What Is the Difference Between Inventory Management and Warehouse Management

Some argue that there is no difference between the terms “inventory management” and “warehouse management” as most companies in the Arab world do not give the warehouse the importance it deserves, so do not exaggerate if I say that without concern for the warehouse this leads to the collapse of the company, and perhaps our lack of awareness of the methods of warehouse management and inventory control properly has often led to the bankruptcy of many companies due to the poor inventory management or their lack of accurate understanding of inventory management techniques, the  inventory as one of the most important components of current assets and the basic element in the production process needs management and planning starting from the goods  receipt and ending with the delivery of the finished product to the company, it also needs to track and know the balance to provide all users of the reports, so we can mention the difference between the two terms as follows: 

Warehouse Management

It is the management that related to the warehouse buildings and preserving the inventory from damage and moisture, providing corridors in the warehouse and monitoring the duties and responsibilities of the warehouse workers and storekeepers, as well as ensuring the safety of inventory materials against electrical hazards and the availability of occupational safety systems inside the warehouses and ensuring the safety and conformity of the items to the terms in the purchase order before receiving them and providing all transportation necessary to transport items (issuing from warehouses) to the different departments of the company.

Inventory Management & Stocktaking 

Inventory Management is a collection of processes that deal with inventory control of reviewing the receipt note voucher and issue voucher and matching them with the purchase order (for adding) and the goods issue request (issuing) and matching and reviewing the inventory balances with the actual balances through stock-taking, setting up the inventory valuation methods, setting the reorder point and the maximum of quantities and providing other departments with inventory reports (such as inventory balance - stock-taking - inventory turnover ratio - ....)

Modern technology has a significant and effective role in developing warehouse management and inventory control techniques, as AccFlex ERP Accounting Software (Hadaf Software Solutions) has made a breakthrough in the speed and accuracy of data entry without the possibility of human error, as well as instantaneous and quick provide the inventory reports as accurately as possible through Inventory Management Software, one of the Best Inventory Management Software in the Arab world because what is it is provided by the Inventory Management Software of the inventory management system, inventory control, and linking them and the rest of the company’s departments is one of the most great software that support Arabic in the Middle East,  can be viewed the most important feature as follows

Inventory Management Software Features

1- In the Inventory Management Software, you can copy the inventory items 

Copying items from one warehouse to another easily without need to re-enter the items again by clicking Copy Inventory Items to another warehouse and in seconds the new warehouse becomes ready with the required items.

2- In the Inventory Management Software, you can edit the properties of the item

Editing Item Group Properties, once one of the group header properties has been edited and clicking Apply, for example, you want to change the unit of measurement of cement from tons to kilograms and you have more than one type of cement (item), once changing the group header (cement) changes the rest of the items, this saves time and effort to change the properties of each item separately.

3- In the Inventory Management Software, you can add more than one item unit of measure flexibly

Adding more than one unit of measure for the same item and the flexibility to convert between units of measure, for example, we have a screwdriver tool set (12-Piece), when adding a set that adds 12-Piece, the payment can be determined by the default unit of measure (one unit) therefore, it facilitates the inventory work and gives an accurate balance of items.

4- In the Inventory Management Software, you can add item expiration dates

Adding an expiration date for each item, this gives an indication for warehouse management when the expiration of this item approaches, perhaps this feature will be very suitable for food companies.

5- In the Inventory Management Software, you can set the minimum and maximum quantities

Forcing the warehouse not to receive new items of the item due to the item reaching the maximum number of units, the responsibility of inventory control is to set the maximum order limit, at which there is a stagnation of the items due to not being issued, as well as reorder point (level of inventory which triggers an action to replenish that particular inventory stock) so as not to disrupt production (activity) and this feature is one of the most unique features through which the balance of items can be controlled through the software.

6- In the Inventory Management Software, you can item coding flexible 

Item coding by using more than one code, when defining more than one code for the item, you can add the existing code on the product, as well as add an internal code to identify the product, and also the ability to search with any of these codes.

7- In the Inventory Management Software, you can flexible adding and issuing items automatically 

Adding and issuing any item of item by using the scanner automatically without the need for the store keeper to intervene to do so and then the review by the inventory controller through how does barcode work.

8- In the Inventory Management Software, you can flexible adding alternative items flexible

Adding alternative items in the absence of sufficient balance of this item the software automatically issuing the alternative item previously defined by the software, as well as the feature of (inventory kitting) which may not be issued either of them without the other.

9- In the Inventory Management Software, you can inventory evaluation flexible

Selecting the inventory valuation method whether FIFO, LIFO, or the weighted average cost (WAC) to make an impact the financial statements are the most accurate.

10- In the Inventory Management Software, you can stock-taking at any time

Selecting the date for stock-taking, the software gives the balance of items on that date only, as well as a specific item and a specific warehouse for stock-taking can be selected.

11- In the Inventory Management Software, you can Stock Issue Request flexible

The Material Request screen and simultaneously displaying on the Storekeeper screen, which provides the required items easily and quickly.

12 – In the Inventory Management Software, you can add items directly from a purchase invoice

Importing the items from the purchase invoice to be added to the warehouse at the same time without the need to re-enter them.

13- In the Inventory Management Software, you can importing items from Excel flexible

Importing products items and exports them from Microsoft Excel, which provides more time and effort to re-enter these items, which also helps to enter inventory opening balance easily, quickly, and accurately.

14- In the Inventory Management Software, you can produce a set of great and intelligent inventory report

Displaying the inventory reports on all items and all transactions and balances with flexibility, improved, and intelligent support that helps non-specialists understand financial information and reporting, helps senior management decision-making, and makes information available to all users of inventory reports.

Although these are some of the advantages of the Best Arabic Inventory Management Software, we cannot this article mention the most important reports that it features.

Inventory turnover is a ratio showing how many times a company has sold and replaced inventory. The inventory turnover ratio is considered one of the key ratios in financial analysis for senior management to determine whether the company follows a right policy in inventory investment as (one of the components of current assets) in the statement of financial position and then the management makes its decisions about inventory investment and this ratio is of the company's activity ratios and the inventory turnover ratio = (cost of goods sold / average inventory) and from the inventory turnover ratio we can know the average inventory period = (360 / inventory turnover) and the inventory turnover ratio measures the number of times inventory is sold or consumed, as well as how long a company holds its inventory before selling it to obtain revenues (sales), and the higher the inventory turnover, the better, since high inventory turnover typically means a company is selling goods quickly, and when a company's inventory turnover is decreasing, it means that it is holding its inventory longer than previously measured time periods, and this ratio only comparable across companies in the same sector/industry, if the company's inventory turnover ratio is 1.25 times and the similar companies in the same sector (the construction sector e.g.) the prevailing ratio is 2.5 times, this was a risk indicator for the company that it was necessary to reconsider the inventory holding policies, exclude stagnant items and purchase fast-selling items (turnover).

The Importance of Inventory Management Software

The existence of Inventory Management Software in the company is considered one of the necessary and important matters for the success of the warehouse management system and inventory control, and even the success of the company as a whole, Inventory Management Software operates as an integrated whole in managing warehouses and works to complete the tasks of warehouse management and inventory control fully, the importance of Inventory Management Software depends on

1- Easy to creating electronic issue vouchers and receipt note vouchers for all the company's products with serial numbers generated by the system, and the inventory control can display them instantly as soon as they are entered by the storekeeper, in order to facilitate the task of inventory control and help in producing accurate reports on the inventory balance.

2- Creating the item card from Inventory Management Software and selecting all the properties of the item (item code - item unit of measure- description- alternative unit of measure- alternative items- the warehouse - item price- selecting the GL account in the chart of accounts ...).

3- The ability to add and issue the inventory items by using the scanner through the presence of a barcode (serial number) on the item that the scanner can read, and Inventory Management Software adds or issues the item immediately, as seen in the hypermarkets and companies’ warehouses.

4- Linking the warehouses with each other, so the Cairo branch warehouse can display the items in the warehouses of the Alexandria branch, for example, instantly, and it can also know the balance and create an inventory transfer when needed.

5- Fast and easy to create a Material Issue Request for all departments, if it was a construction company, and the site needs construction materials (cement - sand - steel ...) and there is no in the site warehouse can create a request from Inventory Management Software and the storekeeper issuing the items.

6- Linking between the warehouse and finance department, when the store keeper issues or adds items immediately, GL accounts are affected because the impact of these items on many accounts (such as cost of goods sold - accounts payable - inventory - purchase returns and allowances - .......).

7- The ease and accuracy of displaying the inventory’s balance, as soon as the inventory controller displays the inventory’s balance immediately, the balance appears for any warehouse and at any date he desires, and thus the ease of performing stocktaking.

8- Ease and accuracy of production planning, the production department can easily display the raw materials inventory balance through the reports provided by Inventory Management Software, it can determine the appropriate production quantity as well as purchase requisitions during the next period, dates of supply and production planning in a way that reduces waste and losses and reduces costs to the lowest level and profit maximization of the company.

9- Linking between the warehouse and procurement department, in the modern concept of management, the warehouse and procurement department is seen as one department (materials management) and in order for the purchase to be made properly, reports on inventory balances are required, and the accounts payable balance cannot be calculated except with the purchase requisition and also not the purchase order can be closed and the supply confirmed only by supplying all the goods contained in the purchase order to the warehouses and all these reports can be provided easily and accurately through Inventory Management Software.

10- Helping the senior management making decisions (providing Inventory Turnover Report, Fast and Non-Moving Inventory Report, Stock-take Report, Item Price List Report, etc.) all of these are reports that help the senior management to take the necessary procedures regarding holding inventory or not, investing in the fast-moving items and importing quantities of them, as well as searching for the best suppliers of items etc. of reports provided by Inventory Management Software in a very timely and accurate manner, which contributes to decision-making.

How to Manage Inventory

Inventory management is one of the most important tasks performed by the department, which is considered one of the most important tasks necessary for the completion and success of any activity, regardless of its size, without inventory, there is no production and without production, there are not sales, and therefore revenues are the objective of the company's activity, so the basis for inventory management should have been established through the following:

1- Selecting the skilled workers to complete the inventory work and tasks.

2- The necessity of bookkeeping for inventory transactions by recording and reviewing the issue vouchers and receipt note vouchers and matching them with the purchase requisitions, no inventory transaction occurs without books.

3- Performing stocktaking works i.e. reviewing the actual inventory balance and matches it with the book balance.

4- Selecting the stocktaking technique used and appropriate for the company's activity, whether (periodic inventory - perpetual inventory).

5- Setting reorder point, as well as the maximum limit of items.

6- Selecting the inventory valuation method and that is directly impacts financial statements, there are several methods for inventory valuation (FIFO (First In, First Out), LIFO (Last In, First Out), and WAC (Weighted Average Cost)).

7- Providing the senior manager and all the different company's departments with the inventory reports.