Warehouse Management System vs Inventory Management System

Allison Champion
6 min read
September 13, 2021
Modified: October 24, 2022

If you’re a brand of any size in the ever-growing world of e-commerce, you’ve likely experienced the confusion that can come with learning and understanding industry terminology. Some terms can seem conflatable when they’re not, while others may appear wildly divergent when in fact, they can be used interchangeably. 

This is particularly true when discussing warehouse management systems (WMS) and inventory management systems (IMS).

On the surface, these terms seem to describe similar functions. However, warehouse management systems and inventory management systems are two different services that perform vastly different functions. 

This article will look at the framework of a warehouse management system vs inventory management system to help you understand each type of system and how they work in the context of your business.

What Is A Warehouse Management System?

So, what is a warehouse management system? A WMS is a software tool that helps the warehouse manager or operators efficiently manage any daily warehouse process, such as: 

  • Inventory storage
  • Order fulfillment
  • Distribution 

From receiving and stocking new inventory to picking and shipping orders for fulfillment, a warehouse management system enhances the functionality of a warehouse, and, by extension, an entire business.

There are various types of warehouse management systems available, all of which can provide a warehouse operator with unique benefits. The three most popular types of WMS include: 

  • Standalone systems – Standalone systems work in conjunction with a business’s existing network to prioritize warehouse management tasks. 
  • Integrated systems – Integrated systems are typically used with larger enterprise resource planning modules, resulting in a shared database for orders, inventory, reporting, and the inventory accounting methods used.  
  • Cloud-based systems – These web-based management systems store a business’ information on the internet rather than on a computer or hard drive. 
Why Use A Warehouse Management System? 

As a warehouse business grows, warehouse operations can become increasingly difficult to manage. Increases in sales mean more product is moving through the warehouse, creating an additional need for inventory organization and fulfillment process planning. Implementing a warehouse management system can enable manager to execute these aspects of their operations. 

Some of the many ways that warehouse management systems help refine warehouse operations include:

  • Space optimization – Warehouse management systems can help you determine the best use of warehouse floor space by tracking units of space, such as compartments or bins. In doing this, you can better understand how to distribute and store your products, which can free up space for additional inventory and increase productivity by allowing for a more streamlined, organized warehouse. 
  • Inventory visibility – A WMS can simplify your inventory tracking processes to help you stay on top of all the product entering and exiting your warehouse. This significantly reduces the likelihood of inventory being misplaced or lost. If you’ve implemented a cloud-based WMS, like those offered by Flowspace, you’ll also experience the added benefit of real-time inventory tracking for the most accurate measure of your inventory needs. 
  • Labor productivity – A WMS can greatly improve the efficiency of your warehouse and increase worker productivity by determining the best practices for task distribution and forecasting your staffing needs. Additionally, the use of WMS technology, such as barcode scanners, can eliminate errors in product picking and inventory recording, saving your warehouse staff valuable time. 
  • Supply chain efficiency – By tracking products from the supplier the moment they reach the warehouse, improving storage and organization, and shortening picking and packaging times, warehouse management systems eliminate inefficiencies in supply chain management. 
What Is An Inventory Management System? 

Whereas a warehouse management system is meant to streamline warehouse operations, an inventory management system is designed to help brands keep track of all their inventory, whether it’s in their warehouse, on its way there, or at a bricks-and-mortar location.

Without a proper inventory system in place, both online and in-store retailers risk running out of inventory, over-ordering inventory, misplacing or losing inventory, and mismanaging warehouse space—all of which can result in lost sales and profits.  

An inventory management solution can improve a brand’s ability to accurately track its inventory, sales, and deliveries with features such as:  

  • Increased inventory insight – An IMS allows for more effective and accurate inventory tracking. This means you can stay on top of what inventory you have in stock and how much of it is available, ensuring that customer orders can be filled and delivered as soon as they’re placed. 
  • Enhanced technology – Many IMS integrate innovative technology, such as barcode scanners, to streamline inventory tracking processes. With barcode scanners, warehouse staff can easily identify and take stock of available inventory as it arrives. When the time comes to pick and package orders, barcode scanners can alert warehouse staff if the improper item is scanned for delivery. 
  • Upgraded reporting – The upgraded reporting capabilities of an IMS allow brands to track which products are popular among consumers and which are not. This not only ensures you maintain enough of your in-demand inventory, but it also allows you to adjust future orders to better serve your customers. Additionally, you can use this feature to identify less popular products that may be worth discounting. 
  • Improved integration – Many IMS allow for the integration of data from multiple locations. This means you can keep track and manage your inventory across all of your locations, including your warehouses and points of sale.
Why Use An Inventory Management System?

Inventory is the beating heart of an e-commerce operation—it’s what draws your customers and drives your sales. However, accurately tracking inventory can be a time-consuming process, and accuracy is crucial to a business’ success. Any errors in inventory reporting can negatively affect the bottom line, skew end-of-year reports, and lead to dissatisfied customers. 

In fact, a recent report by the U.S. Small Business Administration listed inventory mismanagement as one of the top factors contributing to the failure of small businesses. 

Implementing an inventory management system into a business plan can help avoid unnecessary errors in reporting, accounting, and stock estimation, ensuring that brands don’t end up with a surplus of unsold product, or a barrage of unsatisfied customers. 

What Are The Main Differences Between WMS and IMS?

Because warehouse management systems and inventory management systems are frequently misunderstood, it’s important to detail what sets them apart from each other. 

The main differences between WMS and IMS include:

  • Warehouse operators vs. brands and merchants – Warehouse management systems are designed to be used by warehouse operators to streamline any warehouse operation and staff productivity. On the other hand, inventory management systems are meant to assist brands and merchants with inventory tracking and reporting.
  • Inventory location and movement vs. inventory levels – Typically, a WMS focuses on the location and movement of inventory throughout the warehouse to promote organization and fulfillment efficiency. This is unlike an IMS, which focuses on keeping track of inventory levels. An IMS provides insight into how much of a given product you have on hand, better enabling you to anticipate trends, gauge costs, fill orders, and manage replenishments. 
  • Warehouse efficiency vs. reporting accuracy – Whereas a WMS seeks to optimize warehouse operations through space management and organization, an IMS works to reduce errors in inventory reporting and accounting. 

Although they serve different purposes, warehouse management systems and inventory management systems can be something of a dynamic duo. When used in combination with each other, you can eliminate errors at each step of the order fulfillment process, increasing productivity, reducing wasted resources, and ensuring customer satisfaction. 

How Flowspace Can Help

Operating a successful and competitive e-commerce business isn’t easy. Ever-changing consumer trends, technological innovations, and fluctuating markets can pose unique challenges to even the most prepared companies. Fortunately, you don’t have to manage your systems alone.

Flowspace’s innovative technology offers a warehouse management system for warehouse operators, and its cloud-based platform includes an inventory management system for brands. The Flowspace platform is an e-commerce command center, centralizing operations including:

  • Order management – Flowspace enables you to view and track orders as they come in, from any channel, and orders are packed as soon as they’re placed for streamlined fulfillment.
  • Real-time inventory visibility – Flowspace’s fully-integrated, cloud-based platform allows you to track all of your inventory in real-time, so you can stay ahead of low inventory and keep your items in stock with replenishment alerts.
  • Customer insights – Know and understand your customers, from which products are popular in certain communities to repurchase frequency to lifetime value. 

Let Flowspace grow your business with smart fulfillment strategies. Get in touch with us today to learn more!

Written By:

flowspace author Allison Champion

Allison Champion

Allison Champion leads marketing communication at Flowspace, where she works to develop content that addresses the unique challenges facing modern brands in omnichannel eCommerce. She has more than a decade of experience in content development and marketing.