Inventory Management System vs Warehouse Management System: What is the difference?

What exactly are inventory management and warehouse management? Are they the same thing? Are there slight differences between the two? Most importantly, how can these tools help you operate your business as effectively as possible?

Fear not; we’ll answer all these questions in this quick guide to an inventory management system vs warehouse management system. Read on to learn the benefits and applications of each.

 

Inventory Management Systems

Inventory management systems are essentially tools, processes, or systems that a business uses to stay aware of what is happening with its products throughout the entire supply chain – all the way from manufacturing or purchasing to the final sale.

This tool or system can be something as simple as an Excel spreadsheet where the business owner records how much inventory they acquire per month, for example, along with monthly sales, amount of stock on hand, and other data. Or the tool could be a more advanced, integrated software system that tracks all of this information, plus other useful metrics for a business to know and act on.

 

Why is Inventory Management Important?

Inventory management is vital for any business that wants to conduct its operations with as little waste and as much cost efficiency as possible. How does an inventory management system help accomplish this? By making sure that the business owner knows exactly how much inventory is constantly coming into storage and going out to customers.

This is important because a business interested in maximising cost efficiency would want to keep this cycle going quickly and continuously. Having large amounts of excess inventory on hand could be considered effectively a liability (though it might be recorded as an asset on the books). This is because inventory on hand has already been paid for by the business, but has not yet been bought and paid for by customers. It represents money that has been shelled out by the business, but not yet recouped from potential customers.

If products sit around in storage for too long, then this means that the company ordered too much stock too soon and cannot sell it in time – something that a for-profit business wouldn’t want. The situation gets even worse if the inventory is something perishable like food. In that case, the stock may expire and no longer be fit to sell, in which case it would be a straight-up loss for the company.

Hence, one sign of good inventory management is prompt inventory turnover. A good inventory management system, of course, would be extremely helpful for keeping track of this.

 

Warehouse Management Systems

Warehouse management systems, on the other hand, are tools or systems designed to optimise the efficiency of a team working in a warehouse or distribution centre. Such a system would track tasks that are specific to warehouse operations: receipt of stock from a wholesaler or supplier, picking and labelling of items after orders have been received, shipping to retailers or directly to consumers, etc. More advanced warehouse management systems might also include modules for tracking personnel activity metrics, such as amount of labour and time spent on various warehouse activities.

The essential difference between an inventory management system and a warehouse management system is that the latter is focused specifically on improving effectiveness and efficiency within a physical warehouse or distribution centre, and contains tools designed for this purpose.

 

Why is Warehouse Management Important?

Good warehouse management, as facilitated by a system designed for this, will ensure that inventory is received, stored, and shipped out as smoothly as possible. A warehouse optimised in this way will have minimal wasted time, movement, or funds.

This is, naturally, essential for any business that wants to maximise cost efficiency. If warehouse operations include any unnecessary or wasteful actions or movement, the management system will find it and allow managers to brainstorm ways to trim the excess fat, i.e. inefficiency.

 

Conclusion

Inventory management systems and warehouse management systems may have some differences, but share a similar purpose: to help organise the various tasks and functions of a business, reduce waste, and maximise efficiency and profit.

The best versions of these systems are highly integrated and give you central control of your business, coordinating between many different functions and taking a lot of busywork and headache off your hands – leaving you free to focus on delighting your customers. A well-connected system will also allow you to provide your customers with an omnichannel experience, maximising convenience for them and securing their loyalty to your brand.

Combined with a state-of-the-art EPOS system that makes transactions a breeze, your business will have many of the tools it needs to become known for a great customer experience.

Not sure whether it’s time to implement an inventory, warehouse management or ERP system for your business? Learn more by sending us an inquiry here.