August 2, 2016    3 min read

To understand inventory management and warehouse management as standalone concepts, it is essential to understand which area of the overall inventory management process they belong. Many similarities can be drawn between inventory management and warehouse management however there are also certain differences which should be considered to ensure efficient business operations.

Areas of application

Inventory management comprises a more holistic approach and refers to all inventory in a specific location. Warehouse management however exists to provide information on specific locations of stock in a warehouse so that it may be controlled.

Similarities and relationship between warehouse management and inventory management

Both management systems enable monitoring of product levels, tracking of individual items through the site, the location of items, packaging and shipping of them, the management of multiple sites, the addition of received orders to the stock inventory and cycle counting. Warehouse management and inventory management are connected and the control of one aids control of the other. Warehouse management needs to be efficient and accurate in terms of locations of stock that follows a systematic order. Achieving this will allow a greater deal of ease when assessing supply and demand and the re-order levels required, which are components of inventory management.

Key differences

The differences between the two management systems lie mainly in their intricacy. Inventory management provides an overall view of all the stock in a warehouse however it gives limited information on exact locations of stock. This can have logistical ramifications in terms of a lack of information of where to physically find stock that needs to shipped; it may also mean that the system lacks information on the status of stock in terms of its journey through the manufacturing process.

Therefore it is said that inventory management is a component of warehouse management – the all-inclusive management solution. Warehouse management provides exact information of the location of stock items in the warehouse resulting in the ability to generate accurate reports of stock and its status, which can be fed back into other departments allowing for leaner and more efficient processing.

Efficient management of the warehouse

Benefits of warehouse management include (particularly with the right software) the integration of warehouse information into the picking and packing operations that incorporate the forklifts, packing and conveyor belt machinery. Essentially warehouse management systems and software help to automate the processes in order to increase efficiency. From a more human perspective, Directed Operations is a benefit of warehouse management. As the name elicits, it helps to direct personnel to different stock locations and what needs to happen with the stock. Timely automated directions based on real-time data vastly improves operational efficiency and accuracy and allows for prompt picking, packing and replenishing of stock.

The need for management systems

To gain control of inventory it is essential to implement management systems however they come in many different forms to serve different companies with different purposes. Therefore it is imperative that firstly the company and its product is understood, followed closely by the supply and demand of the product. Once a perspective of these basic things is gained then a system can be employed to best suit the company’s requirements. It is essential to comprehend also the differences between different systems in terms of what they provide but also what part of the business they are designed to manage. Following successful implementation of the systems, efficiency both in time and money will result in better profit margins and increased customer and employee satisfaction.