Inventory tracking and management is an essential part of business health, and it’s continuously evolving as manual processes become automated and streamlined. With so much out there to help you stay on top of your product supply, it can make a huge difference to invest in the right tools.
As with any other technology, staying current means your business will have access to the latest innovations and insights. That means you’ll understand exactly what’s going on behind the scenes and what it all means for you looking ahead into the future.
Why does inventory management matter?
Inventory management might sound like a time-consuming, unglamorous task on your to-do list, but as your small business grows, this process can help you stay in control. You need an organized system in place to keep track of how much you’re producing, consuming, and selling, and ultimately how everything combines to affect your bottom line.
The goal of inventory management is to have the right products at the right quantities at the right time. When it’s carried out effectively, you can keep costs down by avoiding the need to carry excess inventory or rush a delivery when your supply runs low. Your products will be fresh, current, and on your shelves rather than away in storage.
With so many new tools on the market, you don’t have to walk around with a clipboard taking tallies of all your products anymore. Now you can gain deeper insight into your operations as you take stock of your materials in real time and forecast into the future.
What to look out for in inventory management software
The right inventory management software should help you achieve lower costs and improve your cash flow. It should allow you to keep track of your inventory easily, plan ahead based on trends in demand, manage shortages or excesses, and analyze performance no matter what device you’re using.
For retail businesses with point-of-sale (POS) systems, the software should integrate with it seamlessly and offer a quick way to scan barcodes. Even across multiple locations, warehouses, storage facilities, or all of the above, your inventory management software should work smoothly.
Check out our expert tips on reducing packaging costs to help you improve your supply chain efficiency on the SmartBiz Small Business Blog. You’ll find a helpful infographic that breaks down 5 key strategies that can work in tandem with your inventory management program.
Common terms and techniques for inventory management
As you research the best ways to stay on top of your inventory, keep these key terms and best practices in mind.
- Supply chain management (SCM): The management of the flow of goods and services, including all the processes and channels involved in turning raw materials into finished products
- Bill of materials: A comprehensive list of raw materials, components, and assemblies required to construct, manufacture, or repair a product
- Just-in-time inventory (JIT): Also known as lean manufacturing or the push-pull inventory control system, this technique involves stocking inventory only as it’s needed and involves sophisticated forecasting
- Drop-shipping: A method that allows customers to place orders on products before they’re in stock, with the holding and shipping responsibility in the hands of the wholesaler or manufacturer (think Amazon)
- Stock keeping unit (SKU): A readable barcode that allows vendors to scan and track the movement of inventory
- First in, first out (FIFO) approach: Especially for perishable and trend-based goods, this system ensures that the items stocked first are the first to be sold—for example, that the most recent items are placed at the back of the warehouse or shelf
- Low-turn stock: Items that have sold in very small quantities, if at all, over the past 6 to 12 months—these can be sold with special discount or promotional offers to reduce excess inventory
- Annual consumption value: Annual demand multiplied by item value
- ABC categories: The process of strategically grouping items into categories based on their annual consumption value, with A being big-ticket items (lowest percentage of inventory and largest annual consumption value) and C being the small items on the other end of the spectrum (highest percentage of inventory and lowest annual consumption value)
- Stock controller: An individual employee who manages order processing, delivery schedules, and overall inventory processing
Helpful inventory management software tools
Ordoro is a cloud-based inventory management software that allows you to keep your inventory in sync across all of your sales channels based on shopping cart and marketplace orders. You can upload SKUs and other product data, see purchases as they come in, whether they be from your own online store or from third-party websites, and print labels in bulk. Once your orders are shipped, you’ll receive updates on their delivery status.
In terms of weaknesses, Ordoro is not designed for large-scale operations and does have limited functionality in its starter plans. If your small business is primarily focused on shipping capabilities, this might be the right fit for you. For more complex projects, you may need to upgrade or consider a different platform.
Ranging from $59 a month for the Express plan to $399 a month for Pro, Ordoro can also offer custom pricing depending on your business needs.
For small business that use QuickBooks, this software is designed to help you incorporate inventory management into your accounting platform. With features to help with multiple locations, real-time tracking, manufacturing, shipping, cost calculations, and more, Fishbowl has the added benefits of forecasting capability and works to help you with your inventory management methods (like FIFO).
Not only that, Fishbowl also automates the processes involved in inventory management, like quoting, ordering, and purchasing, so you can spend more time planning and analyzing performance. They have extensive training materials and support specialists who are available to answer your questions and help you along the way.
One of Fishbowl’s drawbacks, though, is its price. With a $4395 fee at the start, this option is not the most affordable on the market. Keep in mind that the learning curve might be larger at Fishbowl than at other alternatives as well, but the system can offer some considerable results in the long run.
Cin7 is one of the leaders in excellent customer service and an extensive spread of features. Its cloud-based software handles e-commerce, POS systems, warehousing, and other logistics involving third parties to create a comprehensive inventory management system for your business. If you can’t find what you’re looking for, their team can even create some customized functionality to meet your needs.
To help you get on the right track, Cin7 has plenty of materials in the form of thorough documentation, webinars, videos, and live online and over-the-phone support.
On the other hand, you might have to pay a premium for these benefits with a $299/month starting price. Keep that in mind as you weigh the pros and cons of this software solution.
For businesses keeping track of multiple locations and larger operations, Unleashed can be a great fit. Their pricing scale is based on the number of users, warehouses, and feature complexity that you’ll need for your business, so you can ensure that you’re using a cost-effective product for your inventory management needs especially as you continue to expand.
This software is known to cover a lot of ground and is tailored to far-reaching operations, allowing you to track processes and transactions globally and gain insight via reports and analytics. If you’re a local business operating on a smaller scale, this complex functionality might be overwhelming. Also, you won’t have access to forecasting based on demand if you go with this option.
The starting price for Unleashed is $135 a month, with a 14-day free trial so you can test out the various integrations and resources available.
In terms of software, there’s no one ideal choice. It’s all about the features you need at the cost you’re comfortable with to help your business reach the next level.
Veeqo offers a minimalistic, user-friendly dashboard with easy navigation and quick load times. That means you can move between sales, profits, and returns to get an overall snapshot of your inventory stats. You’ll see total orders, purchase values, revenue, and average shipments per day so you can forecast and predict using the analytics the virtual environment provides. You’ll also have the ability to sync inventory across multiple store locations, warehouses, delivery systems, and even currencies. Another strength that Veeqo has over other alternatives is its direct integrations with a variety of services around the world.
For a starting price of $180/month, Veeqo is on par with its competitors in terms of its entry costs. Although its functionality is not as fully developed when it comes to product pushing and more intricate processing, it can be a great option for small businesses who are looking to get a head start on their inventory management with an intuitive, easy to follow layout.
Check out more of our business operations software recommendations on the SmartBiz Small Business Blog. You’ll find our top picks not only for asset management and invoicing, but also for database platforms, customer relationship management (CRM) programs, and more.
Hardware for inventory management
In addition to the various software tools out there, your business will probably need to rely on some physical devices as well. This is where the Internet of Things (IoT) can come in to create a strong, reliable connection between your software and your hardware. That way, you won’t have to enter information manually or create your own spreadsheets—as new data comes in, you’ll see it on your devices and have the ability to create real-time reports as well as to adjust any settings so that all the tools you use are synced and functioning correctly.
Some of the hardware you might find useful will include barcode scanners, handheld scanners, tablets, computers, printers, network devices, and point-of-sale stations. Make sure that each of these tools integrates with your software so you can easily keep track of activity and transactions.
The benefits of good inventory management can make a huge impact on your business. Without shortages and excesses, your supply chain can operate at its full capacity. At the end of the day, you should invest in the processes, tools, and platforms that make the most sense for your unique situation. Whatever you choose, it should be functional and efficient without breaking the bank.
Looking for additional financing to help you purchase new inventory management software, hardware, resources, staff members, or supplies? SmartBiz can help. We’re here to guide you through our streamlined, online small business loan application process and get you to a “yes” so you can achieve your dreams. Get started today by pre-qualifying in under 5 minutes.