This article discusses the differences and similarities between inventory management andwarehouse management. It also compares inventory management and warehouse management systemsand explains how they work together.
Inventory Management vs. Warehouse Management
Warehouse management is the process of handling inventory and related tasks within awarehouse. Inventory management deals with managing stock for the whole business andforecasting business trends.
What Is Inventory Management?
Inventory management is a method for forecasting, ordering, receiving andallocating stock. The purchasing manager will use seasonality and historical sales trends toforecast demand. Inventory includes raw materials, parts and finished products.
Read the inventory management guide to learnmore about the practice.
What Is Warehouse Management?
Warehouse management involves managing stock storage and picking and packing activities in awarehouse. The practice uses demand trends data to place the best-selling items near packingareas to expedite shipping and dictate which items to use to fill orders, such as items withthe 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 movinginventory 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 improveefficiency 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. Inventorymanagement provides a high-level view, while warehouse management focuses on the details ofthe 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 fulfillment.
Warehouse Management
- Tracks the movement and location of stock within the warehouse.
- Analyzes 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 documentswhich warehouse stores it. A warehouse management system (WMS) tracks where each type ofstock 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 toensure efficiency. |
What Is an Inventory Management System?
An inventory management system is software that manages the supply chain and the deliverysystem. Companies use an IMS to manage raw materials in manufacturing and handle finishedgoods for retail.
One of the key benefits of inventory management software is automation. The system can definereplenishment points and then get automatic reminders when stock gets low and providesprompts for cycle checks based on yoursettings. Managers use the software to trace a product by customizable groupings, such asexpiration date, as well as lot and serial number. This allows you to trace a component orraw material to the finished good and finally to the customer order—if a recallhappens, youcan trace what components were used to make specific products and which customers receivedthem.
For advice on selecting the right software for your company, read “Choosing the Right InventoryManagement System” and the guide to all inventory management systemfeatures. To understand why inventory management software is crucial for warehousemanagement, read “Why Software forInventory 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 aWMS to get detailed data on stock levels and define or standardize picking, packing andshipping 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 solutionshelp improve output, save money and satisfy customers. Companies turn to a warehousemanagement solution when they can no longer use spreadsheets to manage replenishment andfulfillment activities.
The system records such specifics as size, weight, color, serial number, lot and case. Sincethe software stores details on all stock, it can pinpoint the location of the item in thewarehouse and its purpose. For example, a WMS can tell you the bin number, the pickingsequence and whether the stock is designated for picking or reserve. The software may alsotrack information such as loading dock door location and how quickly staff picks and packsitems.
To learn more about warehouse inventory management, read the guide on warehouse inventory bestpractices and case studies.
Award Winning
Cloud Inventory
Free ProductTour
Integrating Inventory Management and Warehouse Management Systems to Grow Your Operations
Today, businesses need real-time access to inventory and order status. Automating yourinventory and warehouse processes will make a difference as you adjust or scale yourbusiness.
Whether you’re looking for an inventory management system,warehousemanagement system or both, consider NetSuite. Its cloud-based inventory management solutionoffers automated replenishment and accurate cycle counting. Traceability allows you to trackitems by lot or serial number, through multiple warehouses. The warehouse management moduleprovides an activity-tracking dashboard, integrated barcoding, expiration and shelf-lifetracking and suggested putaway definitions. Learn more about how you can use the NetSuite InventoryManagement System and the NetSuite Warehouse Management System to reduce handlingcosts and increase cash flow.
