What is an Inventory Management Software?
Inventory Management Software helps in tracking the goods moving in and out of the company’s location(s). It practically covers everything, right from production, warehousing, shipping and retail, it allows to track every movement of the stock.
A well-designed and fully-functional inventory management software offers you with the up-to-date information on what is in stock, where it is located, how much of it can be sold, and till when will the stocks last. This information helps in ruling out the risk of overstocking and stock outs which can greatly hamper a company’s profitability and sales cycle.
Where businesses investing heavily to evolve your inventory management practices?
This statistic illustrates the findings of a 2017 global retail supply chain survey asking retailers and manufacturers about the most important investment management practices where retailers and manufacturers invested in 2016 and 2017. In 2017, 50 percent of the retailer and manufacturer respondents invested in warehouse management, up from just over 40 percent in the previous year.
Inventory Management System Workflow
Benefits of Using an Inventory Management Software
- Centralized Storage – If you have your goods stored at different locations, it gets difficult to manage orders and send the right products to the right customers. Having a well-designed warehouse tool can help you track the availability of different products and keep the customers informed about the status of their shipment.
- Well-organized Stock Operations – An inventory management software helps you to keep a complete track on all products in stock. This saves time and effort as you do not need to rush to warehouse to check the availability of any product, if its demand arises.
- Improves Sales Productivity – By keeping a complete track of all stocks, you can prevent losing your customers and reduce the risk of making common human reporting mistakes such as inaccurate counting of products. Additionally, with an inventory management system, you can easily meet the delivery timelines. The customers do not have to wait for ages for their shipment to arrive. They can easily track their goods and know the accurate day of product’s arrival.
- Adjusted Order Frequency – If shortage of stock is bad for your business, overstocking is worse. With a good inventory management system, you can track your actual stock supplies and re-order whenever necessary. This will eliminate the wastage of products which in turn leads to huge sums of money losses.
- Satisfied Customers – With accurate responses, timely delivery and tailored services, your customers are surely going to be happier. They will be able to track the status of their shipment and will not face the risk of a late notice of product unavailability.
- Accurate Planning and Forecasting – A good inventory management system allows you to plan for the future. You can keep a close check on the stock of all products and manage and re-order them accordingly. Also, most systems come with analytical tools that help in gauging trends, opportunities and enable you to measure your sales and productivity.
Common Features of Inventory Management System
- Reorder Point – Inventory management software offers you with a list of products along with their quantities that are required for stock. These points can be programmed into the software that alerts the manager about reordering the product. This prevents shortage of stocks as well as the issue of overstocking.
- Asset Tracking – This feature allows you to track the products present in the warehouse or store via its barcode, radio frequency identification, lot tracking number or serial number.
- Product Listing – This feature allows you to streamline and organize your inventory with the help of significant details such as cost, availability, SKUs, etc. It allows you to create alternatives for every item based on their elementary attributes and keep them in a systematized way.
- Barcode Scanning –This allows you to track the products via their barcodes. This simple exchange of electronic data can also be done through smartphones, eliminating the need to buy expensive scanning hardware.
- Reporting Tools – There are a myriad of reporting tools that help in developing inventory total reports, order history, and transaction reports. These tools allow you to develop a seamless workflow by learning about your products in stock, what all needs to be re-ordered, which products are profitable and much more.
Inventory Management Architecture
- Inventory Forecasting – This feature allows you to decide the right amount of stock in your company so that you are not overstocked or holding too little stock. Both the situations can be detrimental for your business and have a negative impact on your sales and productivity.
- Inventory Alerts – Inventory alerts can be created and sent to you via emails or SMS when the inventory levels fall below the thresholds set by you. This helps in acquiring an advance notice about goods restocking.
- Accounting Tools – Accounting tools such as cost layering, overheads allocation, measurements, disclosures, etc. help in deriving a precise stock valuation.
- Raw Material Tracking – This feature helps you in discerning if there is enough raw material for launching new jobs in the production process.
- Inventory Levels for Parts and Finished Products – This helps in keeping a track of finished goods available in the warehouse or store that can be instantly shipped to the customers. Also, it tracks the availability of parts, in case a customer orders for a customized product.
- Automatic Re-ordering – This feature allows you to automatically re-order the supplies based upon your re-order points. When the stock reaches its minimum level, automatic purchase orders are generated so that you remain on top of your inventory at all times.
- Integrations with ERP or Maintenance Software – You can integrate your inventory management software with ERP or any other maintenance software to help you save time by eradicating the need for re-entering data in separate programs.
- Multiple Location Support – Multiple warehouses and stores can be managed and tracked to keep a check on the total stock quantity available with a business.
- Shelf and Bin Tracking – This feature helps the inventory managers in knowing the exact location of a particular product present in the warehouse without any delay.
- Order picking support – This feature enables collecting all articles in a stated quantity prior to shipment in order to satisfy the customer’s order.
- Real-time Inventory Tracking – This feature enables you to perform real-time inventory tracking even between multiple warehouses and stores.
- Serial Number Tracking – Serial number tracking feature allows you to manage hundreds of thousands of serial numbers, which are permanently recorded into the system, from the time they are received till they the time they are issued out. This information especially helps in verifying a returned article from your computer.
- Expiration Date Tracking – Once the items enter your warehouse, you can assign expiry dates so that you can know the shelf life of these items.
- Item Images – This feature allows you to assign as many images to an item as you wish. Aldo, you can set one default image that will appear in the item manager tool for quick reference.
- Price/ Cost List – This feature enables you to set various price levels to the items, and later you can quote any level to the customers.
- Logistics – Third-party logistics features such as transport analytics and trackers bring an augmented level of transparency to the movement of goods and materials. The users as well as the warehouse managers can easily track the location and know the time of arrival.
You can also develop a mobile app for your inventory management software to help your managers and employees access the software while on the go. These apps offer ample flexibility and greatly augment business productivity as the managers can easily keep a track of the inventories from any place.
Types of Inventory Management Software
Well, there are several ways of classifying the different inventory management software. But most commonly, these software are classified on the basis of their use and intended purpose, along with the basic features included in them.
- Manually-managed Systems – As the name suggests, these are systems are manually managed where even the most complicated calculations are performed by the formulas entered by the users. This type of software is good for startups and even small-scale business enterprises that primarily deal with paper-based stock management. It allows tracking and ordering a restricted number of goods. Some of the versions come with a separate sales management module as well. However, since the calculations are all performed manually, there are always chances of error and inaccuracies in management.
- Barcode Scanning Systems – These software are more robust and efficient as they allow business enterprises to track and manage hundreds of items and extract data directly from the Point of Sale systems. Once the inventory reaches the warehouse, it is automatically updated, thus, the inventory managers have access to up-to-date data about the stocks. Barcode technology simplifies the movement of inventory from one warehouse to another, from the supplier to the warehouse and from the warehouse to the customer.
- Advanced Radio Frequency Systems – While barcode scanning technology has greatly increased the accuracy and efficacy of managing inventory, advanced radio frequency identification (RFID) has stepped up the game to an altogether new level. This system is especially meant for businesses where thousands of items move in and out every day. The technology behind RFID can be categorized into two types- active and passive technology.
Active technology makes use of fixed tag readers that helps in tracking the movement of an item throughout the warehouse. Every time an item passes a tag reader installed in the warehouse, its movement is recorded. This system is basically used for real-time tracking of the inventory. Passive technology, on the other hand, makes use of handheld tag readers to track the movement of the items. The range of active RFID technology is 300 feet and passive RFID technology is 40 feet, which makes moving the inventory across warehouses absolutely hassle-free.
Developing an Inventory Management Software
A well-designed inventory management software is an indispensable part of all manufacturing as well as retail business operations. Therefore, it is imperative to develop a reliable and sturdy software that efficiently controls and manages the inventory, ensuring no goods are lost due to theft or spoilage. Consequently, it is important to make sure that all the following development aspects are well taken care of-
- Requirement Gathering & Analysis
- Wireframing & Designing
- Development & Implementation
- Rigorous Testing
Cost of Developing an Inventory Management Software
The cost of an inventory management software usually depends upon the number and type of features and functionalities integrated into it. Therefore, you need to have a lucid understanding of your business requirements. You have to decide whether your business will benefit from an introductory based system or require a fully-functional inventory and accounting ERP software. Apprehending your needs will help you in setting up a realistic budget.
One important thing to note is that the cost of software development in India is comparatively cheaper as compared to other countries. Custom software development in India is a great option as business enterprises can get their desired software functionalities at cost effective prices.
Based on a thorough comparative research, here are some of the most popular areas along with their development costs per hour.
U.S. based developers: – $50 to $250 per hour
Eastern Europe based developers: – $30 to $150 per hour
India based developers: – $10 to $80 per hour
Importance of Choosing the Right Software Development Partner
Once you have the list of your desired features well in place, you need to get in touch with a suitable software development company that boasts substantial industry experience. Without the right partner, it becomes exceedingly difficult to get your hands on a robust, scalable and efficient inventory control system.
Additionally, with a less-reputed agency, you face the risk of data breaches that will expose your confidential business and consumer information. It is imperative to maintain complete data integrity so that there are no ruptures in the operational system. To eliminate the problem, you can opt for feature-based security that allows the administrator to create group privileges and assign the correct individuals to every group in a way that every user will only have access to the information he/she needs.
Inventory management software help companies track, organize and efficiently manage their goods and raw materials which are used to deliver products to customers successfully. Either as a specific part of Enterprise Resource Management (ERP), or as a standalone module, these software have become especially popular among companies for managing their warehousing needs. Therefore, if you still haven’t integrated this into your business operations, now is the time.