Here at Clearinity, we get this question a lot:
What is Cloud Inventory, and how is it different than Warehouse Management?
Let’s start by breaking down a few key questions. Also, don’t hesitate to reference the Glossary if you see a new term!
What was the tool originally built to do?
How has the tool developed over time?
What does the tool integrate with?
Instead of simply waxing poetic about the finer points of definitions surrounding these tools, we’re going to do a side-by-side comparison of two tools: SkuVault and DEAR Systems.
1. The Original Purpose
From DEAR’s site:
DEAR systems is a software development company established by an international group of financial advisors and software developers. After compiling a comprehensive list of the needs and wishes of business owners and executives across the spectrum of business, we applied our years of experience in creating a comprehensive, understandable, affordable, cloud based inventory system that integrates with industry standard accounting systems.
DEAR Systems is quite literally named after it’s original purpose. DEAR – Double Entry Accounting Record – tells us all we need to know! A team of individuals sat down and said “Hey, getting the accounting out of our orders is hard. Let’s build a system that does that for us!” The only way to get good accounting is to have a pulse on the inventory flow. Hence, they started as inventory management.
From SkuVault’s site:
A WMS that will help you grow
SkuVault allows you to sync your channels, manage your inventory, and generate actionable reports on your data – all in one place, all easy to use. Unlock the potential of your inventory with decreased out-of-stocks, labor costs and fulfillment times.
SkuVault continues to mention out-of-stock, fulfillment, and different pick methods. These are highly operational, and have little to do with proper accounting methods. This is the origin of a warehouse management system.
Keep an eye out for the language that each tool uses. The WMS (warehouse management systems) tools will reference “warehouse”, “picking”, “fulfillment”, and “data” many more times than “accounting”, “COGS”, “purchase orders”, or other business-wide problems.
2. Tool Development Over Time
As any good platform should, they all develop over time. Cloud Inventory eventually begin to realize that they need aspects of a good WMS platform, while WMS tools begin to realize that they are missing out on key data.
DEAR Systems first started with a deep understand of accounting models. They were also smart enough to build in a relatively robust “Locations” module that allowed you to model some good warehouse management practices. Later, they added the ability to have a barcode scanner too! However, they never did pick up some of the finer points of warehouse management, which might include optimized pick routines or things like cycle-counting.
SkuVault has also grown a lot. Previously, SkuVault didn’t have a Purchase Order module at all! If you look at the purpose of a strict WMS, one would never need one. However, cost management and other reporting is very dependent on Purchase Orders. We can now see that they offer it in their “Inventory Management” tools, but the finer points of FIFO, LIFO, and various Average costing methods will still leave a few questions.
Let’s add some visual aids here – these are screenshots from the webpages at the time that this blog was authored.
What do we notice about DEAR? First, there are relatively few integrations. Both tools integrate to your favorite shopping carts and marketplaces, but DEAR has their own B2B portal and POS. This tells us a lot about how they see themselves in the market – they own a lot of data, so why would they need to integrate with so many other tools?
Let’s compare and contrast that with the SkuVault Integrations page. There are SO MANY integrations! They even include accounting platforms and other shipping platforms like ShipStation! The simple fact that they integrate with so many platforms tells us similarly that they fill a specific role – warehouse management – and that they don’t care WHERE the data comes from.
Lastly, it’s worth noting that SkuVault integrates with other ERP solutions. This is the final deciding factor between “cloud inventory” versus “WMS”, since a Cloud Inventory is essentially a stripped-down ERP system for a smaller market. A good WMS will work with your team through all ERP solutions, so they build accordingly!
4. So how do I decide?
As with anything, preparation is key. Here at Clearinity, we’ve instituted a 4-Step Process to guarantee that you end up on the right platform for all the right reasons. How did your business get here? How do you plan to grow? Will you be able to afford switching tools in a year? These are the kinds of questions we dive in on, and plenty more too!
If you want to do it yourself, we want to empower that from start to finish. However, some people know that it’s not the most efficient use of their time and have us help them at each step. How can we help you today? Please schedule a call and connect with us to let us know!