When you run a business selling physical products, inventory management is essential for the health and development of your store. The aim of any inventory management system is to make you aware, at any given time, of anything going on in your production process: what items are available and what are out of stock, what your best selling items are, your order fulfilment status, and much more.
For some businesses, inventory management is even more challenging; for example, manufacturing inventory management is particularly complicated because there’s more to take into account: raw materials, tools, machines, production planning and scheduling processes, resource management, and more.
Luckily, due to technological advancements, today we have inventory management software that automatizes most of the work and provides clear, up-to-date, and live information in user-friendly dashboards. There are many tools like this available on the market, either cloud-based or on-premises, that you can comfortably purchase with a credit or debit card, via PayPal, or other popular payment gateways.
But sometimes, having too many options can be overwhelming, frustrating, and confusing. With so many alternatives available, which inventory management tool is best suited for your business’ particular needs?
In this article, we don’t want to pick the software for you or recommend the most trending one. Instead, we’d like to discuss the most important features of inventory management software. Once you’ve checked that a tool is provided with these features, you’ll be able to make an informed decision, and select the one that you like most, that fits your budget and specific needs.
Without further delay, let’s dig into the top 5 functionalities of inventory management software for small and medium-sized businesses.
- Live inventory
Make sure that the software of your choice is provided with a feature that allows you to be aware of what is and what is not available in your physical stores, e-commerce website, and warehouses, at any given time. This is the primary function of any inventory management software: if it doesn’t have it, it can’t be called an inventory management tool.
The update of all inventory transactions should be – of course – automated. This is usually done through the use of barcodes and synchronizing the inventory management tool with the sales management software so that, when an item is sold, the inventory tool automatically knows that there is one less item available in your store or warehouse.
An additional feature to this could be one that allows you to monitor inventory through different warehouses. This is not essential if you have a very small business; but if you keep your stock in more than one location, you need this additional feature, too.
- Sync with your accounting software
If you’re running any type of business you know what accounting software is: a tool that keeps count of all your expenses and incomes of your business. It’s important that your accounting software is synced with your inventory management tool.
When the two are synced and work seamlessly together, buying items, furnishings, material, tools, or anything you need to keep your business going, is automatically updated, and you’re less exposed to mistakes.
- Multi-channel order management
One of the reasons why you need inventory management software is that it helps you keep track of the availability of products and materials. When anything becomes unavailable, then you need to order it.
It’s not only convenient, but also time and cost saving if your inventory management tool also offers you the possibility of fulfilling your orders through multiple channels. For example, you may have a physical store and an online shop; perhaps you also sell through marketplaces, such as Amazon, eBay, or Etsy. In this case, you want inventory management software that is capable of keeping track of sales from all channels.
- Traceability through barcodes
Your inventory management software can be efficient only if everything within your business, from items to materials, is traceable.
Expenses and incomes are traceable through accounting software. That’s why it is important, as we’ve mentioned, that you can sync the two tools together. Items can be traceable in various ways, one of the most efficient being through the use of barcodes. Therefore, make sure the inventory management tool of your choice features barcode generation and reading.
- Accurate costing
We’ve mentioned more than once how important it is to keep track of your income and expenses when you run a business. Part of keeping track of expenses is being aware of the costs of items and materials. This information is crucial when you need – for example – to calculate the cost of goods sold.
Make sure that your inventory management tool allows you to track costs accurately. The costs you need to track aren’t only the ones you pay for purchasing items or materials, but also – for example – manufacturing costs.