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Today we are going to talk about the different kinds of reconciliation transactions or reports that should be implemented with every WMS/ERP system – and why. We’ll talk about the why first to get something important out of the way. If you have integrated two systems (i.e., WMS and ERP), then you need to have some control in place to make sure that the transactional data between the two systems is in sync and has integrity. Easy enough to understand, however, we find that many companies cut reconciliation transactions or reports from their implementation plans to reduce costs or time. This is not only a bad process, but it is a financially irresponsible thing to do to your company. There have been documented instances of companies going out of business due to integration failures and you certainly don’t want your company to be another case study for why integrations must be accurate.
The first reconciliation that most people consider is the basic Inventory Reconciliation. This can be a transaction sent from the WMS to the ERP, or the ERP to the WMS, or even a third party reporting tool that can access both the WMS and ERP databases. This inventory reconciliation answers the basic question, “Are both of my systems in sync with regards to inventory position?” There are tremendous advantages and cost savings to the company who’s Available to Promise inventory in the ERP matches exactly with what is available in the WMS. We hope these advantages are self-evident to our readers.
We believe that the inventory reconciliation should be run daily for new start-ups in order to flush out all the areas where inventory can get out of sync. While some people argue that you can’t really run inventory reconciliation without all receiving and shipping complete, we have seen many companies work around this problem by simply enhancing the logic in the reconciliation processes to either back out or add back in the inventory that is in some type of incomplete status. Not having complete receiving and shipping should not be an excuse to avoid running daily inventory reconciliation.
Another very important and typically overlooked reconciliation is an Order Reconciliation. This is a process where the WMS and ERP validate that all of the orders that should be in the WMS are in the WMS. This reconciliation is very good at catching missed processes or exceptions where an order might be hanging around the WMS when it should not, or be missing from the WMS when it should be there. Like Inventory Reconciliation, this can be accomplished by sending transactions from the WMS to the ERP, or ERP to WMS, or by using a third party tool to pull and compare data from both systems.
So please, for the sake of having solid inventory data you can trust and knowing that you are serving all of your customers’ orders, strongly consider implementing inventory and order reconciliations as part of your WMS implementation. If you skipped reconciliation during your WMS implementation, it’s not too late to go back and create those now. You might even be surprised at what you find.
