This article discusses the differences and similarities between inventory management and warehouse management. It also compares inventory management and warehouse management systems and explains how they work together.
Inventory Management vs. Warehouse Management
Warehouse management is the process of handling inventory and related tasks within a warehouse. Inventory management deals with managing stock for the whole business and forecasting business trends.
What Is Inventory Management?
Inventory management is a method for forecasting, ordering, receiving and allocating stock. The purchasing manager will use seasonality and historical sales trends to forecast demand. Inventory includes raw materials, parts and finished products.
Read the inventory management guide to learn more about the practice.
What Is Warehouse Management?
Warehouse management involves managing stock storage and picking and packing activities in a warehouse. The practice uses demand trends data to place the best-selling items near packing areas to expedite shipping and dictate which items to use to fill orders, such as items with the closest expiration date.
What Do Inventory Management and Warehouse Management Have in Common?
Inventory management and warehouse management are similar disciplines, as both aid in moving inventory from supplier to end consumer efficiently and effectively. Each involves storing, shipping and reordering stock. They share the following features:
- Both use software, radio frequency identification (RFID) and barcode tools to improve efficiency and accuracy.
- Both provide visibility into all stock, either for one warehouse or the entire company.
Differences Between Inventory Management and Warehouse Management
Inventory management and warehouse management are two facets of managing stock. Inventory management provides a high-level view, while warehouse management focuses on the details of the movement of stock.
Inventory Management
- Focuses on overall inventory levels and their statuses.
- Provides information to calculate sales trends, profit margins and holding costs.
- Determines reorder points based on demand and preferred stock levels.
- Shows the inventory record and stores inventory availability status for fulfilment.
Warehouse Management
- Tracks the movement and location of stock within the warehouse.
- Analyses sales trends, profit margins and holding costs.
- Reveals opportunities to streamline tasks.
Inventory Management Systems vs. Warehouse Management Systems (IMS vs. WMS)
An inventory management system (IMS) tracks all the stock in every warehouse and documents which warehouse stores it. A warehouse management system (WMS) tracks where each type of stock resides within a warehouse. The two solutions often work together.
| Inventory Management Systems | Warehouse Management Systems |
|---|---|
| Track all inventory across all locations. | Track stock movement and locations within a warehouse. |
| Provide an overview of all inventory. | Generate reports on stock status. |
| Focus on maintaining inventory levels to fulfill projected orders. | Focus on picking, packing and shipping stock. |
| Creates rules for picking and packing and guides users through them to ensure efficiency. |
What Is an Inventory Management System?
An inventory management system is software that manages the supply chain and the delivery system. Companies use an IMS to manage raw materials in manufacturing and handle finished goods for retail.
One of the key benefits of inventory management software is automation. The system can define replenishment points and then get automatic reminders when stock gets low and provides prompts for cycle checks based on your settings. Managers use the software to trace a product by customisable groupings, such as expiration date, as well as lot and serial number. This allows you to trace a component or raw material to the finished good and finally to the customer order—if a recall happens, you can trace what components were used to make specific products and which customers received them.
For advice on selecting the right software for your company, read “Choosing the Right Inventory Management System” and the guide to all inventory management system features. To understand why inventory management software is crucial for warehouse management, read “Why Software for Inventory Management Is Critical to an Efficient Warehouse.”
What Is a Warehouse Management System?
A warehouse management system is software that manages daily warehouse tasks. Managers use a WMS to get detailed data on stock levels and define or standardise picking, packing and shipping activities. The solution tracks goods from the warehouse through customer delivery.
Warehouse management software is either a stand-alone program or part of an enterprise resource planning (ERP) suite. Both solutions help improve output, save money and satisfy customers. Companies turn to a warehouse management solution when they can no longer use spreadsheets to manage replenishment and fulfilment activities.
The system records such specifics as size, weight, color, serial number, lot and case. Since the software stores details on all stock, it can pinpoint the location of the item in the warehouse and its purpose. For example, a WMS can tell you the bin number, the picking sequence and whether the stock is designated for picking or reserve. The software may also track information such as loading dock door location and how quickly staff picks and packs items.
To learn more about warehouse inventory management, read the guide on warehouse inventory best practices and case studies.
Award Winning
Cloud Inventory
Integrating Inventory Management and Warehouse Management Systems to Grow Your Operations
Today, businesses need real-time access to inventory and order status. Automating your
inventory and warehouse processes will make a difference as you adjust or scale your
business.
Whether you’re looking for an inventory management system, warehouse
management system or both, consider NetSuite. Its cloud-based inventory management solution
offers automated replenishment and accurate cycle counting. Traceability allows you to track
items by lot or serial number, through multiple warehouses. The warehouse management module
provides an activity-tracking dashboard, integrated barcoding, expiration and shelf-life
tracking and suggested putaway definitions. Learn more about how you can use the NetSuite Inventory
Management System and the NetSuite Warehouse Management System to reduce handling
costs and increase cash flow.
