What Is the Difference Between Warehouse and Inventory?

30 November 2019

Even business professionals sometimes confuse warehouse and inventory management. Although both of these operations essentially involve the handling of merchandise and stock, there are noteworthy differences between them. As such, knowing precisely which tasks are associated with each of these processes is mandatory for both business owners, as well as for warehouse managers.

In this article we will briefly describe both terms, provide an overview of what they mean, and point out the main differences between them.

What Is Warehouse Management?

Warehouse management, also referred to as warehousing, is related to the movement and storage of merchandise within warehouse facilities. This is much broader in scope than inventory management, which is the reason why many organizations have complex warehouse management systems (WMS) in place.

Those in charge of warehousing are responsible for everything that goes on in the storage facility. There are six major areas of warehouse management that have to be constantly kept in check in order to assure a steady flow of goods:

  • Inbound management. This means handling all of the goods that are received, logging/unpacking them, and correctly labeling them either for storage or further dispatch.

  • Merchandise slotting. The next step is to appropriately store the merchandise according to the turnover rate of each item. Fast-moving goods are usually placed within easy reach, near the shipping pick-up or packaging areas.

  • Picking. This may or may not be included in the former process, as it essentially involves separating those items that have to be individually picked and packaged. Frequently, these items have to be placed within reach and/or in the appropriate racks for picking personnel to be able to do their job as fast as possible.

  • Packing Workflow. For those businesses that have individual shipping, such as e-commerce, this is usually a major part of warehouse management practices, taking up a proportional amount of open workflow space. Employees working in the packing lines have to appropriately wrap and label each item, alongside any other content slips. Items must also be added to the delivery manifest before being dispatched, but this is usually automated.

  • Outbound management. Dedicated teams of workers have to make sure goods are ready to be picked up, as well as loaded when couriers arrive with no dead time in-between. Delivery manifests must be handed out with each respective shipment.

  • Return oversight. Finally, this is one of the most expedient processes, as the returned merchandise usually has to be replaced and sent on its way in the same transport. The exchange must also be logged.

When done properly, warehouse management ensures that these six mechanisms work in tandem, without disturbing or delaying one another. Optimizing the speed with which each of these processes is completed generates more value for the business itself, which is why warehouse management is a crucial part of maintaining one’s competitiveness.

What Is Inventory Management?

Inventory management, on the other hand, usually accounts for the largest portion of a firm’s assets. The close organization of inventory is just as essential as its warehouse counterpart, since it basically controls and coordinates all of the merchandise that is needed for the company to maintain its operations.

Ordering and re-ordering of stock, consistent forecasts of demand, but also maintaining a complete and accurate account of inventory records are all part of inventory management. As you can already tell, this branch of the supply network deals with entirely different aspects than warehouse management, despite the fact that it involves the same merchandise.

There are multiple strategies of inventory oversight that companies often deploy in order to maximize their profits and cut down on expenses. Some of the most important are:

  1. The ABC analysis, which sees all of the goods grouped into one of three categories (A,B, or C) depending on their value to the company. “A” items are more important than “B” ones, which are more important than “C”.

  2. The just-in-time order pattern, which is used to have inventory arrive exactly when it’s needed. This is a common practice for A items or perishable goods, but also for those shipments that have to be further dispatched to another location.

Depending on the inner structure of each company, inventory management might also expand beyond order and inventory control. The team might be asked to come up with sales reports, lists of new items that could bring additional sales, or facilitate mobile app tracking.