Are warehouse management and inventory management the same thing?
Do you find yourself sometimes asking yourself this question but quickly discarding it because there seem to be so many similarities? This article will help you answer that question. In short, warehouse management and inventory management are similar, but there are notable differences. You can say that they are the two sides of the same coin.
Warehouse Management
ShipBob defines warehouse management as “the oversight of operations in a warehouse. This includes receiving, tracking, and storing inventory, training staff, managing shipping, planning workload, and monitoring the movement of goods.”
As the definition suggests, the essential processes of warehouse management consist of
- Receiving
- Putaway
- Picking
- Packing
- Shipping (Dispatching), and
- Returns
Most of the processes can be automated by using a warehouse management system, eliminating plenty of manual error-prone data entries.
What is Inventory management?
Investopedia refers to inventory management as “the process of ordering, storing, using, and selling a company’s inventory.” The inventory ranges from finished products to raw materials or the components of a final item. This also refers to forecasting, warehousing, and processing.
Inventory management is crucial to any company as it translates to the final sales number and warehouse charges.
The two most common inventory management methods are just-in-time (or JIT) and materials requirement planning (MRP).
Are warehouse management and inventory management the same thing?
As mentioned at the beginning of the article, they are very similar but not the same. Let’s go through the similarities and differences between the two terms.
Similarities
The terms warehouse management and inventory management are sometimes used interchangeably. Their similarities may be the reason behind this.
- Both terms focus on the storage and movement of items within the warehouse.
- Both focus on efficiently moving the stocks to the end customers.
- Both involve the process of storing and shipping goods.
- Both try to avoid understocking or overstocking.
- Both trace and track the stocks; thus providing companies with visibility.
- Both may use tools to assist management and improve accuracy: software, barcode systems, or RFID (radio frequency identification).
Differences
Despite the seemingly many similarities, warehouse management, and inventory management bear a number of distinct differences.
| Warehouse Management | Inventory Management |
| Focuses more on warehouse management, including the labor | Focuses solely on products and stocks |
| Informs and tracks the movement of particular products in the warehouse (not just the specific location) | Informs the total number of inventory |
| Strives to ease operation | Produces re-stock lists |
| More complex and covers a broader scope as it covers the whole warehouse operation | Simpler because it mainly focuses on the inventories in the warehouse |
| Collects and evaluates data regarding the sales trends and profit margins | Analyses inventory costs, production trends, and profits, |
All in all, warehouse management covers a broader scope as it overlooks the entire warehouse operation (tracking the inventory, the warehouse management processes, and the labor while evaluating data). Inventory management is more specific as it concentrates on analyzing data involving stock only.
Warehouse management system and inventory management system
Warehouse management systems (WMS) and inventory management systems (IMS) are both used to automate and streamline processes, eliminating the many inefficient and error-prone manual data management. WMS and IMS’ similarities once again, both involve the storing of the stock, the delivery of the item from the supplier to the end customer, and the usage of RFID or barcode system to ensure accuracy.
However, what are the systems’ differences?
| Warehouse Management System (WMS) | Inventory Management System (IMS) |
| Manages day-to-day warehouse tasks | Manages supply chain and the dispatch system |
| Provides data on stock levels, standardized picking, and packing, and transportation | Identifies replenishment points and produces the re-order list |
| Produces detailed reports regarding stocks | Produces inventory overview, keeping the inventory levels to fulfill orders |
| Establishes pick and packing standards. |
It is clear that the two systems have different focuses, so which kind of system should you choose?
Which one should you choose?
You’ve probably guessed this answer: It depends. It depends on the scale of your business and how complex it is. It depends on the number of SKUs, the orders volume, and your company’s long-term, forecasted growth.
A short answer for this may be: if you mainly want to know your inventory levels and when to restock, choose an inventory management system. They are simpler. However, if you handle hundreds of orders a day, and have a team of warehouse operators that constantly move back and forth picking and packing, a warehouse management system might be what you are looking for. They are more complicated.
If you want further advice on which system to choose, let SCS Solutions help you. Contact us via https://www.scssolutions.io/, Linkedin, or Facebook. Allow us to streamline your business warehousing operations.