The Difference Between Inventory Management and Warehouse Management Systems

Although Inventory Management and Warehouse Management terms are used interchangeably, there are subtle differences between the two. Understanding these differences is important when choosing what system to get.

There are various Inventory Management Systems (IMS) and Warehouse Management Systems (WMS) software packages on the market. There is also a lot of misunderstanding and misrepresentation about different packages. For example some Warehouse Management Systems have different tiers (most common Tier 1, Tier 2 and Tier 3) defined by warehouse size, turnover speed and complexity.


Inventory Management Systems tend to be simpler. Most commonly used for items, locations, receiving and shipping record keeping. The system provides real time information in a form of reports about past and present transactions. It requires very little time to install and setup comparing to warehouse systems.

Warehouse Management Systems tend to be more complex in functionality. Compared to Inventory Management System, the Warehouse System allows companies to manage the entire storage system from checking in, allocating, to packing and shipping. These WMS systems tend to be integrated with various warehousing equipment such as forklifts, packing machines and conveyor systems.

Most Common Differentiator

The most common differentiator between Warehouse and Inventory Management is Directed Operations. Directed Operations is a Warehouse System functionality that directs warehouse personnel during different warehouse operations so warehouse system has a part of Expert System (ES). It is designed to increase warehouse operator efficiency by sending directions to a warehouse operator for Putaway, Picking, Moving, Replenishment, etc .  Of course before ES could be fully functional you have to define all the rules and processes for it. Warehouse system could have very complex sets of rules and processes or very simple one like ABC Classification, but ES is a most common border line between warehouse system and inventory system

Interestingly, part that some of inventory systems also have ABC Classification but do not have ES complexity. Read more about Expert Systems here.

About the Author:

Peter Oykhman is the President and Owner of CorePartners, Inc. Peter has a background in software development. For the last 15 years, he has been involved in logistics projects for various US and European clients. Contact