Inventory management software can help to boost the productivity of all business sizes across a range of industries. Use this guide to help you break down how inventory management works, and compare products side-by-side.
What is inventory management software?
Inventory management software can help businesses track and manage items along various stages of their supply chain. It can support multiple sales channels and warehouse management operations, helping to ease the processing of assets – ranging from raw materials to finished products – across a company's sites. It can also be used to simplify the accounting process.
This type of software helps to synchronise a host of regular inventory management functions. These include:
- Stock level management
- Inventory categorisation
- Sales and purchase order tracking
- Barcode scanning
- Automatic reorder point planning
The functionality you'll need with inventory management software will depend on your circumstances, including what you currently get from your existing Enterprise resource planning (ERP), retail or warehouse management systems.
Why would I use inventory management software for my business?
Quality inventory management software will go far beyond what's offered by a more traditional method of inventory tracking, such as an Excel-based system that needs to be updated at a set time. For example, after a physical stock count.
Inventory management software allows for integration with point-of-sale (POS) systems, meaning stock levels and sales are updated in an ongoing way and in real-time; this can be great news for businesses who want to maintain permanent inventory data and stock levels.
The software can record changes in a sales revenue account each time your business buys inventory or makes a sale. Additionally, E-commerce businesses can streamline their inventory across their online platforms like Amazon, PayPal, etc.
What to look for when comparing inventory management
- Business size. If you run a small company then you may want a simple choice that pairs up with your current accounting and POS system. Meanwhile, large businesses will need to think about how the software will allow for inventory tracking alongside their ERP and wider supply chain system.
- Sales tracking and order management. Do you need advanced inventory features that can automatically update inventory quantities and track product sales and wholesale purchases? Some systems can be set up to automatically re-order stock when it falls below a certain number. Essentially, you'll want to ask yourself how you'd like to track your goods' end-to-end journey with ease; some software offers lot traceability. This meaning you can utilise lot and serial numbers to track products as they pass from raw materials all the way through to the shop floor.
- Price. Many factors influence the price of this type of software. These include the number of user accounts you want, how many channels of inventory you'll need and the number of orders you process. You can expect to pay a monthly fee for cloud-based software, and one-off charges for on-premise platforms.
- Mobile functionality. Can your inventory management software be managed on mobile and via an app, or only on a PC?
- Hosting. How will you manage the software? Will it be hosted online or at your business' premises?
Compare inventory management software in Australia
Pros and cons of inventory management software
- Efficiency gains – for example, by synchronising product levels across many locations and sales channels (both online and offline).
- Less manual processes usually mean you'll save on your payroll
- Great for companies who need stock levels to be updated fast
- Plans can be expensive
Ultimately, the right inventory management software for you depends on the size of your business, how it operates and the way it makes money. Given how fundamental inventory management systems are for organisations, taking some time to compare software from a range of different providers could reap rewards in the long run.
Frequently asked questions
Is free inventory management software worth thinking about?
That's really up to you to decide. Inventory management isn't usually cheap - while many providers offer free trials, once that ends you can expect to pay anything from $10 to hundreds of dollars per month. But the productivity gains you can unlock from a premium plan could well outweigh those of free software.
What's the difference between ERP and CRM?
ERP offers a comprehensive solution that combines both front- and back-office processes. Meanwhile, CRM deals with other business aspects such as sales, marketing and customer relationships.