What is Inventory Software- A Quick Guideline

In the past, businesses relied on pen and paper to track stock. Today, inventory software changes the game of business and automates this process. It's a digital solution that helps businesses track, manage, and organize their inventory and reduce errors.

This article is your ultimate guiding light for those struggling to keep track of inventory and optimize their warehousing. 

We’ll look into all the necessary details of inventory software but before we do that, let’s define what inventory management is 

What Is Inventory Management

Inventory management involves activities designed to monitor stock levels and maintain optimal inventory. This overall process includes overseeing the entire flow of goods, from acquisition to sale. It also ensures the right stock is available at the right location when needed.

While inventory management and inventory control might sound similar, they serve distinct purposes. Inventory control focuses on managing stock already in your warehouse or storage facility. In contrast, inventory management covers a broader range of activities, including 

• Strategic planning 
• Demand forecasting
• Stock replenishment.

Effective inventory management is crucial for various supply chain participants such as 

• Manufacturers 
• Warehouses 
• Wholesalers 
• Retailers
• ECommerce businesses. 

These entities must meticulously track their inventory as they handle ordering supplies, storing goods, and fulfilling customer orders. 
 

Now, comes the important question - What is Inventory Software

What is Inventory Software?

An inventory management system is a software solution designed to monitor every activity within a warehouse or inventory-focused location. 

This system ensures a complete tracking of inventory orders, sales, and deliveries across multiple vendors. It also allows for precise tracing of individual commodity units, feeding details directly into the system. 

In today's fast-paced tech environment, not using such software can lead to 

• Customer dissatisfaction 
• Decreased sales
• Unnecessary stock accumulation 

Thus, an inventory management system is essential to prevent these issues.

Warehouse management, to retail operations inventory management software upgrades the reliability and provides immediate access to detailed information. 

Business or store owners receive notifications when a specific product or merchandise is running low. Additionally, the automated tracking system monitors product expiration dates, enabling quick and informed decision-making.

Different Types Of Inventory Management Systems

Businesses have various types of inventory management systems to choose from, depending on their specific needs and operations. Here are some of the different types.

Periodic Inventory Management System

This system involves manually counting inventory at specific intervals, such as weekly, monthly, or quarterly. It's typically used by smaller businesses with a limited number of products.

Perpetual Inventory Management System

This system uses technology like barcode scanning or RFID to track inventory levels in real-time. It's best suited for larger businesses with a high volume of products.

Just-in-Time (JIT) Inventory Management System

JIT involves ordering and receiving inventory just in time to meet demand. It helps reduce inventory holding costs and improve cash flow, but requires careful coordination and planning.

Material Requirements Planning 

MRP uses software to plan and control inventory levels based on the production schedule. It ensures that businesses have the necessary materials on hand to meet production needs.

(DRP) Inventory Management System

DRP uses software to manage inventory levels across multiple locations and distribution centres. It optimizes inventory levels and reduces costs associated with carrying excess inventory.

(APS) Inventory Management System

APS uses data analytics and machine learning to optimize inventory levels, production schedules, and distrib

How Does Inventory Management Software Work?

Inventory management can seem complex, but inventory software simplifies the process through automation and integrations. Here's How Does Inventory Management Software Work.

Inputting Data

The first step is inputting data. It involves setting up the system with all necessary information, such as product names, SKUs, supplier details, costs, and initial stock levels. This foundational data is important for accurate inventory tracking and inventory management.

Monitoring Stock Levels

Once the product data is entered, now comes the software part. The software continuously monitors stock levels as items are sold and new stock arrives. There is a technology called barcode scanner. Barcode scanning technologies often assist in automatically updating these levels. It's ensuring that inventory records are always current and accurate.

Automating Purchasing and Reordering

It's a system that helps to give you alerts from time to time.

When it is time to reorder the products the software generates purchase order alerts. Examples like minimum stock levels or anticipated demand.

This automation helps maintain optimal stock levels, preventing stockouts or overstocking.

Tracking Sales and Adjusting Inventory

As sales occur, the software adjusts the stock levels accordingly. This dynamic tracking covers sales from all channels. whether through a marketplace, EDI, or direct sales team, ensuring that inventory records reflect the current stock accurately.

Analysis and Reporting

The final step involves using the software’s reporting and analysis tools to generate insights into inventory performance. Reports on sales trends, turnover rates, and profit margins help inform business decisions, such as adjusting pricing strategies or optimizing stock levels.

Benefits Of Inventory Management Software

If your inventory practices are struggling to keep up with demand, adopting a management platform can be a game-changer. In fact, the past few years have seen a 25% increase in businesses investing in better ways to manage inventory.

Consider your company’s unique needs and how these benefits could address the pain points holding you back.

1. Inventory Accuracy and Efficiencies

Surprisingly, many retail businesses have an inventory accuracy rate of only about 63%. This low number highlights the potential damage of inaccurate orders. One of the core benefits of inventory tracking is reducing the amount of inventory companies need to keep on hand while improving order accuracy.

Reducing held inventory can save companies significant costs and effort. Some companies use modern inventory management solutions. It will help to close one or more warehouse locations, cutting expenses associated with these facilities.

With new inventory tracking software comes the concept of just-in-time inventory. This strategy involves closely monitoring inventory levels and only keeping what’s needed in the short term on hand. 

Companies can leverage the powerful features of inventory management software to stay agile. Implementing these strategies can improve your return on investment (ROI) from the system.

2. Cutting Costs Across the Board

Accuracy is a recurring theme because fewer errors mean fewer resources spent on corrections. More accuracy leads to fewer errors, which in turn reduces expenditures on damage control.

Organizing inventory also reduces costs associated with storing unnecessary items. As the system identifies the proper quantities of products, inventory managers can trust that important items will renew automatically. This allows for a broader product range and cuts costs tied to excess inventory.

Integrating automation into inventory management processes saves time and money. With robotics and AI, fewer hands are needed to pick, pack, and prepare items for shipment.

3. Improved Data Visibility and Planning

The value of business intelligence shouldn’t be overlooked when considering the benefits of an inventory management solution. Barcode scanning and other features enable easy data transfers. 

Combined with a central data warehouse, this allows companies to build data assets for deeper analysis. With this information, companies can answer critical questions

• Where is inventory going, and which customers are being served?
• How can agile inventory improve these processes?
• What does customer demand reveal about its customers, and how can this be applied to marketing?

Obviously, business intelligence is key. It enables companies to fine-tune their marketing efforts, boosting conversions and driving profits. inventory management software aids both production and marketing.

4. Preventing Excess Stock and Stock-Outs

Maintaining balanced inventory levels is a challenging task for inventory managers. Sometimes a simple mistake leads to a proper loss for your company. Neglecting regular checks can quickly lead to excess or insufficient stock. 

Fortunately, inventory management software can prevent these issues, keeping the supply chain stable. For instance, re-order points can be set within the system to automatically purchase more of a popular product when levels reach a specified threshold.

If you’re unsure how to set up a re-order point, many inventory management systems use your company’s data to calculate them for you.

5. Better Customer Service

Happy customers lead to good reviews and repeat business. With an inventory management system, you can quickly and accurately fulfill orders, building a trusted name in the marketplace.

Increased accuracy ensures the right product is delivered to the right place, and automation speeds up the process. Some systems offer real-time updates, notifying customers when their shipment leaves the warehouse and when to expect its arrival. This transparency reduces customer anxiety and saves you from answering numerous queries.

Implementing an inventory management solution can significantly enhance customer satisfaction and loyalty.

6. Automate Time-Consuming Manual Tasks

Businesses always seek ways to save time and reduce labour costs. Inventory management systems excel in this area.

Many top systems include barcode scanning and agile inventory processing features, eliminating labour-intensive tasks. With this inventory software, employees or robotics can increase their efficiency.

By automating more tasks, your employees can focus on higher-value activities, such as strategic planning for the future.

7. Coordinating Multiple Locations

Larger businesses have been early adopters of inventory tracking and ERP software because these systems offer significant economies of scale. Inventory management software can enable a business with multiple warehouses to consolidate operations. These systems also help companies manage multiple locations effectively. 

Example :

If a company has ten or more warehouses, inventory tracking software can provide comprehensive analysis for long-term decision-making.

As a result, an inventory management system can be incredibly beneficial. The key is to find a solution tailored to your company’s specific needs. Once you do, you'll quickly realize the substantial benefits of inventory tracking software.

Top Inventory Management Software Features

Real-Time Inventory Tracking

Your inventory is constantly changing. Items moving in and out rapidly. A feature provides detailed insights into which products are booked, inbound, returned, or currently on the shelf at any location. This enables efficient redirecting of available stock to meet customer orders.

Live and Summarized Stock Value

Tracking stock quantity is essential. However, knowing the exact value of your inventory is just as important for assessing your business’s financial health. An ideal inventory management system offers real-time summaries of stock value by location. It will help your finance team balance revenue and expenses effectively.

Stock Alerts and Automated Purchase Orders

Managing inventory across multiple sales channels can be challenging. Automated ordering features help by tracking stock levels and issuing purchase orders when inventory falls below a set threshold. This prevents stockouts and ensures timely replenishment based on historical data and current needs.

Reordering Based on Insights

Manual data entry is time-consuming. Advanced inventory systems automatically update databases in real time, providing a comprehensive view of your inventory. This helps in making informed purchasing decisions and optimizing stock levels.

Unlimited SKUs

A system with no SKU restrictions allows you to expand your product range freely and adapt to spontaneous changes. It supports business growth without constraints.

Inventory Reporting management 

Generating and analyzing reports should be effortless. Automated reports, both in figures and visual formats, help you track large-scale inventory efficiently. Total reporting management provides insights necessary for strategic planning and operational efficiency.

Component-Wise Tracking for Electronics

Retailers dealing with electronic products often need to track individual components and assembled items. The BOM feature facilitates this, ensuring that every part is accounted for and easily accessible.

Batch Tracking system 

For businesses dealing with perishable goods, batch tracking is essential. It allows you to monitor expiration dates and manage stock rotation. It's guaranteed that products are sold before they expire and minimizing waste.

Serial Number Tracking for Electronics

Tracking serial numbers is important for managing electronic products and their components. An advanced inventory system provides detailed tracking, helping you manage replacements and services efficiently.

Mobile Functionalities

Mobile access for inventory management tasks improves efficiency. Your warehouse team can update inventory status, and pick and dispatch items using smartphones. Indeed it's reducing the need for constant admin coordination.

Multi-Channel Integration

Ensure your inventory solution integrates seamlessly with major eCommerce platforms like Amazon and Shopify. Real-time data synchronization across all sales channels helps maintain accurate inventory levels.

Advanced Security 

Inventory management systems must have powerful encryption and security protocols. Not only protects transactions but also delivers information from fraud. Verify that your chosen software adheres to the latest security standards.

Third-Party Integration

Compatibility with existing systems is vital. An open API inventory solution integrates smoothly with ERP and accounting software.

Centralized Database

A centralized database helps manage inventory across multiple locations, reducing inconsistencies and preventing losses. It enables you to create a detailed hierarchy of warehouses and storage locations, ensuring accurate tracking.

Automation of Manual Tasks

Automating stock-taking and tracking processes using barcode scanning and other technologies saves time and reduces errors. This modernization is crucial for staying competitive and efficient.

Optimized Reorder Levels

Balancing inventory levels is critical. Advanced systems use historical data and predictive analytics to set optimal reorder levels. As a result, preventing overstocking and stockouts, and reducing maintenance costs.

Efficient Storage Management

Storage management is an important feature of any organization . By monitoring sales trends, an inventory system helps identify when to reduce storage space. Not only saving on warehousing costs but also optimizing inventory levels based on demand.

Demand Forecasting

Let's introduce the demand forecasting features. This feature helps to use historical sales data to predict future needs. This helps businesses plan orders and stock levels accurately.

Barcode Scanning

Barcode scanning simplifies inventory tracking, providing quick updates and detailed control over stock data. This feature is especially beneficial for online retailers.

A good inventory management system improves customer satisfaction by ensuring accurate and timely order fulfilment. Real-time updates and transparency build trust and loyalty.

Inventory management software cost-lets calculate 

After investigating over 80 inventory management software providers listed on Capterra and other platforms, excluding those with fewer than 20 reviews, we determined the average cost of these systems.

Our findings indicate that the typical monthly cost for inventory management software is around $175 per user. Adding a customer support package usually costs an extra $80 per month. As a result, bringing the total to approximately $255 per user each month.

Additionally, there may be a one-time implementation fee, ranging from $789 to over $10,000, depending on various consultancy and customization needs.

Sometimes inventory management software offers a more budget-friendly option compared to these averages. Visit our pricing page to explore the subscription plans available with Unleashed.

There are some of the Factors that can influence the cost of inventory management software

• Whether or not you need an accounting add-on
• Optional pay-to-use modules not included in the base software package
• The number of users you will need
• The currency you can pay in
• The average volume of inventory 
• The average number of orders received
• Level and sophistication of reporting requirements.
• Third-party API or hardware integrations.
• Level of customer support required.
• Business readiness costs

Endnote

We've explored what is inventory software and what every solid inventory solution should possess. While many ERP and business software packages offer additional functionalities, they often come with a hefty price tag.

For online sellers in the startup to mid-range phase, the inventory management software features discussed in this blog are essential.