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What Is a Warehouse Inventory Management System?

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Image by, courtesy of Carolyn Coles

A warehouse is used to store and distribute product to customers. Without a proper inventory reporting system, the purchasing department cannot know when to re-order and the sales department does not have an accurate report on what is available to sell. A warehouse inventory management system handles all aspects of inventory movement, from receipt to shipping.

Inventory Tracking

Many warehouse inventory management systems use an AS400 system or other similar platform. The software tracks inventory based on each sku (stock keeping unit) and its location within the warehouse. The system will also track all inventory changes, sales and receipts of each sku.

Order Processing

The inventory control system begins with order entry at which time inventory is allocated to a specified order. The inventory is removed from the available quantity and an order is generated for the warehouse to use in the fulfillment process.


All products brought into the warehouse are tracked by sku as well as by a PO number (purchase order). All quantities received are verified against the PO, which is used to process payment to the vendor.


An order will proceed through the warehouse and will either ship as a full case or through a pick-and-pack process. The inventory is tracked throughout this process and many systems assign a status number to each step of the process in order to better track inventory.

Cycle Counting - Inventory

Most warehouse management systems will incorporate an inventory control application designed for routine cycle counting. This software will determine which inventory to count, track these counts, and report any inventory irregularities.


Tom Raley is a freelance writer living in central Arkansas. He has been writing for more than 20 years and his short stories and articles have appeared in more than 25 different publications including P.I. Magazine, Pulsar and Writer's Digest.