Inventory management vs warehouse management - Dropshipping Blog

Inventory Management vs Warehouse Management: Which is Worth Your Investment in 2021?

ecommerce warehousing and fulfillment solution

The world of eCommerce can seem like one of the best options to make money online. And no doubt that it is one of the most lucrative opportunities that you come across. However, for those who are already running an online business, they know the complexities. One of the biggest of which is dealing with inventory. When you’re selling physical products out there you have to keep them safe. That’s when you have to choose between inventory management vs warehouse management. 

Selling physical inventory can involve a lot of tasks in a business. Right from buying to arranging and selling it, there are more than a few detailed levels of tasks involved in the job. While you keep your inventory in the warehouse, it is necessary to understand what is the difference between inventory management vs warehouse management. 

While both of them might seem very similar, it is natural to get confused. Having said that, many sellers often make this mistake of investing in warehouse management when they should be focusing on inventory management. And that’s where the real difference of inventory management vs warehouse management comes into the picture. 

But, before you get to know the detailed differences between inventory management vs warehouse management, let’s take you through all the steps that inventory goes through in an online business.

Inventory Management vs Warehouse Management: The Hassles of Inventory

When you decide you want to sell physical products in the market, the first thing that you do is look for partners. Be it manufacturers or wholesalers or retailers, you need to tie up with people who supply you with your inventory. This is the first step of setting up your online business. An exception to this can be when you manufacture your own products. In this case however, you have to source your materials.

Once you have tied up with a suitable partner for the inventory, you need to come up with an agreement for storing it. This means that you have to decide the quantities based one which you will source the inventory and come to a negotiation over the price. For example, one of the common methods can be to source your inventory as you get orders. In this case you might have to pay an extra amount for the products. However, if you’re bulk sourcing the inventory, then you have more to save.

Role of a Warehouse

However, in this situation, another problem crops up. The problem of storing goods. This is where you need to know the difference between inventory management vs warehouse management. Storing goods can mean you have to rent or purchase a warehouse. This is where you keep your goods.

However, it doesn’t end here. Once you store your goods, you have to make sure that they are well-maintained and in good condition. Because not all of them will have to be sold together, you also need to come up with efficient ways to arrange them. This would constitute a lot of your warehouse management. And this is because you will have to allocate the space appropriately and make full use of it. 

Any fault in the above process, and your business might have to suffer the losses. This makes inventory management vs warehouse management even more important. Most businesses make this mistake of ignoring their inventory and warehouse.

They keep their focus on selling and building the best campaigns. As a result of this, their business suffers. The quality of customer satisfaction drops strikingly and loyal customers start drifting apart. Therefore, it becomes fundamental to understand inventory management vs warehouse management and differentiate between the two. 

inventory management vs warehouse management

What is Inventory Management?

Now that you know the hassles inventory has to go through, let me tell you more about inventory management. People often interchangeably use inventory management with warehouse management. But, very few know that there is a difference3 and this is where the line of success and failure lies. 

Inventory management is the quintessential practice of keeping the stock of a company’s inventory. When you’re selling physical products, it is natural that you will keep an eye on several factors. These may include-

  • The number of products you’re selling
  • Products that are bestselling 
  • The products that are sitting at the back of your warehouse, meaning that not many people are ordering them
  • Finally, the products that you’re sourcing from the suppliers
  • In addition to this, it is also vital to keep a track of the products that have become damaged over time or have expired 

All of this constitutes inventory management. Inventory management is also related to noticing other details about the inventory. While inventory management vs warehouse management also deals with other aspects, it is inventory management that directly deals with monitoring the weight, dimensions and aunts of inventory.

Monitoring these details is necessary, because it helps the business at various levels. It helps deliver customer satisfaction and maintain the transparency in your business. In addition to this, an inventory management system can help you ease this task.

What is Warehouse Management?

Warehouse management is a slightly different practice. In this, one takes care of the operations related to the warehouse. Warehouse is quintessentially a place where the inventory is stored. Therefore, management of the warehouse is fundamental and necessary for a business.

Warehouse management starts from the time that sellers start sourcing their inventory. It means controlling the A to Z of processes inside a warehouse. Right from allocating space to arranging the products in the right format, the warehouse deals with everything physical about your business.

It is imperative to understand that inventory management vs warehouse management involves a lot of details. And it is the inventory that the warehouse is ultimately managing. Therefore activities such as managing the equipment of the warehouse, training and dedicating the staff falls under warehouse management.

In addition to this, activities like keeping a track of the shipments that come and out of your warehouse and prioritizing the order of storage also becomes a crucial part. Most businesses opt for a warehouse management system to manage their warehouse. This helps them reduce inefficiencies and make the entire order fulfillment chain seamless. 

When you have a warehouse management system in place, it is only natural that you are able to manage your inventory in a better manner. And because the physical condition of your inventory is something that matters the most, it is important you know inventory management vs warehouse management. 

What is the Difference Between the Two?

Now that you know what inventory management vs warehouse management mean, it is also imperative to understand the difference between the two. This will help you make the right choice for your business and at the same time maintain healthy levels of stock.

The Level of Details

There is a difference between the levels of detail than inventory management vs warehouse management offer. While one is more complex, the other is less difficult to understand. Inventory  management tells you about the total inventory you have in your business. They will present a breakdown of the inventory depending on the various parameters such as bestselling, slow selling total in and out inventory and more. 

This means that the inventory management system will tell you about the stock you have stored in one place or one warehouse. Whereas the warehouse management system is far more complex. It manages several aspects of your warehouse, that might be multiple in number. Inventory, therefore, is a small part of the warehouse management system. If you have products stored at multiple places, the warehouse management system will give you a holistic picture of your inventory. 

The Information About Your Business

Another major difference between the two lies in understanding the levels of details that inventory management vs warehouse management have to offer for youtube business. While inventory management tells you about the quantity of your stock and other numbers, it is only quantitative. If you want to have more information, you need to dive down into the qualitative aspects of data. This is where the warehouse management system is required. 

In other words, if you are looking for a greater degree of control, you need more information about your inventory. Therefore, warehouse management comes more handy. You can control more than one aspect of your business with it. 

The Overlap

When it comes to your order fulfilment chain, both inventory management vs warehouse management have a huge role to play. While inventory management is only related to your stocks, warehouse management encompasses far more aspects of your order fulfillment. Therefore, a warehouse management system will integrate into the requirements of your order fulfillment much better and comprehensively. 

Conclusion: Which out of Inventory Management vs Warehouse Management is Best for Your Business?

If you’re looking for just one option out of inventory management vs warehouse management, it is time you analyze the needs of your business. If you are a small business running from only one location, inventory management is better for you. However, if you are running from multiple locations, warehouse management is something you must have. Whatever you choose, be sure to focus on shipping for your business. Use a 3PL like Dash101 that will help you maximize your reach and save on shipping costs. 


Before you go, don't forget to subscribe to our blog.

Our confirmation email includes link to download our app.