Next in the "What is" series is, What is Inventory software?

There are many types of software ranging from free to thousand of dollars, which one is right for you depends on your organizational needs both today and in the future. If you are purchasing software make sure you know what your company needs before making any decisions.

Often times we see inventory software as part of a larger package, like ERP (enterprise resource planning software). The reason for this is inventory effects many areas of the business so it makes sense to integrate all areas while controlling inventory.

Inventory software for distributing and manufacturing organizations at their core should track sales, purchases and shipments. In a value added environment, where you are taking raw material or prod cuts and converting them to different assemblies or kits you will want to track at the very least the items consumed in the process.

The only way to track your inventory in a software package is to report when movement as it occurs or as close to it as you can. So when you receive your inventory levels go up, when you ship they go down. The sales orders create the demand for the inventory items, other things like sales plans or forecasts can often be incorporated into Inventory software.

In some cases you will see the use of MRP (materials requirements planning) to do the calculation of what you need to buy and when based on your on hand inventory and the sales demand or ship dates. As mentioned, Inventory software is often part of a larger software package and the reason is that things like accounting, scheduling, purchasing, Sales, CRM, quality, all have to do with with the movement and the handling of inventory. If you are doing the work to track the inventory than things like accounts receivable and accounts payable become automatic.

That is the benefit of inventory software, automation. It automates the math calculations, stores the information for easy reference in the future. Depending on your business needs it should automate other processes as well by using bar code scanning, price groups that are set up and stored so the order desk can take orders than research past prices, accurate inventory levels so people don't have to physically check the shelves, lot or serial control.

What it does and how really depends on your business. Some people want to buy an out of the box solution and make it work, others want to stretch and bend the software to match their own business processes.

In the end inventory software is a tool. And like this blogger always says first you need the right tool for the job then you need the know how to use it. There are some many vendors out there who can provdie you with software, what your organization needs to do is find a vendor who's software can meet your business needs and can provide you with the support you need.

Inventory software or ERP software once installed becomes a money saving vehicle, but there is effort in the set-up and maintenance of it. Like anything else the more effort and time you put into to it the more you will get out of it.

Visit our ERP guide for the complete "What is series"