations.
Centralization of data and processes
When data on products, purchases, sales, and inventory is spread across multiple tools, teams end up performing more checks and re-entering data.
The ERP system centralizes this information and creates a shared repository. It thus helps to:
- Reduce inconsistencies across departments.
- Minimize duplicate entries.
- Ensure the reliability of the information used to make decisions.
- Improve the administrative traceability of operations.
More structured inventory and procurement management
An inventory management ERP system allows you to track recorded quantities, goods received and shipped, and supplier orders.
It streamlines replenishment planning by linking business needs to purchasing. This feature is particularly useful for minimizing stockouts and better managing inventory levels.
Better Cost and Performance Management
ERP brings operational data and financial information together. This makes it possible to track purchase costs, margins, lead times, and various logistics performance metrics.
This consolidated view helps companies identify their main areas of expenditure and better coordinate decisions across purchasing, sales, and logistics.
What are the limitations of an ERP system in the supply chain?
An ERP system is an excellent management tool. However, its ability to manage logistics operations depends on the available features and the level of complexity of the business.
The limitations of a logistics ERP system become particularly apparent when a company needs to manage numerous locations, omnichannel flows, multiple warehouses, or advanced order-fulfillment methods.
What are the limitations of an ERP system when it comes to inventory management?
An ERP system is fully capable of recording, centralizing, and optimizing inventory. It also allows you to track purchases, restocking, and available quantities within the management system.
The limitations of an ERP system for inventory management become particularly apparent when a company needs to track exactly what is happening physically in the warehouse.
The challenge does not necessarily lie in the quantities recorded, but rather in how well they correspond to actual operations.
Theoretical Inventory, Physical Inventory, and Available Inventory: What Are the Differences?
These three concepts are essential for understanding the limitations of inventory management in an ERP system.
| Inventory Type | Definition |
| Theoretical inventory or ERP inventory | Quantity recorded in the management system |
| Physical inventory | Actual quantity on hand in the warehouse |
| Available stock | Quantity available for new orders |
Let’s look at a concrete example: An ERP system shows 10 units of a product. However, 2 units are already reserved for customer orders, and 1 unit is on hold in quality control after receipt. The book inventory and the physical inventory may therefore both be 10 units, while the inventory available for sale is only 7 units.
If reservations or holds are not properly accounted for, the company risks selling a product that it cannot ship immediately.
Another scenario: The IT inventory system shows the correct quantity, but the order pickers do not know the exact location of the items. In this case, the problem lies with on-the-floor operations rather than administrative tracking.
The Main Operational Limitations of an ERP System for Inventory Management
Depending on the software’s features, certain operations may become difficult to manage:
- Product Location: Precisely identify locations within the warehouse.
- Inventory movements: Track transfers between zones in real time.
- Reservations: Distinguish between total quantities and the quantities of products that are actually available.
- Inventory: Organize inventory counts and reconcile physical and computerized inventory levels.
- Multi-warehouse management: maintaining reliable visibility across multiple locations.
- Picking and order fulfillment: Guide and monitor the picking process using a scanner or PDA.
Some ERP systems offer advanced modules to address these needs. However, their effectiveness depends on the configuration and the functional depth of the solution.
When operations become more complex, a WMS (Warehouse Management System) can complement the ERP by providing accurate tracking of movements, storage locations, and order picking.
The ERP system retains its role in management and consolidation, while the WMS provides a more detailed layer ofon-the-ground logistics execution.
The Limitations of ERP in Order Fulfillment
An ERP system can record an order and transmit the information needed to process it. However, it does not always offer the features needed to optimize the physical fulfillment process.
Let’s consider a company that processes several hundred orders a day, with items located in different zones. The teams must plan their picking routes, select the correct products, verify the quantities, and prepare the packages.
A WMS can then provide features such as batch picking, PDA-based guidance, scan-based verification, and traceability for each operation.
The challenge is to ensure the reliability of the preparations without increasing the number of manual steps.
The Limitations of ERP in Order Orchestration
In an omnichannel organization, orders can come from an e-commerce site, marketplaces, brick-and-mortar stores, or B2B customers.
The ERP system centralizes sales information, but it does not always allow for the implementation of sufficiently advancedorder orchestration rules.
In particular, a company may need to automatically select the warehouse responsible for fulfilling an order based on available inventory, the destination, or business priorities.
That is precisely the role of an OMS (Order Management System), which coordinates orders across different channels and logistics sites.
The Limitations of ERP in Transportation and Returns
Shipping management also requires specific features: carrier selection, label generation, package tracking, and shipping document management.
A TMS (Transport Management System) can automate these operations based on rules regarding weight, destination, cost, or delivery time.
Returns management, for its part, requires careful tracking of receipt, quality control, and the restocking of items.
The value of specialized tools becomes apparent when these tasks become too numerous or too complex to be handled effectively within the ERP system alone.
ERP, SCM, WMS, OMS, TMS: What Are the Differences?
The terms ERP, SCM, WMS, OMS, and TMS refer to tools with different scopes but that are complementary.
Understanding their role makes it possible to build a suitable logistics architecture without unnecessarily increasing the number of software applications.
| Tool | Lead Role | Functions Covered |
| ERP | Corporate Management | Purchasing, Finance, Consolidated Inventory, Orders |
| SCM | Supply Chain Planning | Forecasting, procurement, and coordination of flows |
| WMS | Operational Warehouse Management | Receiving, Picking, Inventory |
| WHO | Order orchestration | Centralization, allocation, routing, status |
| TMS | Transportation Management | Carrier selection, labels, tracking, costs |
ERP vs. SCM
The ERP system centralizes the company’s data and business processes.
SCM (Supply Chain Management) focuses more on the planning, coordination, and optimization of the supply chain.
ERP provides a cross-functional foundation, while SCM tools enable more in-depth management of workflows.
ERP vs WMS
The main difference between ERP and WMS lies in the level of detail of the operations. ERP manages business information. WMS organizes and tracks physical movements within the warehouse: receiving, putaway, picking, inventory counts, and inspections.
This complementarity helps align the inventory management perspective with the reality on the ground.
ERP vs. OMS
The ERP system records and organizes orders in the information system.The OMS coordinates their processing, taking into account sales channels, available inventory, and business rules.
It becomes particularly useful when multiple warehouses or logistics partners are involved in order fulfillment.
ERP vs. TMS
The ERP system stores the information needed for the administrative tracking of shipments. The TMS handles the execution of shipments: selecting carriers, generating shipping labels, providing tracking numbers, and managing delivery costs.
Why connect an ERP system to a WMS or a logistics solution?
Connecting an ERP system to a WMS, OMS, or TMS allows a company to retain its existing management system while enhancing its operational capabilities.
This architecture serves a simple purpose: to ensure that the right information flows between tools without requiring repeated data entry.
The Benefits of a Logistics ERP Connector
A logistics ERP connector facilitates automatic data exchange between different software systems.
It can transmit orders, product codes, inventory levels, order fulfillment statuses, and shipping information.
Each tool retains its role, while the data needed to process transactions flows between the systems.
Synchronization of inventory, orders, and shipments
The synchronization of inventory between ERP systems and e-commerce channels is particularly important for omnichannel businesses. When a product is sold, reserved, received, or returned, the information must be accurately updated across the relevant systems.
Effective integration makes it possible, among other things, to:
- Synchronize commands across channels and systems.
- Update inventory levels after inventory transactions.
- Forward the preparation and shipping status reports.
- Track the tracking numbers.
- Minimize data re-entry and inconsistencies between software programs.
The reliability of these transactions helps reduce the risk of overselling, cancellations, and shipping delays.
Reduction in errors and manual interventions
When software systems do not communicate with one another, teams often have to transfer information manually. This process increases the risk of errors and makes it harder to track changes.
An Logistics ERP API or a properly configured connector automates data exchanges, improves data consistency, and makes it easier to track operations.
How does the ERP + Shippingbo integration work?
The integration between an ERP system and Shippingbo is based on the complementary nature of the tools.
The ERP system retains management and control functions. Shippingbo, thanks to its suite OMS, WMS and TMS, is involved in order orchestration and logistics execution.
Data synchronized across tools
Integration can help synchronize orders, product SKUs, inventory levels, and shipping information.
The goal is to ensure continuity between management data and the operations carried out in the warehouse.
An example of an automated logistics process
Let’s take a brand that sells on Shopify and several marketplaces while continuing to use its ERP system for purchasing and invoicing.
When an order is placed, the various logistics steps may occur in sequence:
- OMS Shippingbo: centralizes orders and routes them to the correct inventory source.
- WMS Shippingbo: manages order fulfillment, inventory movements, and checks.
- TMS Shippingbo: Selects the carrier and generates shipping documents.
- ERP Synchronization: Transmits the information needed for management oversight.
This organizational structure makes it possible to coordinate the management of operations with the actual fulfillment of orders.
What are the benefits for an omnichannel e-commerce business?
For a company that manages multiple sales channels, the ERP + Shippingbo integration provides greater control over operations.
Teams have a more consistent view of orders and inventory, while repetitive tasks can be automated.
The company retains its ERP system while relying on specialized e-commerce logistics tools.
How to Choose a Supply Chain Architecture?
The choice of an IT architecture depends on the complexity of the workflows, the logistics organization, and the development objectives.
There are three main configurations to consider.
Case 1: Public Building Only
An ERP system alone may be sufficient when operations remain simple: a single warehouse, few sales channels, moderate volumes, and standardized order fulfillment processes.
In this context, adding a specialized tool isn’t necessarily required.
Case 2: ERP + Specialized Logistics Solution
When a company needs to manage a larger volume of orders, multiple carriers, or inventory spread across different locations, connecting the ERP system to specialized tools becomes necessary.
This configuration allows the company to retain its management system while strengthening operational inventory management, order fulfillment, and shipping.
Case 3: Best-of-breed architecture
A ” best-of-breed ” architecture involves combining several specialized solutions based on their areas of expertise.
The ERP system provides oversight, the OMS coordinates orders, the WMS manages the warehouse, and the TMS handles shipments.
This configuration offers flexibility, but requires special attention to the quality of integrations and data governance.
ERP and Logistics: Maintaining Control, Improving Execution
A supply chain ERP remains essential for centralizing data, structuring processes, and managing the company’s operations. Its limitations become apparent primarily when logistics require greater precision, speed, and operational traceability. The challenge, therefore, is not to systematically replace the ERP system, but to determine when it makes sense to supplement it with an OMS, a WMS, or a TMS.
With Shippingbo, e-commerce businesses can connect their ERP system to a specialized logistics suite to improve inventory accuracy, coordinate orders, and manage shipments—all without disrupting their core management infrastructure.
Request a Shippingbo demo to learn how to connect your ERP to your logistics operations and improve reliability in your day-to-day operations:
FAQ
An ERP system allows you to centralize, track, and optimize inventory. Its limitations become apparent when a company needs to precisely manage storage locations, real-time inventory movements, reservations, inventory counts, or order picking. To address these needs, the Shippingbo WMS complements the ERP system by tracking physical operations, ensuring the traceability of movements, and improving the reliability of warehouse inventory.
An ERP system for inventory management may be sufficient when logistics flows remain simple, with few storage locations and moderate volumes. However, when a company expands into omnichannel operations, manages multiple warehouses, or needs to streamline its order fulfillment processes, a specialized tool becomes necessary. Shippingbo enables companies to synchronize inventory across sales channels and coordinate inventory management with logistics operations, without necessarily replacing the existing ERP system.
Theoretical inventory refers to the quantities recorded in the ERP system. Physical inventory represents the products actually present in the warehouse. Available inventory refers to the quantities that can be allocated to new orders, after deducting reservations and any holds. With its OMS and WMS features, Shippingbo enables you to track physical movements and update availability to ensure reliable omnichannel inventory management.
Connecting an ERP system to a WMS becomes essential when operations require greater precision: scan-based or PDA-based picking, bin management, frequent inventory counts, tracking of movements, or multi-warehouse management. The Shippingbo WMS handles these on-the-ground operations, while the ERP system retains its role in oversight and consolidation. This complementary approach enhances the reliability of order fulfillment, automates workflows, and supports logistics growth without disrupting the entire information system.
Glossary
ERP (Enterprise Resource Planning)
Integrated management software that centralizes a company’s information and business processes.
SCM (Supply Chain Management)
Methods and tools for planning, coordinating, and optimizing the supply chain.
OMS (Order Management System)
Software that centralizes orders and coordinates their processing across sales channels and logistics sites.
WMS (Warehouse Management System)
Warehouse management software that enables you to manage receiving, storage locations, inventory movements, inventory counts, and order picking.
TMS (Transport Management System)
Software designed specifically for managing shipments, carriers, and delivery tracking.
API (Application Programming Interface)
An interface that allows multiple software programs to communicate and automatically exchange data.
Logistics ERP Connector
A system that facilitates the exchange of information between a business and specialized logistics tools.
Interoperability
The ability of multiple computer systems to communicate and work together.