What is inventory management software?

Published on 16/03/2022 by Ojasvini

This article will talk about inventory management software, how it works, and the process involved. We will also discuss its benefits for businesses.

Inventory management software can help businesses track, manage, and store products to meet customer demands

According to a report by the Harvard Business Review, the COVID-19 pandemic has uncovered flaws in production processes and supply chains globally. This study could indicate the need for businesses to have efficient and reliable supply chain and inventory management for smooth business operations. In such a case, appropriate inventory management software can potentially help small to midsize enterprises (SMEs) to make their overall network and product management more resilient. 

What is inventory management?

Inventory management is a process that includes controlling and tracking your organisation’s inventory as it is purchased, manufactured, used, stored, and distributed. The system is comprised of different steps starting from when you purchase the raw materials till you sell the product to the customer. This process is done to make sure that you have the appropriate quantity of products needed and enough storage space. 

How does inventory management software work?

Inventory management software are systems that help businesses track, manage, organise, and store products to meet customers’ demands efficiently. Such tools help streamline how companies source, store, and distribute items to make them available to be purchased by customers. With the help of these tools, businesses can ensure that ample inventory is maintained to avoid potential interruptions in supply chain and daily operations. 

For instance, suppose customer X visits a department store and notices that the products are organised in various categories, stored on different shelves, and labelled with prices that might change. Here, inventory management software could help determine the exact location of the products and offer insights to store owners about the demand and supply for every product. The tool —in short— keeps track of the flow of a product from the first instance it is delivered to the supplier, through the complete production process until it reaches the customer. 

The inventory management process might include all the required steps from tracking and managing items moving from suppliers to storage spaces and finally on to customers. The general steps involved in the process are as follows:

Steps involved in inventory management
Common steps involved in inventory management include purchasing, producing, storing, selling, and reporting.

What are the benefits of inventory management software?

As per a report by Global Market Insights, the market size of inventory management software was US$3 billion in 2019 and is predicted to increase by 5% from 2020 to 2026. This study might indicate how important it is for SMEs to organise and streamline their inventory management process. Below we have given some benefits of inventory management systems. 

Helps in tracking inventory

Inventory management software might help businesses keep track of their inventory in real-time —for instance, which particular product is located where and what is the demand for that product and so on until it finally reaches the customer. This feature might help reduce the possibility of human errors such as an error in maintaining a spreadsheet for inventory tracking, which could potentially lead to financial loss. 

Gives a centralised view of all transactions

Some inventory management systems may offer a centralised dashboard via which you can view all the transaction updates and check the order status. With such a dashboard, you can also look up the serial or batch number of a product. In addition to this, you can track a product’s movements and even check the expiration date of a product.

Forecasts potential future demand for better service

The right inventory management software might help analyse the potential future demands of customers via a centralised dashboard. The dashboard could help businesses understand which particular product might have the maximum demand by tracking purchase patterns, thereby assisting them in keeping sought-after products in stock. 

Also, businesses can compare their performance using such platforms at the beginning and end of a particular time period. You could also import and export analysis reports in formats such as .pdf and .xlsx using some inventory management software. 

Generates analytics reports to calculate profit or loss

Some such software might also help generate a consolidated analytical report to calculate any profit or loss by giving the exact number of orders and the associated expenses for purchasing raw materials to complete the production process. With the help of such reports, businesses can analyse which product is the most profitable and in-demand and which particular product is the least profitable. This data can then be used to make informed decisions while purchasing raw materials and manufacturing products.

What’s the key takeaway?

There might be many different options available for SMEs when managing inventory. However, selecting the appropriate inventory management software can help create an efficient and more streamlined process for customer satisfaction and business operations. With the help of an effective system, you could potentially increase profits, analyse sales patterns, predict future product requirements, and enhance customer loyalty.

Looking for inventory management software? Take a look at our catalogue!

This article may refer to products, programs or services that are not available in your country, or that may be restricted under the laws or regulations of your country. We suggest that you consult the software provider directly for information regarding product availability and compliance with local laws.

About the author

Content Analyst for Australia. Focusing on insights about software technolgies critical to SMEs. Insipred by growing tech trends and how these help SMEs to grow.

Content Analyst for Australia. Focusing on insights about software technolgies critical to SMEs. Insipred by growing tech trends and how these help SMEs to grow.