What Does an Inventory Management System Do?

An inventory management system records and tracks stock as inventory is received, stored, transferred, picked and issued. The system can be used to monitor stock levels, inventory movements and warehouse locations.

Businesses with more than one warehouse or store can also use the inventory system to track and transfer stock between different locations.

Inventory Management System Software Features 

Inventory management software can integrate with accounting software, order processing and warehouse management systems so inventory and business transactions can be managed between the different systems. Depending on the software used, inventory management functions can include barcode tracking, batch tracking and lot tracking for inventory traceability. Other specific inventory management features include:

• Multi-Warehouse Inventory Transfers: Transfer and track inventory between warehouse, store or company locations.
• Order and Back Order Management: Record sales orders and manage items that are waiting for stock replenishment.
• eCommerce and EDI Integration: Connect inventory information with supported eCommerce or EDI systems.
• Serialized Inventory: Track individual inventory items using serial numbers where required.
• Units of Measurement: Manage inventory using the units of measurement required for the products.
• Kitting and Bill of Materials: Manage components and finished items where kitting or bill of materials functions are required.

Inventory Management and Accounting Software

Some accounting software includes inventory management functions for businesses that need to record accounting and stock transactions in the same system. Other businesses may require a separate inventory management system that integrates with their accounting software or ERP system.

The software required will depend on the number of products, warehouse locations, stock movements and inventory functions that the business needs to manage.

Inventory Management and Stock Control Tools

• Stock Replenishment: Set stock levels or replenishment points to identify when inventory needs to be reordered.
• FIFO and FEFO Stock Management: Manage stock movement based on the inventory method required by the business and products.
• Inventory Auditing and Stock Take: Compare physical stock with the inventory records in the system.
• ABC Inventory Analysis: Group inventory items according to their importance or value where this function is required.
• Inventory Forecasting: Review inventory information when planning future stock requirements.
• Drop Shipping: Manage orders that are fulfilled directly by a supplier where supported by the inventory system.
• Barcode Inventory Tracking: Use barcodes to identify and track inventory items and stock movements.

Benefits of Inventory Management Software

• Inventory management software can track stock across different sales channels such as walk-in sales, phone orders, email orders and eCommerce where the systems are connected. This helps the business review the quantity of stock available for sale.
• Inventory software can manage receiving, picking, packing and shipping based on the warehouse and shelf locations recorded in the system.
• Businesses with several warehouse or store locations can transfer and track inventory between locations from the same inventory management system.