A Definition of Inventory Management Software
Inventory management software is a computer-based solution that gives organizations the ability to track all aspects of their inventory. Inventory management software varies based on its application: in point of sales inventory management, the software tracks inventory levels, orders, sales, and deliveries, while inventory management software for manufacturing involves creating work orders, bills of materials, and other documents relating to production. Inventory management software is a tool used by organizations that want to streamline their inventory data keeping processes, especially if they are using antiquated forms or spreadsheets.
Inventory Management Software Options
Inventory management software typically contains several components that work together seamlessly to provide an organization with a comprehensive solution for their inventory management needs. Some software companies provide packaged inventory management software solutions, while others provide modules or add-ons for companies to customize their inventory management software in order to suit their inventory processes and needs. Most inventory management software solutions offer features that include order management, asset tracking, service management, and product identification.
When choosing an inventory management software solution for your organization, you should consider your goals and needs. If your company already uses QuickBooks, you may want to consider a software solution that integrates with QuickBooks. You also should consider how you are going to gather your inventory data to input it into the software. If you are going to use handheld scanners to scan barcodes, you should look for options that are compatible with the inventory hardware you intend to use as well.
Additionally, if you have inventory in multiple locations or in trucks, you should look for inventory management software that allows for tracking by location and for barcode scanning. If you work on the go, you should consider an inventory management software solution that is cloud-based so that you can access your real-time inventory data from anywhere at any time. IDC Industry Insights’ Bob Parker recommends that SMBs should “get the fundamentals right” before putting money into an inventory management solution: “Once the fundamentals are in place an SMB can explore more advanced technology like bar code readers and analysis tools if volumes support it.”
Benefits of Inventory Management Software
Of course, your inventory is crucial to your bottom line in several ways. If you are overstocked or understocked, you run the risk of making costly mistakes. If your employees are spending too much time tracking inventory with an inefficient process, you are losing money, too. But, the benefits of inventory management software go beyond the obvious.
An inventory management software solution that is worth the investment will integrate with your back-office systems and accounting systems so that you can optimize your inventory and, as NetSuite puts it, “ensure the inventory asset value on your financial reports matches what is physically in stock… This integration provides a competitive edge with abilities to plan effectively, execute predictably with customers and minimize labor costs and errors associated with manual reconciliation.” Integrating your inventory management software with your back office leads to three cost-saving benefits:
- Inventory optimization to meet product availability and ROI goals – Real-time visibility of your inventory leads to inventory optimization so that you can meet the needs of your customers and your investors, and an inventory management system will give you the sales order, purchase order, and planning systems information that you need to have just the right level of inventory on hand
- Inventory visibility for supply chain partners – If your company relies on supply chain partners to manage inventory and customer shipments, you need to have an inventory management system that integrates with supplier and third-party logistics systems so that they can make sure product is available when your customers want it
- Accurate inventory statements in financial reports – Effectively ensuring that your annual reports and tax returns reflect an accurate inventory value is important for your investors and the government, and inventory management software helps you maintain financial integrity by helping you to match the inventory value that is recorded in your books with the physical value that is in your warehouse.
For more information on inventory management software and best practices for managing your inventory, visit the following articles:
- Warehouse Inventory Management: 20 Experts Reveal the #1 Way Companies Can Reduce Warehouse Inventory Errors
- Top 30 Inventory Management, Control and Tracking Software Apps
- 5 Best Practices for Inventory Management That Apply to Every Business
- 19 Inventory Management Experts Reveal the Single Most Effective Strategy Companies Can Use to Reduce Inventory Costs