Hosted Inventory Management

Inventory Management has always been a big concern for businesses. Inventory plays an important role in the supply chain. A good supply chain keeps the transaction of products from warehouse to customer running smoothly. In today’s world economy, companies are paying more attention to the bottom line as they pursue avenues to cut costs. At the same time, companies must compete with each other in order to meet ever increasing demands. A solution to this is hosted inventory management.

What Is Hosted Inventory Management?

The main idea behind hosted inventory management is that instead of a company’s inventory being managed within the company’s own network and maintained by the company itself, a separate network host outside the company manages the inventory. The inventory is often accessible through the web on a secure network.

With hosted inventory management, a company or institution purchases software packages from an inventory management provider. This software, while originally referred to as “hosted” software, has also been called “on-demand” software or even more recently as SAAS (Software As A Service).

Why is Hosted Inventory Management Important?


It takes time, money, and specialized personnel to manage a company’s inventory. This can add to payroll and risk costs as well as keeping employees from performing their original job requirements and duties.

In today’s business world, inventory management can help control profit margins. Having software can help a business reduce waste and prevent inventory from stockpiling or bottlenecking.

In order to implement a hosted inventory management system, a business must pay a licensing fee for the software. It is much cheaper than spending the money on your own system but care must be taken. Many hosted inventory management systems are either outdated or too complicated for general employees to maintain.

Advantages of Hosted Inventory Management

While some critics may claim there are disadvantages to hosted inventory management (such as inaccurate systems that are not properly updated) there are many advantages that have proven beneficial to successful businesses.

One of the main advantages to a hosted inventory management system is lower cost which translates to a higher cash-flow. It is decidedly cheaper to buy a hosted software package versus traditional software. No special equipment or hardware is needed such as a network. All that users of hosted software need are reliable PCs which most companies already provide to their employees. The software and set-up, along with the license fees, are cheaper than traditional implementation. Also, you don’t have to worry about additional costs for upgrades or maintenance like you do with traditional inventory systems.

Another benefit of hosted inventory management is that it takes less time to install and can be up and running a lot quicker than traditional software. You don’t have to mess with setting up internal servers, network security, and other hardware. This fast deployment of the system means businesses and institutions can begin using their management system sooner. It also means companies spend less time in training employees.

Hosted inventory systems are generally are less distracting because the software is doing most of the work. This leaves employees free to pursue other tasks.

Hosted inventory management is less risky that traditional software. When a company begins a project, the longer it takes to get it off the ground, the more likely that something may occur to derail the project, including the project’s team members losing motivation and momentum. The longer a project takes, the more money comes out of the company’s pocket. With hosted software, there is usually a faster time period before a project is ready for completion. The less time spent on a project, the more money a company saves.

Traditional inventory management systems require a business to manage relations and communications with multiple vendors and suppliers. With hosted inventory management, you just deal with one source which makes reorders faster and much easier. As a company striving to be successful, you have more time to focus on your company’s goals.

How Does Hosted Inventory Management Work?

The beauty of hosted inventory management is that it does all the work for you. You still have to sit down and collect data but you no longer have to juggle every aspect of inventory single-handedly. Hosted inventory management manages all aspects such as:

  1. Purchasing of products and materials
  2. Shipping of all items to and from the company’s distribution center.
  3. Setting up bar codes on all items.
  4. Management of work orders.
  5. Inventory maintenance such as keeping up with quantities and item locations.
  6. Management of a company’s assets
  7. Logging reports and sending them to appropriate departments.
  8. Processing of all orders through the correct channels.
  9. Able to keep accurate information on multiple distribution centers and warehouses.
  10. Keeping accurate accounting records of all inventories as they are sold.

Buy Inventory Management Software or Build Your Own?

There is a question on whether a company should invest in hosted inventory management, or set up its own inventory system. It depends entirely on the company’s needs, assets, and how much available capital they have on hand.

Many companies that are just starting out or still growing would probably be better off implementing a hosted system. The cost is less and the company will spend less time getting it set up. This frees the company up to pursue the nature of its business without slowing down.

If a company has plenty of capital to invest in their own system and has the time to install the hardware without impending the flow of business, then these companies might be better off setting up their own secure inventory network.