Inventory Management Software

Inventory management is important to every business, especially so for manufacturers and resellers. Managing materials and goods so that they utilize the fewest of an enterprise’s resources can give the company a competitive edge in an ever-increasingly tight market. Inventory management software lets a business manage inventory along all points in the supply chain, from receiving to the point of sale.

Functions of Inventory Management Software

Inventory management is a highly complex process that involves many variables. A business must coordinate receiving and stowing with outbound shipments, always ensuring there is ample space for new stock and that all items are accounted for. The flow of goods in and out of a business must be monitored closely to identify market trends and to create strategic plans for the enterprise’s future.

Flow of Goods

Not only must a business keep track of the goods coming in and going out, it must also track the costs to procure, store, sell and ship these goods. The company must also account for damage, loss, and labor costs associated with handling the merchandise. Inventory management software allows an enterprise to track all of these things, while detailing the precise location of goods to allow for fast and efficient order picking.



The business can determine the appropriate ordering times for inventory replenishment with inventory management software. Software allows for controls to be set that determine stock levels for reorder, ensuring the business always have enough product to meet demand. The software even helps determine what an item’s reorder point should be by taking in factors like lead time, seasonal changes and the time between receiving and stowing. These settings can easily be altered when needed.


Inventory management software also lets a company monitor and track multiple locations or the business as a whole. The business can review complete histories of lot numbers so that products can be tracked throughout the life cycle. This feature is especially helpful for resellers working with perishable goods because it allows the business to set expiration dates for the products. Accounting is made easier with such software as well. It allows the company to track specific cost for each lot. The lot can be tracked all the way to the point of sale.

Additional Functionality

Some software packages carry other functions that allow the company to extend operations beyond brick and mortar, addition E-commerce capabilities. Further enhancements allow the business to consolidate shipments, and process back orders, returns and substitutions.

Choosing the Right Software

Selecting the right software will depend on the scrutiny the company places on core business functions. It is easy to become distracted by the bonus features some software offers. A business must determine the core functions needed and focus on acquiring software that fills those needs most efficiently. It is not safe to assume a given software package has the basic functionality all businesses should have. Always scrutinize the list of functions the software vendor provides and ask questions to fully understand the depth of capability for each function.

Tailoring to Business Needs

Not all software is created alike and most packages were designed with specific businesses in mind and then later marketed to a wider audience. For this reason, it is vital that a company seek software that fits the core business model. Manufacturers will seek to find software design specifically for that type of business. For such an enterprise, a software package that is designed around accounting and has simply added on a feature for manufacturing will not fit the bill. Not only must the software be designed for manufacturers, it must also fit well with the particular business model. For instance, make-to-stock manufacturers will not be as well served with software designed for make-to-order manufacturers.

Distributors will want software that functions well in order processing, inventory management and transportation logistics. In most cases, software packages are designed for one of these elements and then altered to include the other two. By finding out who a software vendor’s customers are, a company can better understand the types of business the software is good for and make a more informed decision before purchasing.

It is rare that the software salesman is the same person that answers customer questions, solves problems and coordinates implementation. The salesman’s main goal is to get a business to buy his product. For this reason, the purchaser must ask detailed questions and never accept an answer that is not crystal clear. Ask questions about each aspect of the software’s functionality and be prepared to settle for some functions to be limited. Focus on meeting the company’s core business functions and negotiate other functionality modifications with the seller.

Customer Service

No company should purchase a software package without first speaking to other clients who use the software. While contacts can be made through the salesman, it is obvious that the salesman will only point to positive reviews. A business can research forums online to connect with other users of a software and collect user experiences before making a purchase decision. The research should focus on customer satisfaction, responsiveness of the help desk and ease of use.


While core functions are the most important aspects to software, usability is also important to minimize training costs for staff. Pay special attention to tasks that will be commonly performed in the organization. Consider how many clicks, how many screens and how much time is involved in performing a specific task.

The old adage, “garbage in, garbage out” rings especially true when it comes to procuring the right software. The successful implementation of a given software package depends greatly on the effort spent in investigating all options available and selecting the most appropriate package.

Challenges of Implementation

No matter which software package a business chooses, it is important to understand that implementation is an even greater challenge than choosing the right software. Implementation always takes more time, money and energy than anticipated. By making a good choice in selecting software, a firm minimizes the challenges associated with implementation.