Inventory Management, Warehousing and Order Management: Importance and Best Practices

best advanced certification program in digital supply chain management course

Inventory management, warehousing, and order management are crucial to running a successful business. Businesses may simplify processes and increase customer satisfaction by properly managing these areas. These supply chain management strategies help companies address cash flow challenges and optimise the flow of materials, leading to improved efficiency and cost reduction.

This blog will discuss the importance of inventory management, warehousing, order management, and best practices.

First, let us understand what the 3 procedures are from the following table:

Aspect Inventory Management Warehousing Order Management
Definition The process of managing the flow and storage of goods, materials, and finished products. The process of storing, managing, and moving goods within a warehouse. The process of receiving, processing, and fulfilling customer orders.
Objectives Optimise inventory levels, minimise carrying costs, and meet customer demand. Maximise storage capacity, optimise the layout and improve operational efficiency. Streamline order processing, minimise errors, and improve customer satisfaction.
Key Activities Forecasting, planning, purchasing, receiving, storing, picking, packing, and shipping. Receiving, putaway, picking, replenishment, packing, and shipping. Receiving orders, processing orders, picking products, packing orders, and shipping orders.
Key Metrics Inventory turnover, stockouts, order fill rate, and carrying cost. Capacity utilisation, order cycle time, order accuracy, and labour productivity. Order processing time, order accuracy, on-time delivery, and customer satisfaction.
Technologies Inventory management software, barcode scanners, RFID, and automated inventory systems. Warehouse management systems (WMS), conveyor systems, automated storage and retrieval systems (AS/RS), and mobile robots. Order management software, customer relationship management (CRM) system, and enterprise resource planning (ERP) system.
Challenges Maintaining optimal inventory levels, reducing excess inventory, and managing stockouts. Maximising space utilisation, improving order accuracy, and reducing operational costs. Managing complex order fulfilment processes, ensuring timely delivery, and minimising errors.
Benefits Improved inventory accuracy, increased productivity, and enhanced customer satisfaction. Optimised space utilisation, reduced labour costs, and improved operational efficiency. Faster order processing, increased order accuracy, and improved customer satisfaction.

Importance and Best Practices of Inventory Management


Some importance of inventory management are:

  • Ensures fulfilment of incoming or open orders
  • Automates the process of ordering, storing, and optimising goods
  • Prevents the accumulation of dead stocks
  • Saves money by understanding stock trends and using stock efficiently
  • Manages the flow of raw materials from procurement to finished products
  • Enhances product quality
  • Minimises overstocks and improves efficiency
  • Enables businesses to monitor market trends and adjust product offerings accordingly
  • Accurately forecasts how much inventory is needed based on sales activity, preventing overstock and stockout
  • Helps businesses make smart decisions and adjust their product line

Best Practices

Here are some best practices for inventory management:

  • Accurately forecast demand to ensure the right stock levels are maintained
  • Track inventory from purchase to sale to identify trends and ensure adequate stock levels
  • Optimise the entire inventory process, from initial orders to restocking, receiving, storage, and shipping
  • Ensure the right stock is available in the right place, at the right time, and at the right cost
  • Implement a system for tracking inventory turnover and identifying slow-moving items
  • Design the warehouse for efficiency by placing top-selling items in easily accessible locations
  • Conduct regular audits to ensure inventory accuracy and identify discrepancies
  • Train employees on inventory management best practices

Importance and Best Practices of Warehousing


Some importance of warehousing are:

  • It helps in inventory management, which involves tracking and organising products and goods shipments
  • Warehousing is essential for the efficient storage and management of goods
  • Helps in improving customer service by ensuring that products are available when needed and delivered on time
  • Proper warehouse setup, receiving goods efficiently, storing temperature-sensitive products correctly, picking and packing are some of the functions of warehousing
  • Helps in reducing transportation costs by consolidating shipments and reducing the number of trips
  • It provides a safe and secure environment for storing goods, protecting them from damage, theft, and other risks

Best Practice

Here are some best practices for warehousing:

  • Reduce touch points to streamline operations
  • Control inbound and outbound freight to reduce costs
  • Use automatic data collection to track inventory and avoid manual data entry processes
  • Efficient labour is key to successful warehousing
  • Implement minimal touch of goods, one-way flow, and triadic warehousing principles for warehouse design and operation
  • Use a warehouse management system to maintain a system of record for all inventory
  • Use warehouse management software to help with daily tasks and increase efficiency
  • Better storage allocation helps to optimise warehouse layout and item placement
  • Benchmarking is important to determine best-in-class pick rates and compare performance against industry standards
  • Inventory tracking is essential to warehouse management

Importance and Best Practices of Order Management


Here are some points explaining the importance of order management:

  • Allows businesses to coordinate the entire fulfilment process
  • Helps to manage inventory levels, ensuring that products are available when customers place orders
  • It helps to ensure that orders are processed accurately and efficiently, reducing the possibility of human error
  • It can help businesses to reduce costs by optimising and reducing waste
  • Helps to improve customer satisfaction by ensuring that orders are fulfilled on time and accurately
  • Allows businesses to track orders from start to finish, providing visibility into the entire fulfilment process

Best Practices

Best practices of order management include:

  • Real-time synchronisation of information to ensure accuracy and avoid errors
  • Integrating with other systems, such as inventory management and shipping, to streamline the process
  • Centralising all orders in one system to keep track of everything in one place
  • Accepting and fulfilling orders, managing inventory, and engaging in post-sales interactions
  • Developing a request for proposal for an order management system to ensure that the system meets the company's business requirements
  • Mapping order management processes to the supply chain to ensure that the system fits into the order of things and does not disrupt other IT systems
  • Transforming ERP systems to optimise order management processes

Proper inventory management, warehousing, and order management are crucial for businesses that deal with physical products. By implementing these supply chain strategies, businesses can streamline their operations, reduce costs, and improve customer satisfaction.


The Advanced Certification Programme in Digital Supply Chain Management by Imarticus Learning is designed for graduates and diploma holders who wish to learn digital supply chain management.

The programme consists of seven modules that cover essential aspects of digital supply chain strategy and management. These modules include supply chain fundamentals, technology in inventory management, supply chain analytics, supply chain risk management, technology in logistics management, implementation of digital supply chain strategy in a supply chain, and more.

The programme aims to equip students with the required knowledge and expertise to succeed in the fast-growing field of digital supply chain management.

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