Inventory management software is a software system for tracking inventory levels, orders, sales, and deliveries. It can also be used in the manufacturing industry to create a work order, bill of materials, and other production-related documents. Companies use inventory management software to avoid product overstock and outages. It is a tool for organizing inventory data that before was generally stored in hard-copy form or in spreadsheets.
Inventory management software is made up of several key components working together to create a cohesive inventory of many organizations' systems.
These features include:
Should inventory reach a specific threshold, a company's inventory management system can be programmed to tell managers to reorder that product. This helps companies avoid running out of products or tying up too much capital in inventory.
When a product is in a warehouse or store, it can be tracked via its barcode and/or other tracking criteria, such as serial number, lot number or revision number. Systems. for Business, Encyclopedia of Business, 2nd ed. Nowadays, inventory management software often utilizes barcode, radio-frequency identification (RFID), and/or wireless tracking technology.
Companies that are primarily service-oriented rather than product-oriented can use inventory management software to track the cost of the materials they use to provide services, such as cleaning supplies. This way, they can attach prices to their services that reflect the total cost of performing them.
Barcodes are often the means whereby data on products and orders are inputted into inventory management software. A barcode reader is used to read barcodes and look up information on the products they represent. Radio-frequency identification (RFID) tags and wireless methods of product identification are also growing in popularity.
Modern inventory software programs may use QR codes or NFC tags to identify inventory items and smart-phones as scanners. This method provides an option for businesses to track inventory using barcode scanning without a need to purchase expensive scanning hardware.
A fully automated demand forecasting and inventory optimization system to attain key inventory optimization metrics such as:
- Reorder point: the number of units that should trigger a replenishment order.
- Order quantity: the number of units that should be reordered, based on the reorder point, stock on hand and stock on order.
- Lead demand: the number of units that will be sold during the lead time.
- Stock cover: the number of days left before a stock-out if no reorder is made.
- Accuracy: the expected accuracy of the forecasts.
Companies often use inventory management software to reduce their carrying costs. The software is used to track products and parts as they are transported from a vendor to a warehouse, between warehouses, and finally to a retail location or directly to a customer.
Inventory management software is used for a variety of purposes, including:
- Maintaining a balance between too much and too little inventory.
- Tracking inventory as it is transported between locations.
- Receiving items into a warehouse or other location.
- Picking, packing, and shipping items from a warehouse.
- Keeping track of product sales and inventory levels.
- Cutting down on product obsolescence and spoilage.
- Avoiding missing out on sales due to out-of-stock situations.
A company's inventory represents one of its largest investments, along with its workforce and locations. Inventory management software helps companies cut expenses by minimizing the number of unnecessary parts and products in storage. It also helps companies keep lost sales to a minimum by having enough stock on hand to meet demand.
Inventory management software often allows for the automation of many inventory-related tasks. For example, the software can automatically collect data, conduct calculations, and create records. This not only results in time savings, cost savings but also increases business efficiency.