Inventory Management Software Quick Summary
Inventory management software enables businesses with large volumes of physical products to keep track of those products through various stages along the supply chain. Features include product categorization, sales and purchase order tracking, electronic scanning and automatic ordering.
Retailers can typically use scaled-down systems focused on maintaining perpetual inventory, whereas businesses with complex supply chains often use the inventory management functionality in ERP systems.
Benefits of Inventory Management Software
While inventory can be tracked in Excel, spreadsheets only work for periodic inventory systems (i.e., inventory systems that are updated at intervals, say after stock takes). Inventory management software is necessary to enable a true perpetual inventory system, where inventory is updated continuously as sales are made and goods are received. Benefits include:
Greater inventory accuracy
Reduced reliance on stock takes
Competitive Advantages of Using Inventory Management Software
Inventory management software can offer a competitive edge for e-commerce retailers, logistics providers and businesses in other industries where margins can be razor-thin:
Better synchronization: E-commerce retailers can synchronize inventory across digital channels (e.g., eBay, Amazon, Shopify etc.), physical retailers can synchronize inventory across multiple stores and multi-channel retailers can synchronize e-commerce platforms with brick-and-mortar stores.
Greater efficiency: Inventory management systems can integrate with point-of-sale systems to update inventory in real time as sales are made.
Reliable tracking: Advanced inventory management in ERP systems enables end-to-end tracking of goods, from raw materials to retail shelf.
Business Sizes Using Inventory Management Software
Inventory management software is used by businesses of all sizes, across a variety of industries.
Our internal data shows that of a sample of 1,676 inventory management buyers who contacted us recently, most were small businesses, with 91 percent employing fewer than 100 people, and 75 percent generating less than $5 million annually.
Smaller businesses typically use a scaled-down inventory management system in conjunction with a point of sale system and an accounting system.
Larger businesses (and enterprise businesses) typically use the inventory management functionality of an ERP system, as these systems allow for inventory tracking across multiple links in the supply chain.
Software Related to Inventory Management
Inventory management functionality is included in a diverse group of software categories, such as:
Accounting software: Helps businesses automate their core accounting functions to more easily balance their books and provide proof of their financial standing. Systems typically include a centralized general ledger, accounts payable, accounts receivable, billing and invoicing and the ability to produce standardized reports.
Distribution ERP systems: These are required by a wide variety of businesses that operate in the middle of the supply chain between manufacturers and customers. Distribution software systems can feature a wide variety of functionality and features, including inventory management, warehouse management, customer management, order management and accounting.
Manufacturing ERP systems: Provides functionality to plan and execute projects from beginning to end, while automating materials planning, production tracking and scheduling and product lifecycle management.
Retail management systems: Many vendors combine point-of-sale systems with inventory management systems in a single platform. Retail ERP systems also include inventory management functionality.
Warehouse management systems: These systems are inventory control systems specifically designed for warehouse inventory that also offer software automation for crucial warehouse processes. Automating processes such as warehouse picking has been conclusively shown to be vastly more efficient than manual methods.