What is the difference between warehouse management and inventory management? Continue reading to learn what each term means and what the features are.
The terms “inventory management” and “warehouse management” are sometimes used interchangeably, meaninglessly, as they both deal with operations and products within manufacturing and distribution companies. Despite their few similarities, there are many notable differences between warehouse and inventory management systems. Warehouse managers and business owners should be aware of and understand the differences between the two terms, as the type of management system used to track inventory depends on certain factors that can either boost or hinder the profitability and efficiency of your company.
What are the main differences between inventory management and warehouse management?
Inventory management is less complex than warehouse management. Inventory management systems tell you the total number of products or materials in a specific location. Warehouse management systems help companies keep track of all their storage systems. So, if you want to manage many storage bins or racks of the same products, a warehouse management system will come into play. For your convenience, we would like to summarize the scope of work of an inventory management system and a warehouse management system as below.
Different functions between inventory management and warehouse management
Inventory management system
Focuses on overall inventory levels and status.
Provides information on sales trends, profit margins, and carrying costs.
Determines what and when to reorder based on predefined demands and inventory levels.
Displays inventory records and stores inventory availability for fulfillment.
Storage management system
Monitors the movement and location of stock within the warehouse.
Analyzes sales trends, profit margins, and maintenance costs.
Suggests opportunities to optimize tasks.
Check out the other stages below where differences are evident:
Control
With inventory management, retailers can only know that they have a certain product in stock and how much. Warehouse management, on the other hand, allows retailers to find specific locations where inventory is stored. A warehouse management system helps businesses have more control over their operations by providing more details needed to complete other tasks.
Integration
Another major difference between warehouse and inventory management is the ability to integrate with other management systems within a company.
Inventory management is typically considered the first step in the warehouse management process. Warehouse management is more closely linked to other aspects of business management, such as product sourcing, sales, delivery, and quality control.
We can see that warehouse management has more capacity and opportunities to connect with operations in other departments, while inventory management does not.
Solutions
Since warehouse and inventory management deals with a different scope of inventory control, their corresponding systems offer different features to fulfill the tasks.
Since the main focus of warehouse management is to handle the overall inventory and storage level, warehouse management systems allow companies to make adjustments in inventory and storage when needed, while we cannot expect this feature in inventory management systems.
After all, how do you differentiate between inventory management and storage management?
A warehouse management system typically includes:
Warehouse design: optimizing product allocation, workflow, and picking logic.
Inventory tracking: using barcodes or RFID to track the location of goods.
Receiving and putaway: providing guides for storage and retrieval of inventory.
Picking and packing: directing warehouse employees to pick and pack items in the most efficient manner.
Shipping: creating bills of lading, packing lists, and invoices for shipments.
Labor management: monitoring employee performance with KPIs.
Yard and dock: helping drivers find the exact loading dock and supporting cross-docking operations.
Reporting tools: analyzing warehouse operations to track KPIs.
An inventory management system includes:
Picking and packing: directing employees to the correct stock locations in the warehouse.
Shipping: monitoring invoicing, invoices, packing sheets, and other related documents.
Managing locations: allocating items in the warehouse for the best use of space and resources.
Order receiving: managing incoming orders for direct fulfillment operations.
Tracking inventory levels on each item or SKU.
Stocktaking: picking products to check inventory, counting items, and recording reasons behind discrepancies.
Barcode tracking: managing barcode scan entries and integrating with shipping, accounting, and other systems.
Reporting tools: generating data for complete analysis.
Inventory management and storage management: conclusions
Finally, warehouse management mainly deals with the overall inventory levels, storage, and stock status in a warehouse. Inventory management aims to manage inventory for the entire business and predict sales trends. The main takeaway here is to have a stable and effective system in place to help you automate and streamline your warehouse and inventory operations.
We hope you were able to clarify these two terms. Now it’s time to review your current business processes to see if you need an inventory or warehouse management system or simply find out where there is room for improvement.
Technology in storage and inventory management
With automation, robotics, AI and other advanced technologies making their way into the world’s distribution facilities, the warehouse management system (WMS) is the proven foundation for successful warehouse operations.
Even when it comes to inventory, from fully automated systems that can place last-minute orders, the focus is on making systems more engaging and user-friendly, packaging the presentation of data in a more logical way, enabling quick and intelligent decision-making.
Today’s customer has zero tolerance for late, missing, or incorrect orders. A WMS will enable better, faster return-to-stock management and make it easier to implement with expanded functionality.
By implementing a WMS that utilizes the latest warehousing technology, you put your business at the forefront of progress. Offering significant benefits across your entire supply chain, a WMS will ensure you achieve your business goals.
If you need to have more efficiency and agility in your logistics processes, 3PL Links has the complete solution for your company, from receiving the products to delivering them to the customer.
Get in touch and check out all the services that can help with your business logistics!
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