What inventory management software does
Inventory management software, often part of an administrative system or an ERP, keeps the record of stock by product and by warehouse. Its typical functions are:
- Receipts and issues with their document: purchases, sales, transfers between warehouses and adjustments.
- Stock by warehouse and, in some systems, by lot or serial number.
- Cost and valuation of inventory with the method your accountant defines.
- Minimums and maximums to suggest purchases.
- Reports on stock, movements and turnover.
It is the tool of administration and finance: it answers how much there is, what it is worth and how much should be purchased.
What a WMS adds
A WMS (warehouse management system) works inside the warehouse. In addition to how much stock there is, it records where each item is, with its location, lot and serial number, and it directs the work of the people:
- Receiving against a document, with a scan of each line and a tolerance.
- Put-away with a suggested location and a scan of the destination location.
- Guided picking: the handheld shows location, product, lot and quantity in route order and stops an error before it ships.
- Packing, shipping and returns with their records.
- Counts by location without stopping the warehouse.
- Labels for products, pallets and locations.
It is the tool of operations: it answers where the stock is, who moved it and which task comes next.
Side-by-side comparison
| Aspect | Inventory software | WMS |
|---|---|---|
| Question it answers | How much there is and what it is worth | Where it is and what to do with it |
| Level of detail | Product and warehouse | Product, location, lot, serial number and pallet |
| Users | Administration, purchasing, finance | Floor operators, supervisors, warehouse manager |
| How data is captured | Documents on a computer | Handheld scanning, at the moment of the movement |
| Validation | When the document is reviewed | At the scan: location, product, lot and quantity |
| Floor work | Does not direct it | Assigns tasks and their order |
| Counts | Full count with later data entry | Counts by zone or location, with results by type of discrepancy |
| Costs and invoicing | Yes | No; it leaves them to the administrative system or the ERP |
When inventory software is sufficient
Inventory software is sufficient, and a WMS would be an unnecessary expense, when:
- The warehouse is small and everyone knows where each product is.
- There are few products, without lots, expiration dates or serial numbers.
- One or two people receive and pick, with few orders per day.
- Picking errors and inventory discrepancies are infrequent and their causes are known.
In that case, the first investment should be in organizing the warehouse: coded locations, receiving against a document and periodic counts. The guide on how to control warehouse inventory describes those controls.
Signs that a WMS is needed
The signs appear on the floor, not in the reports:
- Time is lost searching for products that the system records as in stock.
- Picking errors reach the customer: the wrong product, quantity or lot.
- Lots are not respected: the new lot ships while the old one expires on the rack.
- Counts do not reconcile, and the cause cannot be explained.
- Operations depend on key people: when they are absent, the warehouse stops.
- Orders or shifts have grown, and supervision can no longer review everything.
- A customer or a regulation requires traceability by lot or serial number.
If three or more of these signs apply, the question is no longer whether a WMS is needed, but which one. The guide how to choose a WMS proposes the criteria and a checklist.
How the two systems work together
Choosing a WMS does not require abandoning the administrative system. The usual arrangement is that both remain in use under a clear rule: the administrative system or the ERP keeps products, costs, purchasing, sales and invoicing; the WMS receives the purchase orders and sales orders, executes the floor work and returns the work actually executed, with quantities, lots and serial numbers.
The connection can be a direct connector, an API or file uploads, depending on the system. The guide how to integrate a WMS with your ERP explains what is exchanged and the most frequent errors. For the difference with a full ERP, see WMS vs. ERP; for the difference with a spreadsheet, WMS vs. Excel.
What to measure before changing systems
Before deciding between improving the use of your current software and implementing a WMS, gather data from recent weeks:
- Time lost searching for products. Ask two or three pickers to record, for one week, how many times a product was not in the expected place.
- Picking errors that reach the customer. Review returns and complaints for the wrong product, quantity or lot.
- The difference between the count and the record. Count a sample of 50 locations and compare it with the system record.
- The controls the product requires. If you handle lots, expiration dates or serial numbers, confirm whether your current system records them on every shipment.
- Dependence on individual memory. If the warehouse stops when one person is absent, the knowledge is not in the system.
With that data, the comparison is no longer between two types of software but between the cost of the current errors and the cost of a system that prevents them.
How Chainlink WMS handles it
Chainlink WMS is a cloud warehouse management system. It records each item of stock by product, location, lot and serial number, with its status (available, quarantine, in transit, staged for shipping, damaged or blocked), and it directs floor work from the Android app: receiving against a document, put-away, guided picking with scan validation, packing, shipping, returns and counts without a signal. Each movement is posted to the stock ledger with its user and document.
It does not invoice or keep the accounting: it works with your ERP through the connectors for SAP Business One, Odoo, ERPNext, SAP S/4HANA and Microsoft Dynamics 365 Business Central (an add-on for Professional and Enterprise), the REST API included in every plan or bulk import from an XLSX or CSV template. See features and pricing.
Frequently asked questions
Does a WMS replace inventory software?
Not necessarily. The WMS handles the warehouse operation; the inventory software or the ERP keeps costs, valuation and invoicing. Some small companies use only the WMS for physical control and keep costs in their accounting system.
Is a WMS useful for a small warehouse?
It is useful when the warehouse has location, picking or lot problems, even if it is small. If everyone knows where each product is and errors are infrequent, the first step is to organize locations and processes.
Is special equipment needed to use a WMS?
Scanning equipment is needed: handhelds with a built-in scanner or, in small operations, Android phones with their camera. For product and location labels, a label printer is needed.