Warehouse Management vs. Inventory Management: Which is Best?
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When examining the complex jargon professionals use in various fields, it is easy to imagine how certain terms and phrases can get confused or mistakenly interchanged. This is especially true for brick-and-mortar and eCommerce businesses that are heavily logistical by nature. Inventory management software and warehouse management software are terms in these types of businesses that are often confused with one another.
Although both terms seemingly refer to material management, there are significant differences that any business considering the use of management software needs to know. This post will highlight the similarities and differences between these two types of software, and also clear any misconceptions about these terms you may have.
Why Use a Warehouse Management or Inventory Management Software?
For those who do not use any type of inventory or warehouse management software, you may be asking yourself, what is the importance of management software anyways? Great question.
Management software is a great asset to have for any business that has to move, stock, ship, house, or generally handle inventory. It allows users to easily keep track of inventory levels and locations. However, when comparing inventory management software to warehouse management software there are some important distinctions to make between the two.
Using Inventory Management
Before the days of management software, businesses would commonly account for inventory by using some homegrown method. Most of which either required pen and paper or an excel spreadsheet. However, because of the cost of mis-ships, out-of-stocks, product returns, and overstocks the demand for inventory management software has dramatically increased.
Many of today’s successful business have adopted the use of management software to help make their inventory more efficient. It is becoming more and more common for businesses to integrate a management software as their business grows and inventory begins to become too much of a handful. In fact, poor inventory management is one of the top 8 reasons why small businesses fail, according to SBA.gov. While the upfront cost can be a cause for concern, according to an article from Entrepreneur, “Companies can increase their profitability 20 to 50 percent or more through careful inventory management.”
When taking a closer look into management software, you can see that it is very product-detail oriented, and depending on the type of software used, can be complex in usage. However, the time and money saved by automating inventory is well worth it, depending on your inventory needs.
Inventory Management Software
What It Does
Inventory management software is a computer-based system for tracking inventory levels, orders, sales, and deliveries. It can also be used in the manufacturing industry to create a work order, bill of materials, and other production-related documents. This software works well for businesses who are looking for inventory software that is less complex and is focused on the handling of the physical product itself.
Who It’s For
Inventory management software is ideal for small to midsize businesses who do not have a wide range of products. Although this software’s features are limited to inventory, that is actually its greatest benefit. For a business that has no need for the fancy bells and whistles of a more complex management system, inventory management software is ideal.
Warehouse Management Software
What It DOES
Warehouse management software, like inventory management software, is capable of monitoring product quantities, cycle counting, picking, packing, shipping, and managing multiple locations. However, warehouse management software provides more details and capabilities catered to product shipping, channel listing, and many other features. In fact, warehouse management software has so many features that it would be impossible to try to describe them all in one post.
Overall, the features of warehouse management software provide users information on products and warehouses processes that can be used to make assessments about warehouse efficiency. Another notable advantage of this software is its ability to monitor online inventory across multiple channels.
At its core, warehouse management software is designed to optimize warehouse operations. However, this software has another primary function: track and monitor inventory across multiple eCommerce sites and/or warehouses. This software tracks online inventory and sales while also running real-time quantity syncs across multiple marketplaces. So if you sell an item on one site the sale will be taken off the product’s quantity on all marketplaces.
The Difference Between Warehouse Management and Inventory Management
The Difference in Complexity
One of the most distinguishable differences between inventory management software and warehouse management software is in their level of complexity. Generally speaking, inventory management software is more simplistic in usage. However, there are many different inventory softwares, so the complexity of the software is varied.
Inventory management software’s features are designed specifically to manage inventory, and nothing more. While this software has a wide range of functionality, it lacks many of the features you would find in warehouse management software.
For example, inventory management software cannot compartmentalize product locations within a storage space or warehouse. Basically meaning it will tell you what building has what product, but not its location within that building. It is because inventory management systems have these limitations that their usage is simple.
Warehouse management software, on the other hand, is more complex due to its wide range of features and capabilities. However, most warehouse management softwares use a tier system to determine the software’s level of complexity.
For example, here at SkuVault, we have a four-tier system that ranges from the Basic package to the Enterprise package. The Basic package is simplistic and acts very similar to what you’d expect from an inventory management software, but with more features. On the other side of the spectrum, our Enterprise package is more complex but allows our clients to take full control of their warehouse through its high level of customizability and features.
The Difference in Integrations
Another notable difference between inventory management software and warehouse management software is the ability to integrate with other software. While inventory management software is typically the first step in warehouse management, it is not integral to other operations within the warehouse. However, warehouse management software easily integrates with other software.
SkuVault, for example, is a warehouse management software with the ability to integrate with other software. Our software integrates with other management software like ShipWorks, a company that handles shipping logistics for businesses that do their own shipping and labeling.
SkuVault is able to sync with ShipWorks so that all products and shipping reflect the same data and are automated in a way that allows both software to “talk” to each other. It is because of warehouse management software’s ability to blend in seamlessly with warehouse operations that businesses are interested in the software’s customizable features.
Highly customizable features like these are attractive to businesses who want inventory software with the ability to adapt to other software they are already using. This ability makes processes that would normally be time-consuming or impossible simpler and more effective. With warehouse management software a business can merge all operations of their warehouse and marketplaces.
When deciding whether to use inventory management software or warehouse management software, buyers have to decide which one works best for their business model.
An inventory management software is best suited for a small to midsize business that has a limited number of products and only has one or two warehouses. This is because of the nature of the software itself. Overall, inventory management software simply tells you what products you have available and the quantity.
Say that you are a small business owner who fixes and sells bicycles. Because you are a small business, you only have one warehouse that stores fully assembled bikes as well as the various parts to fix broken ones. It would be more advantageous to choose an inventory management software since your needs are limited. As the owner, all you would need to know about your inventory is if the part or bike that a customer is looking is available and if the products you ordered are correct upon arrival.
When to Upgrade
Let’s take this same business and look at it 10 years into the future.
The owner has now grown the business to where it has expanded its products to include all things related to biking. The business now sells not only bikes and parts but has expanded to include biking apparel, accessories, tools, water bottles, and helmets. Besides expanding products, the business has also begun taking orders online. Since expanding its range of products and venturing into eCommerce, the business owner finds that the inventory management system that he has been using for years is no longer able to cater to the needs of his business.
At this stage of growth, a warehouse management system is more desirable. The business owner is now using multiple warehouses and has multiple online marketplaces. The need for more functionality demands a more functional solution, and warehouse management software is that solution. This software allows the owner to monitor shipping, online sales, channel management, and provides accurate data reports.
Now that you have a better understanding of the differences between the two software it is time to decide which one works for your business. Assess the operations of your business and decide which management software is a good fit. I highly suggest making a list of core required features for your business. Be realistic, though. The bells and whistles should not be your focus at this point. They are nice and most reputable systems all have them, but if your business would not profit then wait.
Choosing a warehouse or inventory management system for your business is a serious decision that requires careful consideration. While this software is similar in name, there are important distinctions to make between them. Both inventory management software and warehouse management software have been designed to minimize human error and increase efficiency, but do so in very different ways. So do your research and choose wisely.