Inventory Management and Warehouse Management – Same, Same or Different?

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A common question for businesses looking to implement Inventory Management Systems (IMS) and Warehouse Management Systems (WMS) is ‘are they the same, or different?’ While there is a certain amount of interchangeability of terms, they are ultimately very different systems, with a combination of both subtle and glaring differences in purpose and functionality.

There are some tasks and processes that both can do, like tracking product quantities and receiving orders, but it’s their differences that are most defining. In a nutshell, these differences can be explained through three key areas: specificity, complexity and modularity.

As a rough guide for use, let’s take a closer look at these as well as the main ways each system is utilized.

Let’s get specific

One of the main differences between the two is in the specificity of information and control. While Inventory Management Systems will track inventory quantity and general location, Warehouse Management Systems will usually track inventory – like items, raw materials and products – to specific bin and compartment locations within a warehouse. WMS often utilize a greater amount of product detail than IMS, as much as is needed for the smooth and efficient operating of the warehouse.

WMS are usually tasked with providing a set of procedures to control inventory, storage and equipment within a warehouse or a group of warehouses. While IMS provide overall management of inventory, they do so in a more generalized way and not usually to the same specificity as WMS.

Complexity versus simplicity

Broadly speaking, Warehouse Management Systems usually require more granularity and complexity than Inventory Management Systems, especially for businesses that operate from a large and varied base of inventory, raw materials and production processes. Generally, an IMS is also far simpler than an WMS in what it does – for example, IMS can tell you how much stock there is and roughly where it is, whereas WHS can tell you exactly where each part and product is stored within the warehouse as well as quantity and information about racking, logical grouping, supplier information and the how long items can be stored for.

It’s so modular!

To oversimplify a little – Inventory Management Systems provide an overview and Warehouse Management Systems provide an inside-view. It’s this ‘inside view’ that partly defines why WMS are so important to manufacturing businesses. WMS are often monitoring and controlling quite complex warehouse, production and distribution processes, including optimization and operating strategies.

Due to this complexity and variability, many WMS need to have the capacity and scope to accommodate whatever functionality the warehouse needs to effectively operate. As this is highly dependent on what an individual business needs, there is usually a fair amount of modularity to modern WMS.

Most Warehouse Management Systems will be variations on a similar theme regards their core functionality – to control the storage and movement of inventory within the warehouse – though many now offer more than this by way of additional features and expansion modules. Which system a business uses usually comes down to what functionality they need and who can provide it.

Not the same – but working for the same goals

So while they are not competing systems, and are often used as part of a collaborative whole, there are some fundamental differences between IMS and WMS in concept and function. As with most business solutions, it comes down to what an individual business needs in order to efficiently function and optimize operations.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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