Inventory Management Guide

Chapter 6. What Is Inventory Management Software?

Inventory management software is where you’ll handle much of your operations. Chapter 6 of our inventory management guide explains all.

Welcome to Chapter 6 of Sellercloud’s inventory management guide. In this chapter, we’ll explain all there is to know about inventory management software.

We will also discuss the different types of inventory management software based on their purpose and function and how they are implemented.

This chapter is vital because software is a major part of inventory management. You will likely spend a great deal of time working on such software.

Confused? Head back to the inventory management guide homepage.

What Is Inventory Management Software?

Just as we did in the previous chapter, let’s quickly run through the difference between inventory management software, inventory management systems, inventory control systems, and inventory management techniques, just to be crystal clear.

The primary two phrases you might confuse are ‘inventory management software’ and ‘inventory management system.’

The difference is that inventory management software is the computer software used to manage inventory, while an inventory management system can include software and other tools used to manage inventory.

Meanwhile, inventory control systems are processes or tools used to manage and track inventory; inventory management techniques are methods you can employ to manage inventory.

The inventory management software market is enormous. Future Market Insights states, “The global inventory management software market is estimated to be valued at around US$ 1,737.0 [million] in 2022.” There’s no shortage of options.

Also, remember that inventory management software can only work in a perpetual inventory management system and usually works alongside the hardware.

  • Head back to Chapter 5 if you need a refresher on the relationship between inventory management hardware and software.
  • Chapter 4, if you need a reminder on inventory management control systems.
  • And Chapter 3 if you’re not sure about inventory management techniques.

What Are the Different Types of Inventory Management Software?

There are quite a few types of inventory management software, and many can overlap in terms of functionality. 

Definitions are not necessarily uniform, and different companies may produce software for various reasons to capture more than one use case.

Some inventory management software is purposely simpler. Elsewhere, some are more advanced. The type of inventory management software you use depends on your business needs and your budget.

According to Business News Daily, inventory management software can range from $100 to $3,000 monthly. So, it’s essential to understand what you’re paying for.

Some software only focuses on a particular part of inventory management. For example:

  • Barcode scanning software—As explained in the previous chapter, this software focuses on scanning barcodes.
  • Radio Frequency Identification (RFID)—Used to track and manage inventory items through radio signals.
  • Asset tracking software—Used specifically to track products.

More sophisticated software will include all these features, while simpler software might not. Some other features you might expect from more advanced inventory management software include:

  • Real-time reporting—This provides reports exactly when you want them based on current data.
  • Warehouse management features—Control and monitor everything that happens in your warehouse.
  • Customization—Top-shelf inventory management software should be flexible enough to fulfill any business’s needs.
  • Customer relationship management tools (CRM)—Communicating with customers through the software is an added benefit.
  • Listing management—You should be able to make changes to listings if there are unexpected changes easily.
  • Optimized ordering process—Helps with picking, packing, and delivery workflows.
  • Product cycle counting—Helps with checking physical inventory matches what has been recorded.
  • Forecasting features—Based on historical data, they can forecast what amount of inventory you need to order.
  • Integrations—It can be hugely beneficial to plug in all the services your company requires.
  • Omnichannel selling—Allows you to manage your inventory across multiple platforms and marketplaces.
  • Rule engine—Create custom rules to automatically update your inventory when a stock reaches a certain level.
  • Shipping software or integrations—Consider if the software that you’ll be using has a shipping software module, or you will need to pay more for an additional service.
  • Accounting—It helps you keep track of all your finances.

These are all features you can expect from a top platform like Sellercloud, for example.

Now let’s look at the two main types of inventory management software—on-premise and cloud.

What Is On-premises Inventory Management Software?

On-premise inventory management software is exactly what it sounds like—it’s grounded only at your site(s). Because of this, it requires a server to function.

This kind of software appeals to some but not all companies. You can deploy to multiple warehouses, though it might be more effort.

However, on-premises inventory management software can be expensive to invest in and maintain. The server also takes up space that could be utilized for other purposes.

Furthermore, it can be more difficult to deploy, and you may need to hire someone highly skilled to maintain it.

What Is Cloud Inventory Management Software?

With cloud inventory management software, everything is handled through the cloud, and it is becoming more of the standard in warehouse management.

Cloud inventory management software can provide access to real-time data better than on-premises software. It can also offer flexibility for businesses with multiple locations and remote teams.

A benefit of these systems is that multiple devices can use this system simultaneously. As explained in Chapter 5, pickers can use mobile devices to collect orders throughout the warehouse.

With a cloud inventory management system, all this information can be updated in real-time as these devices pick and move around the warehouse.

An additional benefit is that you don’t need a dedicated server which can be expensive and take up space.

However, having a strong working internet connection in your warehouse is ever more important to ensure these devices can communicate with the cloud.

Cloud-based inventory management software can also connect different parts of the inventory management process, including shipping, accounting, and your listings across marketplaces. This can make your entire operations more efficient.

What Is ERP Inventory Management Software?

ERP stands for ‘Enterprise Resource Planning.’ It is more reserved for manufacturing, not so much for e-commerce sellers, but they are still worth knowing about.

ERP systems integrate multiple business processes, including inventory management, into a centralized platform. They can provide a comprehensive view of an entire organization.

The difference between ERP software and inventory management software is that ERP is a suite of applications for different business functions. In contrast, inventory management software is a specialized tool for inventory-related tasks and order fulfillment.

What Is an Example of Inventory Management Software: Sellercloud

As we’ve mentioned before, as your company grows and your operations get more complex, advanced inventory management software becomes a necessity.

When shopping around for inventory management software, explore various options before settling down and deciding. You also should be acutely aware of your business needs.

Ultimately, it should make your inventory management tasks more efficient and reduce the workload. Again, let’s use Sellercloud as an example.

The best inventory management software should:

Fast to Deploy and Easy to Integrate

Fast deployment is crucial because the longer it takes to deploy new inventory management software, the more orders you will be missing as you make the change which can lose your company money and turn away customers.

Regarding integration, it should ideally be a painless experience requiring little, if any, changes on behalf of the merchant and offering multiple ways to integrate with the software.

Furthermore, the software should integrate with whatever services you are already using and easily integrate new ones as they come along.

Again, this reduces the changes your company will have to make and keeps your operations flexible to new technologies and services.

Sellercloud has a dedicated team to help companies integrate their software, is easy to deploy, and offers customization and a wealth of integrations.

Improve Efficiency and Coordination

Improving efficiency is the number one feature companies should look for in inventory management software.

Before anything else, you should aim to adopt inventory management software from a company that can clearly demonstrate how it can improve your inventory operation’s efficiency.

Efficiency can be achieved in various ways, with automating tasks being one of the most useful. 

Furthermore, operational efficiency can be realized with advanced reporting features, which can help companies make data-informed decisions and ultimately boost efficiency.

With everyone on board with the same inventory management software, it can improve coordination and communication between warehouse units.

People will have visibility into each other’s operations and better coordinate their work. This also relates back to efficiency as this can all be monitored, and areas of improvement can be identified.

Sellercloud is centralized so that you can see the entirety of your operations from one place, and it offers various ways to monitor inventory management operations.

More importantly, you can request a demo to learn how it works.

Reduce Hardware (and Other) Expenses

Reducing the costs associated with your inventory management operations is important because it improves your profitability and safeguards you from financial risk during tough economic times when sales may be lower.

As mentioned above, cloud-based inventory management software is a top way of reducing these costs because it removes the need for a physical self-hosted server, which is a highly expensive investment.

On top of that, cloud-based inventory management software removes the need to hire IT professionals, which can also be costly.

With a cloud-based service, the company will maintain and update the software and keep it secure.

Sellercloud is entirely cloud-based, so investing in servers and IT professionals is unnecessary.

Provide Real-Time Inventory Tracking

Real-time inventory tracking is an increasingly important and common feature offered by inventory management software providers.

Any inventory management software is not worth your time without real-time inventory tracking.

It helps you keep on top of your operations when you sell on multiple platforms, answer clients’ questions and deal with inventory issues, just to name a few benefits.

More importantly, when strictly discussing inventory management software, inventory tracking features help track how your inventory moves through the warehouse.

This can help inventory managers work towards improvements in the warehouse, again improving efficiency.

Sellercloud’s Skustack can provide this tracking information. (More on inventory tracking in Chapter 7.)

How Is Inventory Management Software Implemented?

Before you even consider implementing inventory management software, you must carefully consider your company’s needs and the costs involved and ensure that you have all the correct infrastructure and hardware ready (and that it integrates with what you currently have).

Here’s a quick checklist:

  • You should also have researched the reputation and track record of the software vendor. Stick to a reputable vendor with a history of successful implementations and excellent customer support.
  • Evaluated the customization options to ensure they align with your warehouse needs. Different warehouses may have unique requirements, so the software should be flexible enough to adapt.
  • Test the software if possible. This enables you to identify potential issues and make necessary adjustments before a rollout.

If you already have inventory management software, it is wise to continue using it while the new software is installed so you can continue to manage your orders.

When the new software is finally installed, all you need to do is turn off the old software and start using the new software.

With the new system up and running, you must set up devices to ensure they are all connected to the new system.

Finally, customize your settings to ensure they are optimized for your warehouse.

Once implementation is complete and tested, you must train your employees to use it. Be prepared for many questions and a few hiccups at the beginning.

You should also be open to reviewing how well the new inventory management software is working for your team and make any required changes based on their feedback.

Key Points From Chapter 6

Remember these key points about inventory management software.

  • Inventory management software is the software used to manage inventory in a warehouse. It can come in many shapes and sizes and include various features that businesses may desire.
  • Cloud-based inventory management software is standard in many modern warehouses today, though some still use on-premises inventory management software.
  • ERP stands for Enterprise Resource Planning—it is more reserved for manufacturing and less for inventory management, though it may include inventory management features.
  • Sellercloud is an example of inventory management software that provides a range of advanced features covering the most sophisticated use cases.
  • Several steps are involved in implementing inventory management software, but before you make the leap, ensure that you have demoed the software, evaluated its customizations, and checked its reputation.

In Chapter 7, we’ll dive into inventory management tracking.

Chapter 5. What Are Inventory Management Systems?
Chapter 7. What Is Inventory Management Tracking?