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Warehousing Management vs Inventory Management: What Are The Differences?

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warehousing management

The terms-warehouse management and inventory management are often used interchangeably in practices as they refer to the same type of material management in a retail business. However, there are some subtle differences between them.

As business owners, you really should understand these terms distinctly because that will help you find the most effective ways to optimize your business operations. Let’s discover their differences in this article.

Warehouse Management vs. Inventory Management

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What is warehouse management?

Warehouse management includes monitoring stock storage, picking, and packing activities in a warehouse. The management process starts right from receiving the inventory from the suppliers, allocating storage space for all products, to moving them inside the warehouse.

The ultimate goal of warehouse management is to minimize operating costs while maintaining the quality of products.

What is inventory management?

Inventory management is about forecasting needs, ordering, receiving, allocating, and transferring stocked goods. To be more specific, it manages the amounts, costs, weight, dimensions, and location of the stock. This is to ensure that business owners know exactly what and when to replenish products or buy more materials to manufacture products, to meet customer demands.

How do they relate to each other?

As you can see, both management methods indicate the processes and practices to control stock levels, manage the stock flow, and the current and future inventory demands.

However, in terms of scope, managing inventory is just a part of managing a warehouse or warehouses. In other words, warehouse inventory management is a specific task of monitoring warehouses in a retail business.

No matter how many warehouses or product SKUs you have, data consistency and synchronization between your warehouse and inventory management systems will ensure your business operates smoothly and profitably. If you haven’t had any names in mind, the comprehensive and easy-to-use Magestore’s stock control software can be a good start and worth your try.

What are the main differences between warehouse management and inventory management?

Now that you’ve understood the meaning of these two management concepts. Let’s dive deeper into the key points to differentiate them.

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Complexity

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 monitor their entire storage systems. Thus, if you want to manage plenty of storage bins or racks of the same products, a warehouse management system will come into play. For your convenience, we’d like to summarize the scope of work of an inventory management system and a warehouse management system as below:

Inventory management system:

  • focuses on the overall stock levels and their statuses
  • gives information on sales trends, profit margins, and holding costs
  • determines what and when to reorder based on demands and preset inventory levels
  • shows the inventory record and stores inventory availability for fulfillment

Warehouse management system:

  • keeps track of the movement and location of stock within the warehouse
  • analyzes sales trends, profit margins, and holding costs
  • suggests opportunities for optimizing tasks

Control

This second difference can be considered a result of the first one. With inventory management, retailers can only know that they have a certain product in stock and its quantity. Warehouse management, however, allows retailers to find specific locations where the inventory is stored. A warehouse management system helps businesses take more control over their operations as it provides them with more details needed to complete other tasks.

Integration

Another main difference between warehouse and inventory management is the ability to integrate with other management systems of a business.

Inventory management is normally considered the first step in warehouse management processes. Warehouse management is more close to other aspects of business management, such as product supply, sales, delivery, and quality control.

We can see that warehouse management has more ability and chances to connect with the operations in other departments while inventory management doesn’t.

Solutions

As warehouse and inventory management deals with a different scope of stock control, thus, their corresponding systems offer different features to fulfill the tasks.

As the main focus of warehouse management is to handle the overall stock level and storage, warehouse management systems allow businesses to make any adjustments to inventory and their storage when needed while we can’t expect this feature in inventory management systems.

You can look at the most popular features of each system in the following:

A warehouse management system often includes:

  • Warehouse design: optimizing product allocation, workflow, and picking logics
  • Inventory tracking: using barcodes or RFID to track the location of goods
  • Receiving and putaway: providing guides to inventory putaway and retrieval
  • Picking and packing: guiding warehouse workers to pick and pack items in the most efficient way
  • Shipping: creating bills of lading, packing lists, and invoices for shipments
  • Labor management: overseeing employee performance with KPIs
  • Yard and dock: helping drivers find the exact loading dock and supporting the cross-docking operation
  • Reporting tools: analyzing warehouse operations to track KPIs

An inventory management system has:

  • Picking and packing: guiding employees to the correct locations of inventory in the warehouse
  • Shipping: monitoring billing, invoices, packing sheets, and other related documents
  • Managing locations: allocating items in the warehouse for the most optimal use of space and resources
  • Receiving orders: managing incoming orders to direct fulfillment operations
  • Tracking stock levels on each item or SKU
  • Stocktaking: pick the products to check inventory, count items, and record the reasons behind the differences
  • Barcode tracking: managing barcode scanning inputs and integrating with shipping, accounting, and other systems
  • Reporting tools: generating data for thorough analysis

In summary

Warehouse management mainly deals with the overall inventory levels, storage, inventory status in a warehouse. Inventory management targets managing stock for the whole business and forecasting sales trends. The key takeaway here is to have a stable and effective system to help them automate and streamline their warehouse and inventory operations.

We hope that you can clarify these two terms. It’s now time for you to review your current business processes to see whether you need a warehouse or inventory management system or simply find out where there is room for improvement.

 

We are a team of writers passionate about innovation and entrepreneur lifestyle. We are devoted to providing you the best insight into innovation trends and startups.

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