Inventory Management Software - Page 25

Introduction

Inventory management software is the name given to software applications designed to allow users to monitor inventory levels with a view to optimizing distribution, stock control, order fulfillment, inventory creation, and other associated tasks. For businesses across Canada, managing inventory effectively can be essential for achieving greater supply chain efficiency and for maximizing both short and long-term financial results.

Software of this kind can be valuable for any Canadian business that needs to hold goods or materials for future use. The entire discipline of inventory management, or field inventory management, involves understanding demands on stock, how those demands may change or be affected by internal or external factors, and the stock levels that are needed for the business to remain as productive and profitable as possible.

A key benefit of utilizing inventory management solutions for small businesses is the ability to automate many of the processes associated with field inventory management. When these tasks are carried out manually, they can be extremely time consuming, and it can be harder to identify sudden changes in demand and respond to them at the ideal time. In this sense, automation not only improves efficiency but also allows businesses to achieve superior results.

Inventory management applications are often compared to order management software and there can be significant overlap in terms of the features of these solutions and their overall role within an organization. Additionally, this software may also be compared to supply chain management software, or a warehouse management system. In some cases, these solutions can be used in combination, although comprehensive, all-in-one packages are available.

Features included within the different inventory management solutions can vary, as can the quality of those features when put into practice. Yet, most software in this category will share similar core functionality. With this in mind, using inventory management software, users should be able to carry out the following tasks or activities:

• Track current levels of stock and receive alerts when it is time to order more of a particular item
• Order products or materials from suppliers, store receipts, and make amendments to orders over time
• Categorize inventory items based on their features or attributes, and then make use of search functionality
• Access data related to inventory performance, generate reports, and monitor performance over time

What is inventory management software?

Inventory management software is software that has been designed with the aim of assisting businesses with field inventory management tasks. This generally means tracking stock levels, optimizing supply chain-related functions, identifying changes in demand, and responding to those changes appropriately to maintain order fulfillment. Businesses need to manage their inventory carefully to reduce unnecessary storage space, avoid waste related to perishable goods or materials, minimize customer waiting times, and maximize profit.

Inventory management is important for almost all businesses because products need to be available for sale and able to be delivered to customers as soon as possible, while raw materials need to be stored and made available for use. This means that, in the vast majority of cases, Canadian businesses will have some form of stock that needs to be managed.

Crucially, high-quality inventory management software allows these needs to be balanced against any limitations that may exist in terms of physical space available and the shelf life of stock. Better still, much of this can be automated with a view to achieving maximum accuracy and efficiency. This, in turn, can help companies to achieve peak performance while also delivering the kind of customer experience that builds lasting loyalty and repeat business.

Furthermore, the most advanced solutions can help organizations in Canada to audit their inventory so that issues are found swiftly, inefficiencies can be addressed, and the need for active human involvement is reduced.

What are the benefits of inventory management software?

The benefits of using inventory management applications for small businesses tend to focus on automation. After all, inventory management is a complicated discipline, which requires companies to think carefully about their stock mix, the demands placed on their stock, the extent to which those demands can shift, and what needs to be done to optimize performance in spite of these changes. With that being said, there are specific benefits linked to the use of software of this kind, such as:

• Supply chain efficiency: the process of managing all aspects of a supply chain manually can be extremely time-consuming, and modern technology has made it unnecessary and, in many cases, inaccurate too. Through the use of inventory management software, it is possible to automate many of the tasks and processes in this area. For instance, most software in this category will provide tools to manage orders with suppliers, make new orders when stock is needed, and make changes to existing orders. When this process is automated, the software can automatically place orders when levels of stock reach a set threshold or when demand reaches a certain level. Through the power of artificial intelligence, this can be more reliable than manual management of supply chains because changes or low stock levels will not go unnoticed and immediate action can be taken.
• Financial benefits: initial investment in inventory management software can have long-term financial benefits, helping organizations to save money, reduce costs, and maximize profits. When inventory is managed effectively, the amount of stock that is kept in storage at any given time can also be kept to a minimum. This, in turn, can save businesses money by reducing the size of stock rooms or warehouses the business requires. Furthermore, effective management of stock can minimize or even completely eliminate money that is spent on perishable products or materials that expire before they can be used. As new stock is ordered automatically, at the best possible time, organizations can also avoid some of the charges linked to requesting urgent deliveries from suppliers.
• Reduced demands on staff: when utilized to its full potential, artificial intelligence allows many inventory management tasks and processes to be carried out automatically, in the best moment, without the need for employees to personally act. The reduced labour demands can have several important benefits, such as reducing workloads, generally making day-to-day life easier for employees, and limiting the number of staff that need to be working at any given time. As a consequence, businesses may not need to recruit as many people, and this can lead to significant savings. Away from the financial benefits, reducing work demands in this way can free up more time for employees to focus on complex or unpredictable tasks, which AI could not handle.
• Rapid response to changes: businesses often need to contend with sudden events or changes, and this applies not only to their own organization but also to suppliers, business partners, and clients or customers. Examples of this include a sudden increase in orders from customers or seasonal shifts in demand for a particular product. Alternatively, the sudden changes could be caused by completely unforeseen circumstances, such as the emergence of COVID-19 and the subsequent imposition of restrictions on mass gatherings. Regardless, inventory management applications can allow businesses to respond swiftly to any changes that impact demand. If there is a sudden spike, the software can alert decision-makers or automatically place orders for more stock. Conversely, if demand drops, the software can identify this too, and cancel planned orders for new stock, or make adjustments to the order, so that less of a particular product or material is ordered. The key here is to avoid situations where an organization either has too much stock or insufficient stock to cope with the levels of demand they are facing.
• Centralization of data: the entire process of inventory management means plenty of information needs to be kept. This includes information about stock levels or information about specific products or specific materials. However, it can also include details on agreements with suppliers, information about orders that have been placed, and more. Having as much of this information available in a single place can greatly simplify inventory management efforts and can help to avoid situations where employees need to switch back and forth between different applications.

What are the features of inventory management software?

The features of inventory management software are all intended to assist users with the process of managing stock levels. This means having the ability to oversee aspects of the supply chain while also managing factors like fluctuations in demand. While software packages in this category can differ in terms of some of the supplementary features provided, most solutions will have similar core functionality. Some of the most common and significant features associated with inventory management packages are outlined in more detail below:

• Inventory management: create a database for business inventory so that all relevant information is accessible from one place, and then oversee all aspects of managing that inventory. Through the inventory management features, users can view current levels of stock for each individual item in their inventory and gain a clear understanding of what products or materials are in stock, which are running low, and which are out of stock entirely. Much of this information can be automated, especially if integration with a point-of-sale system is possible so that inventory levels are automatically updated as and when new orders arrive or when sales are processed.
• Inventory optimization: establish ideal levels of stock, based on the specific needs and circumstances of the business, and ensure that those levels are maintained. Inventory optimization is concerned with reducing or eliminating instances where stock levels for a particular item are too low or too high. When stock is too low, customers could potentially face delays that have a negative impact on the customer experience. When stock levels are too high, businesses need to find space to store the items and the possibility of some of the stock perishing before it is used increases. Through automation, ideal inventory levels can be maintained, with intelligent adjustments to ordering being made as levels of demand change or as other significant events occur.
• Product identification: categorize products according to their features and attributes, and assign product types or keywords so that the inventory list can be sorted in logical ways. Product identification can help to make the inventory database fully searchable, allowing users to quickly and easily find specific items and see current stock levels, along with important contextual data. Information that may be collected about inventory items includes weight, size, batch numbers, and expiry dates. This allows different items in the inventory to be treated differently based on the specific business requirements and the demands that are relevant to that item. Some high-level inventory management software will also include support for barcode scanning—or other product identification techniques—so that items can be scanned and automatically added to this database, without the need for manual data entry.
• Purchase order management: manage all aspects related to the purchase of products, materials, supplies, and equipment. This can include having access to all past order information, receipts, contact information for individual suppliers or vendors, and details of recurring orders. Invoices can also be collected, added and stored indefinitely, making them easy to access in the future. In addition to overseeing the basic details related to orders, a key part of purchase order management involves evaluating current behaviours and assessing whether all purchases are necessary, beneficial, and have been optimized in terms of cost-effectiveness.
• Supplier management: collect and manage all relevant information about suppliers, including contact information, past communication, order history, receipts, confirmation emails, dispatch notices, invoices, and contracts or signed written agreements. In some cases, the software will include tools for signing and authenticating documents digitally, so that all agreements with suppliers can become completely paperless. Storing all of this information can make it easier to refer back to in the event of a dispute, disagreement, contractual breach, or missed deadline. In some cases, it may also be possible to compare suppliers in areas like cost, turnaround times, and availability, so that items can be ordered from the best supplier, in the right moment, for the best cost efficiency.
• Alerts/notifications: create alerts when inventory reaches a certain level—or when demand hits a certain threshold—in order to prompt a response from decision-makers. Some organizations may have circumstances that mean they do not want to take advantage of automation to re-order materials or other stock. In these situations, alerts can help to ensure they are still able to respond swiftly to changes in circumstances when they occur. This then helps to avoid any situation where an organization is left without supplies or materials they desperately need.
• Reporting/analytics: set key performance indicators, collect the relevant data, and create insightful reports into past and current inventory performance, or create forecasts about future inventory performance. Report generation can be essential for keeping stakeholders informed about the current state of play. They may be key to achieving buy-in in situations where more storage space is needed or where more fundamental changes need to be made to business practices. Top-end inventory management solutions will provide access to real-time insights so that any issues or inefficiencies can be identified and addressed as soon as possible. Data visualization tools may also be on offer, allowing key indicators to be viewed in easy-to-digest formats, such as charts, graphs, or tables.

Capterra's inventory management software directory includes a large number of options, which can be filtered based on price, the available features, the method of deployment, and the number of intended users. As a result, businesses can streamline their search for the ideal software solution, removing options that do not match the requirements.

What should be considered when purchasing inventory management software?

When purchasing inventory management software, there are many different factors that need to be taken into consideration, and decision-makers need to think carefully about their process for identifying the ideal solution for their specific needs. An effective way to understand those needs is to ask some key questions and come up with answers to them, as this can help to focus minds on what really matters. Some of the most important questions to ask are:

• What are the inventory management software features? While there are a number of core features that buyers would expect to find in the vast majority of software solutions of this kind, it is important for buyers to give careful consideration to the precise range of features they need, as well as any features that may be less essential but still valuable. The inventory management needs of businesses can vary significantly, too, so the features required by a restaurant or hotel may differ substantially from the needs of an electronics retailer or a supermarket. Buyers need to identify the features that are most important to them. From there, they can utilize their search process to narrow down the available software solutions to those that best cater to these requirements.
• What is the total cost of inventory management software? Businesses always need to weigh up the costs of the different software options on the market, but it is important to understand that this needs to be evaluated in a holistic way, taking into consideration the full range of costs over the entire time the software is being used. This can be understood more simply as the total cost of ownership and use, and it means companies need to think not only about the cost of acquiring the software but also about the expense attached to providing employees with the necessary training, acquiring support in the event of technical difficulties, receiving software updates, storing the associated data, and providing access to all of those who need it.
• Is integration with other applications possible? Modern businesses tend to use a wide range of tools and applications, and this can make integration and compatibility important. In situations where businesses are already utilizing finance software, point-of-sale systems, and similar tools, integration with an inventory management system is going to be a major consideration. When these tools can be used in combination and when data can be shared between them, efficiency and accuracy can be improved, data duplication can be minimized, and the user experience can be optimized. At its best, integration provides an additional layer of automation, saving companies time, effort and money in the process. However, integration needs should be balanced against other considerations.
• What is the preferred method of software deployment? Aside from finding software with the right features—available at the right price point—companies also need to think about their preferred method of deployment. The two main options here are on-premise deployment and cloud-based deployment, and each has its advantages and drawbacks. Generally speaking, on-site deployment has higher upfront costs, but the long-term costs may be lower and there is a greater sense of control and ownership. Cloud-based solutions, on the other hand, are deployed with assistance from a third-party service provider—usually on a subscription basis. This means the upfront costs can be extremely low, and the long-term costs, while higher, are extremely predictable and consistent. The need for on-site data storage is removed and responsibility for keeping data safe can be passed to a third-party expert. Cloud-based options also provide benefits in terms of remote accessibility and compatibility with a wide range of devices. However, there is less overall control, and the total cost of ownership may end up higher.

What are the most relevant inventory management software trends?

• Increased use of artificial intelligence: The use of artificial intelligence within software is nothing new, but it is becoming more reliable and more advanced all the time, and this increases its potential scope. For inventory management purposes, artificial intelligence can be used to make intelligent forecasts about demand based on past data, market data, relevant real-world trends, and the current behaviour of customers. Additionally, AI can play a role in analyzing inventory performance and automating some of the core inventory management tasks. In some cases, AI may also be used to provide user support. For example, a chatbot could be used to answer basic questions about how to perform certain actions or where to find a particular piece of information.
• Growth of remote and hybrid work: In general, businesses are embracing remote and hybrid work models more than ever, and this could mean fewer employees are on-site at any given time. With regards to inventory management, this increases the need for reliable automation, with systems in place to continually monitor stock levels and provide up-to-date information to people who may not be able to physically check warehouses or other storage areas. 85% of Canadians who worked from home during the pandemic wanted to keep doing so when surveyed in 2021 and so many businesses adapted their offering in some way during the coronavirus pandemic so that it could be delivered virtually instead. As normal life has resumed, many of these businesses have continued to capitalize on these changes—either to keep costs low, limit physical space requirements, or to keep staff happy. However, this does mean finding software solutions that provide remote accessibility.
• Integration with IoT technology: A growing number of common devices within business settings are now 'smart' devices, which are connected to the internet, in order to communicate with other devices around them. This use of the internet of things (IoT) requires software that has been designed with such devices in mind. A growing trend within inventory management, for instance, is the use of video surveillance and video analytics in order to determine how much storage space is being used at any given time. Where integration with video analytics is possible, this information can help businesses to build a clearer picture. Another example may be the use of a smart thermostat in order to regulate temperatures in the storage area, and this could help to maximize the shelf life of certain products. However, IoT integration could be more basic, such as compatibility with smart speakers and smartphones, allowing for a greater amount of voice control.
• Popularity of cloud-based solutions: Finally, as the demands for remote accessibility increase, as businesses become more aware of the value of keeping data up-to-date and secure, and as it has the capacity to greatly reduce upfront costs, cloud-based deployment is becoming more and more popular. In a field like inventory management, cloud-based options can provide benefits in terms of ensuring everyone is able to access the same up-to-date information, making sure that any changes to data are applied across the board. Web-based cloud options can be accessed using computers, smartphones and tablets, and permissions can be set up easily so that only those with the right level of clearance can access the most sensitive data. Of course, this needs to be weighed up against the disadvantages of cloud-based options, such as the continuous subscription fees that could increase long-term costs.

Sources:

The features highlighted were identified based on their relevance and the percentage of products in Capterra's directory that offer them. The following sources were used for this document:

1. Gartner’s Top Actions for Supply Chain Inventory Reduction - Gartner.com (Date accessed: Monday, January 17, 2022)

2. What Is a Digital Signature and How to Create One? - Capterra UK Blog (Date accessed: Tuesday, January 18, 2022)

3. Workplace wellness: Almost 3 in 4 Canadian remote workers report burnout - Capterra Canada Blog (Date accessed: Tuesday, January 18, 2022)