What is inventory management software?

Inventory management software is a system for tracking and reporting on the use and distribution of supplies or products. Software suitable for larger, multi-location operations is sometimes referred to as warehouse management software, but it generally performs the same functions on a larger scale.

Inventory management software features
Before you start investigating inventory management software, decide which features are most important to your business. Here are some of the standard features you should expect:

• Inventory control – sets locations and shelf or bin numbers for each item in inventory. Tracks incoming and expiration dates as applicable.
• Shipping – creates or imports sales orders to generate pick lists, packing slips, and shipping information. First in, first out (FIFO) or last in, first out (LIFO) as appropriate.
• Receiving – manages the placement of incoming inventory, generates put lists.
• Multiple units of measure – allows incoming items to be measured in pallets, but outgoing to be measured in cases or individual pieces.

More complex inventory management systems add workforce and warehouse management features, helping you create the most efficient approaches to both daily tasks and long-term planning.

Hardware requirements
The most important hardware elements in an inventory management system are the handheld scanners that employees will use to track individual items. For greater flexibility, look for software that supports multiple brands of scanners – you'll appreciate the freedom to choose the model that best suits your needs.

Scanner features to look for:

• Ergonomics – how heavy is each scanner, and how comfortable is it to hold?
• Support for high-density bar codes as well as standard linear codes.
• Appropriate environmental protection – sealed against dust or water, or rubberized for shock protection, whatever is important for your location.
• Wireless scanners are the best choice for most business, allowing employees to move freely around a warehouse.

You can expect to pay anywhere from $500 to $2,500 per scanner – at those prices, it's important to make sure you're getting exactly what you need. Take the time to try out various scanners and compare their performance before making a final decision.

User interface
While vendors may offer very similar feature sets, each will have a different way of accessing those features. Take the time to compare the user interface across the programs.  

Start with online demonstrations and then see if you can get trial copies of the software to test. Go through the your most common tasks, like entering new items or creating inventory reports, to see how easy the software is to use. The best programs will be intuitive to use from the beginning.

Evaluating vendors
In addition to investigating the software itself, spend some time evaluating the company producing the software. Look for outstanding customer support, and a commitment to maintaining and updating the inventory management software over time.

The release history of the software is often a telling piece of information. A series of recent upgrades is a pretty good signal that the company is listening to their customers and that they'll continue to commit resources to improving the software over time.

ASP vs. hosted solutions
An important decision to make when choosing inventory management software is where you want the software hosted. An internally-hosted solution that runs on your computers gives you the greatest control over your software. However, it can take considerable expertise and effort to maintain. In addition, keeping the data in-house gives you the responsibility of making regular backups in case of a system crash.

ASP (application service provider) solutions are hosted by the provider, instead – your staff accesses the software and data through a web browser or specialized client software. The main advantage of ASP solutions is that your information can be accessed from multiple locations without significant investment in networking technology. In addition, ASP vendors work to ensure that your information will be kept secure and available. However, the biggest downside is that it requires an active Internet connection.

Inventory management software buying checklist

• Does the software run on your platform? (PC or Mac; Oracle, SQL, or other database?)
• How many locations and separate items do you need to track?
• How many people will need to access the software simultaneously?
• Is it easy to update the status or location of an item?
• Who will be using the software? Do you need to restrict access for some?
• Does the software need to integrate with any other software?
• Is the user interface self-explanatory, easy to use?
• Are the reports easy to understand? Can you easily generate the specific reports you need?

Pricing
Software pricing varies significantly from a few hundred to several thousand dollars. While the standard method of pricing is for a general user license, some vendors will license their software on a per-unit basis. You can expect to pay additional fees for custom integration work, as well.

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