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Inventory Management Vs Warehouse Management - Learn the Difference

Supply Chain Management is one of the most important aspects of a business operation. In the business world, supply chain management is also known as logistics. Logistics Management is an umbrella term, which means a lot of activities and sub-task come under it. When talking about Logistics Management, the two most common and vital processes are Inventory Management and Warehouse Management.

Inventory Management

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Inventory Management is one of the most vital operational activities for a business. In this process, enterprises monitor the inventory level of goods and commodities they sell. The sub-task of this activity includes managing finished and in-progress goods and getting updates on new stock that might be coming from factories. 

This is a sequential process in which businesses get to the progress of raw materials. That would be then made into in-progress goods and later into finished goods that would be sent to retailers.

Warehouse Management

Wearhouse

Warehouse Management is another critical operational activity. Warehouse management includes all ongoing training in the warehouse. Warehouses are places where a company stores its inventory and stocks for a relatively short period that would be sent to wholesalers or retailers. Despite the business size, Warehouse Management is a highly intensive activity requiring much focus. 

Often businesses hire warehouse managers to ensure the smooth running of the warehouse. The warehouse comprises a team of employees who look after activities such as picking, packaging, and shipping the finished goods.

Warehouse Management and Inventory Management are often confused as one activity. People use these terms as the same activity because these are highly correlated. These two operations are highly correlated for sure, but they have significant differences. 

A business should know these differences so that these operations are effectively conducted. I will tell you the critical differences between inventory management and warehouse management. Along with differences, we aim to inform you about the benefits of both and their similarities.

Differences between Inventory Management and Warehouse Management

There are many differences between Inventory Management and Warehouse Management. Let's have a look at all of them. After we go through these differences, you can differentiate between these two operational activities. Knowing the difference, you could grasp more business knowledge, enabling you and your business to boost operational efficiency and productivity in both of these operations.

Tracking Inventory

The notable difference between Inventory Management and Warehouse Management starts with how the inventory of the stock level is supervised or monitored. These operational activities have different ways of dealing with raw materials, in-progress, and finished goods.

In Inventory Management, businesses track all the stock levels. This means that businesses track the raw material, goods in progress, and finished goods. This means that focused supervision is done on stocks. The stock that would be produced and the time it would be brought to warehouses and from there to wholesalers or retailers are all things under consideration. 

As we know that all the stocks are analyzed in Inventory Management. This raises the need for reporting, such as getting to the latest updates and applying different formulas like FIFO (First in, First Out) and Rate of Inventory Turnover. The reporting makes it easier for the logistics team to understand the current situation of stock so that they can draft future strategies accordingly. Extensive work is required to manage and monitor all the stock levels throughout the logistics cycle. 

Besides everything, one of the most critical aspects is rock-solid collaboration and coherent communication between employees at every stage. For example, the factory employees must inform the warehouse employees that the new inventory will be dispatched. Likewise, employees at the warehouse would inform retailers or wholesalers that new stock would soon be shipped.

In the Warehouse Management business, monitor, track, and supervise inventory level only in the warehouse. This might seem like a much simpler task, but it's not. Companies often have massive warehouses, and they store stock in considerable quantities in them. As the amount of the stock is vast, this requires efficient supervision and ensuring that inventory remains secured.

Warehouse Management is all about optimizing inventory storage in the given space of the warehouse. Along with knowing the exact location of where each stock is so that it can be reached out quickly and shipped to retailers or wholesalers immediately. The store is associated with SKUs (Stock Keeping Units) which helps warehouse staff in knowing where the products are placed. 

Business Calculation

As we know, selling goods is what a product-based business is about. In such a business, inventory is the only way of generating revenues. The inventory is also used for many businesses' financial and profitability calculations. As inventory helps in the analysis of revenue and profits, they also help in tracking expenses. When it comes to both Inventory and Warehouse Management, they both serve in different financial calculations and analyzing trends.

In Inventory Management, as all the stock throughout the distribution cycle is monitored, this helps business in lots of ways. Inventory management helps update enterprises on the latest trends, like sales and production. Business gets updates from retailers and wholesalers that their stocks or products are selling off quickly, showing that the product is in demand. This would alert the company that they need to boost production levels. Hence, they would increase the labor force and orders for raw materials to increase production. 

Inventory Management also helps businesses in tracking down the expenses made on inventory. The expense tracking can be done efficiently after knowing how much is spent on purchasing raw materials. Also, knowing how much business has to bear in transforming raw material into a finished good. Expense tracking through inventory management can help companies understand where they are wasting money to reduce cash waste and lower expenses.

Warehouse Management doesn't help with any financial calculation; however, it does help evaluate the latest consumer trends. For example, warehouses often store stock to be shipped to wholesalers or retailers. Usually, there are some returns when these returns come in massive levels. This shows a flow in factory production. This can be tracked back and made sure it wouldn't happen again. Warehouse Management can also help businesses in knowing the seasonal trends such as in which quarter of the year their product is sold or shipped most.

Complexity in Management

One of the essential differences between Inventory and Warehouse Management is complexity level. We have discussed the importance level of both of these operational processes. Still, Warehouse Management requires extra effort and attention compared to Inventory Management because of its number of sub-tasks.

Inventory Management might seem like a hassle as it quantifies and monitors all stock levels throughout the business operation and logistic cycle, but it is much simpler. In Inventory Management, businesses track down the inventory level at storage facilities such as warehouses, marts, and wholesaler shops. Other activities and analyses are done afterwards. The quantifying of inventory is mainly done for inventory control and to make handling inventory smooth, ensuring operation flexibility.

Warehouse Management is much more complex. The complexity is due to being precise and accurate with everything. Inventory theft and misplacement are common problems that businesses often face. 

To track what inventory is stolen, it would be identified by looking up the SKUs that are not present. SKUs are unique alpha-numeric codes used for each item in a storage system. In Warehouse Management, teams of warehouse staff often make the place of inventory to ensure that it remains safe. 

The responsibility of transporting or shipping stock to retailers or wholesalers also is the responsibility of warehouse employees. Warehouse Management is a continuous operational process; new updates are made daily. The human resources investment and intensive active management make it more complex than Inventory Management.

Software Solutions

We have gone through every detail regarding Inventory Management and Warehouse Management. As we know, both of these business operations are essential and, to some extent, complex to carry out. In older times, businesses manually managed stock levels and warehouses, which required much paperwork, and was time-consuming. 

Thanks to technological advancements, we have intelligent software solutions that assist businesses in Inventory and Warehouse Management. Let's look at their capabilities and functionalities and how these can boost your business's efficiency and productivity.

Inventory Management Software

Inventory Management Software is software designed mainly to enhance inventory management for businesses. The key features of this software are that it tracks and supervises raw materials, in-progress and finished goods. In addition, the goods distributed, whether at factories, warehouses, or another storage system, are all monitored with the help of IMS.

The star feature of this software is also that it helps businesses to identify their star performers. A star performer is a product that is a hot favorite in demand, sold right off when it appears on the retailers' shelves. 

By identifying the star-performing products, a business can invest or allocate more resources to its production and maximize profits. IMS also assists businesses in identifying poor-performing products. These are products that are hardly sold. By identification of these products, a company can lower the production level of these products and allocate its production resources elsewhere. 

Finished Goods

Warehouse Management Software 

Wearhouse

WMS, or Warehouse Management System/Software, is a software solution that assists businesses in their daily warehouse operation. This software performs numerous tasks, from auditing, monitoring, replenishing stock levels, and many more. One of the best parts of this software is that they are customizable.

Talking of features, this software checks inventory level and informs the business about low stock beforehand. This software is also commonly used to avoid inventory misplacement. Inventory Mismanagement is one of the big problems that cause trouble for small and big businesses. 

Avoiding Inventory Mismanagement at the warehouse is a priority of every business, and this can be done using WMS. WMS also reduces the chances of human error, ensuring accurate results every time. WMS also helps companies optimize the warehouses' flooring space so that more inventory can be stored.

IMS vs WMS Key Difference

IMS tracks inventory or stock at every distribution channel. This helps businesses to know where their inventory is. IMS takes control of the overall circulation of inventory throughout every distribution channel. IMS is often used in a broader context as it is the most essential supply chain activity.

WMS tracks the movement of the inventory in the warehouse. WMS is that's why it is more often used by only the warehouse staff so that they can make entries accordingly. WMS is used more actively and intensively to create daily reports and inventory order statuses.

IMS often works to make sure that inventory is smoothly managed so that the end user gets the finished products without any problem. IMS aims that there are no empty shelves at the retailers, which could mean a loss of customers. IMS also aims that there is no over-pilling of stock in the warehouse as it decreases the space. Another critical issue IMS resolves is that production is done on time so that goods are sent timely to warehouses.

WMS deals with the final stages of the logistics cycle. This aim is that finished goods are smoothly Picked, Packaged, and Shipped to retailers and warehouses from where it reaches the final customer. 

Wrapping Up

We have discussed all the differences in detail between Inventory Management and Warehouse Management. We have gone through the solutions like WMS and IMS too. A business should also know what is the difference between the two so that they can effectively manage both Inventory and Warehouses.

Most often, businesses get stuck on what sort of software should be used for both Inventory Management and Warehouse Management. Well, we have the answer to it.

ZarMoney is the best software for both Inventory Management and Warehouse Management. This software will take care of all your warehouse processes. Demand Forecasting can also be done with ZarMoney. It has all the features you are looking for that can boost your management productivity to the next level. So don't waste time and make a worthy investment in ZarMoney.

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