Accurate stock levels and precise, real-time locations are crucial for the success of product businesses. Inventory tracking software can mean the difference between thousands of customer orders out the door and thousands of dollars down the drain.
In this inventory tracking software guide, we break down what it’s for, which features to look for based on your industry and size, and how to safely manage a software upgrade.
What is inventory tracking?
Inventory tracking refers to the ways a business will track the materials, goods, and products that are being delivered through the supply chain. Tracking software follows the inventory from the supplier to the manufacturer, to ensure it is being delivered on time and as expected.
What is inventory tracking software?
Inventory tracking software is a tool or system which can be implemented into your business workflow to track inventory as it moves through the supply chain. Automated tracking software creates data inputs as the inventory goes from place to place and can inform where assets are at any one time.
It can also identify any delays, glitches or unexpected changes to the expected timetable of delivery. This can then be used to manage any issues with warehousing or customer delivery.
Why inventory tracking is important
Tracking inventory is an important part of running a business because it protects against under or overstocking of inventory in your warehouses.
Any disconnect between what is being ordered and what is being warehoused and sold can create a massive financial headache for your business: being left with unused or out-of-date stock is costly and disposal can be expensive.
Conversely, if you are understocked and customers do not receive the goods they expect, there can be brand and reputational damage.
Inventory tracking software is useful for understanding stock levels of parts and materials as well as finished goods.Benefits of inventory tracking software
It's important to consistently track inventory levels to ensure warehousing management is efficient and in case of any issues with suppliers, shifts in customer demand, or a need to shift business strategy.
Here are four ways inventory tracking software helps with this.
1. Improved customer satisfaction
Inventory management and tracking software allows you to ensure inventory is on hand as expected, keeping sales on track. This means customers will receive the goods they ordered within the time they expect.
When you use inventory tracking, any issues that may arise along the supply chain will be identified. This gives you a chance to mitigate the brand damage and potential dissatisfaction that could arise with customers.
2. Accurate data
Tracking raw materials, goods being delivered, and products being shifted to your customers helps paint an accurate picture of your data.
Real-time stock location data is important as it means you will be able to best utilise the space in your warehouse. It also ensures you’re always on top of what’s coming and what’s going out.
3. Cost reduction
Tracking inventory saves on cost. Being proactive about where your inventory is and if there are any issues prevents minor concerns from blowing up into bigger problems later.
A well-managed data inputting system allows you to forecast and predict inventory requirements for the future.
Inventory tracking also helps inform whether there is a need to use warehouses for different purposes, or strategically manage stocking for business reasons.
4. Saves you time
Inventory tracking software can reduce your weekly workload by hours thanks to the automation of manual tasks.
You can use it to determine the number of assets being shifted at any one time, where they’re coming from, and where they’re going next. The live locations of these assets are automatically updated as the goods move, rather than retroactively updated after the fact.
Inventory tracking software costs
Inventory tracking software comes in a variety of packages, and the cost can vary substantially. An average subscription costs around US$100 per month. Complex offerings can cost several thousand a month.
There may also be one-off licensing costs to consider.
The cost of a subscription will generally rise as the business gets bigger, meaning its needs will be more detailed and it will require more staff to access the software.
The best inventory tracking software seamlessly integrates with other systems, such as accounting or POS.3 signs you need inventory tracking software
Inventory tracking software is essential for product businesses dealing with medium–high volumes of stock.
Spreadsheet-based and paper-based inventory systems may be sufficient for small businesses with a low number of SKUs. But they’re often overwhelmed with the manual demands and complexity of larger catalogues.
Here are 3 signs you need inventory tracking software:
1. You frequently run out of stock.
Running out of stock means you can’t sell to customers, which means your business will lose potential revenue. If a customer is expecting a product and it is not available, brand damage is also a risk.
Inventory tracking software allows you to track where inventory is at any one time, avoiding these risks.
2. You’re still manually counting stock.
Manually counting stock is a time-consuming process which is prone to human error. It can also slow down production or fulfilment, as employees must wait until a stocktake is complete to continue their work.
Inventory tracking software can be manipulated to ‘freeze’ stock levels and automatically produce stocktaking lists that would otherwise need to be created manually.
3. You’re struggling to track business metrics.
Being across key business metrics makes decision-making immeasurably easier.
Inventory tracking software often contains reporting functionality that enables you to access a business intelligence dashboard with all the required data points at your fingertips.
This allows businesses to make smarter decisions backed by evidence lifted directly from their inventory system.
Key features to look for in a real-time inventory tracking system
The inventory management software features required will vary between different businesses and industries, but there are some functions all companies may benefit from.
Key features to look for in inventory tracking software include:
- Real-time inventory tracking: Most importantly, the software should tell you exactly where every item in your warehouse is at any time.
- Business intelligence reporting: Reporting features are critical for understanding how your stock affects the health and cash flow of your business, and how it can be managed to improve these factors.
- Demand forecasting: Inventory software with forecasting capabilities can help prevent over- or under-stocking by informing optimal reorder levels based on historical data.
- Integration with your other software systems: With cloud-based systems steadily increasing in popularity, you need an inventory system that will serve as a single source of truth for all your business data.
- Data security: Cybersecurity attacks can destroy a business’s reputation in minutes. Never choose software without state-of-the-art data protection in place.
- Scalability: Inventory tracking software that can be upgraded or optimised depending on the size of your business means you won’t have to switch over to a whole new system when you reach a certain level of success.
- Excellent customer support: Inventory tracking consists of dozens of small processes that can impact overall performance. Look for a vendor with a proven track record of excellent customer service to ensure a fast fix or quick advice whenever you need it.
More efficiency and better stock accuracy are the targeted outcomes of implementing inventory tracking software.
The right software prevents hiccups with sales – such as double-selling or selling an item you don’t have – and enables you to manage every aspect of the inward and outward flow of assets from your warehouses.
Inventory tracking isn't just about the location and quantity of stock; it also covers the progress status of parts in production.The best inventory tracking software for specific business types
Depending on your business model, size, and industry you may require different functionalities from inventory tracking software.
Below, we break down some of the key elements to look for based on how and what you’re selling.
Best ecommerce inventory tracking software
The best ecommerce inventory software is one that allows you to manage orders from multiple warehouses, provides multichannel sales support, and integrates seamlessly with your ecommerce store.
Ideally, the software will also speak to your accounting system to create a streamlined transfer of data across all areas of the business.
Other helpful ecommerce inventory tracking software features include demand forecasting and the ability to manage the high volume of customer orders generally associated with ecommerce.
Best retail inventory tracking software
For retail businesses, the ideal inventory tracking software is one that updates sales data in real-time to prevent stockouts and missed sales.
The retail industry is fast-moving and customer-centric. Software that can keep up with the need for accurate, live data and superb customer satisfaction will therefore greatly benefit retailers.
Additional retail inventory tracking software features to look for include inventory planning, supplier management, and a mobile sales app.
Best manufacturing inventory tracking software
The best manufacturing inventory software is a system that allows you to track labour costs, manage assemblies, and get up-to-the-minute stock numbers and sales margins.
Since manufacturers handle a significant portion of the supply chain, you want an inventory tracking tool that aids in production, fulfilment, shipping, and everything in between.
An online B2B ecommerce store and batch or serial number tracking are also highly useful software features for manufacturers.
When should you upgrade to inventory tracking software?
Investing in inventory tracking software is a smart step for any growing business that’s struggling to manage its stock.
Certain triggers will indicate the right time to shift to a new system, as detailed below.
You will know it’s time to switch when:
- You’re accessing data and need to ask if the information is up to date.
- Keeping track of large quantities of inventory stock in a spreadsheet is causing an increase in data entry errors.
- You’re wasting valuable time verifying if stock quantities in a spreadsheet workbook accurately reflect the inventory stock you have on hand.
- Only one person can access and update data at a time, but you have multiple individuals working with your inventory.
- Profitability is being negatively impacted due to lost sales or carrying excessive levels of inventory.
- Using spreadsheets as a means of inventory control increasingly results in data entry inaccuracy and forecasting inadequacy.
Cloud solutions help take the guesswork out of inventory control, providing a clear insight into high-turnover items and those items left on the shelf.
By understanding what products are moving you can improve forecasting and free up capital that might otherwise be spent on items that should be discontinued.
The need for effective inventory tracking software continues to increase as we move towards a cloud-based future.How to prepare for an inventory tracking software upgrade
So, you’ve decided it’s time to upgrade your inventory system. Well then, what next?
Let’s look at a reliable four-step process for managing an inventory tracking software upgrade.
1. Identify your inventory management needs
Before implementing inventory tracking software, your leadership team should be able to clearly identify the business’s inventory management needs.
This involves mapping out each stage of the supply chain in your business’s control and identifying decision points at each stage. Leveraging previous performance data (even anecdotal information) can help you identify the areas where your inventory management currently falls short.
2. Develop sound inventory principles
Inventory tracking software is not a panacea for underperforming inventory control.
Strong inventory management processes are needed to ensure that inventory tracking software is a success. Develop a set of guiding principles that ensure inventory moves through the supply chain efficiently and reliably.
Once a map of the supply chain has been developed, your business’s leadership team has a chance to set out how each stage of the process should ideally operate.
3. Secure stakeholder support
Next, you’ll need to get both leadership and the business at large on board.
In practice, a certain degree of evangelism is required here – particularly if your business has managed inventory in the traditional way for a long time.
It's unlikely that everyone in the team will be on board at first. The prospect of adjusting to a new system can be stressful, but explaining the advantages of transitioning can often ease this.
4. Implement a transition plan
A comprehensive plan to manage the transition is crucial, both to manage risk and to maintain staff morale.
Implementing cloud-based inventory management software is usually straightforward, although hiccups occasionally occur. Your transition plan should identify how your team will handle any inventory errors during this time and how you can prevent mistakes from occurring in the first place.
This could be as simple as ensuring that data entry and output from the new system are double-checked for the first week or fortnight that the system is operating.
