How to Build an Inventory Management System?

Inventory Management Software = Smart Inventory Management

In a landscape where globalization has enabled end users to shop commodities from anywhere and get them delivered to their doorsteps within days, the supply chain must be furious and seamless. Inventory Management is something that determines the efficiency of the supply chain at any given point. If different parts of the supply chain manage the incoming and outgoing inventory well, no complication can happen in meeting the demand for inventory from end users. 

But, inventory management is no longer a task that can be handled on paper or random spreadsheets. The new tech solutions termed as “Inventory Management 

Software” comes into the limelight here with its exceptional capabilities to manage large inventory at warehouses, manufacturing hubs, retail stores, or anywhere. Let’s know everything about this software and how they are reshaping the industry- 

What Is Inventory Management Software?

As the name suggests, it is a technological tool that tracks every inventory movement in a warehouse or inventory-targeted place. It ensures complete tracking of inventory levels, sales, orders, and deliveries among the different parties so that each commodity unit is traceable and fed into the system. While a lack of inventory might move your customers away from you to reduce sales, and excess inventory might save you money stocking unnecessary things, and inventory management software helps you avoid both situations. 

Be it a warehouse, a retail store, manufacturing hubs, depots, and anything, inventory management software increases the accuracy of product tracking and presents the information instantly when required. A Store owner can know when a particular product is about to go out of stock. Tracking the expiry dates of different items and making intelligent decisions accordingly becomes easy with such a system. 

Market Statistics of Inventory Management Software

While the above statements say a lot about the usability of inventory management software, it says nothing about the popularity of the same. The apps and websites being used for smart inventory management are no longer a new concept. The stats given below will help you understand the same- 

• According to Statista, the Supply Chain Management Software market is projected to reach USD 19.25 billion by the end of 2023. 
• The same market is expected to show a CAGR of 4.6% between 2023-2028.
• At the same time, Inventory Management Software market demand is estimated to be 25% of the overall global warehouse management system market. 

Other than that, below is the presence of Inventory management software in different countries– 

Benefits of Using Inventory Management Software

Inventory tracking system has been marking its presence in every industrial landscape due to its competencies of managing large inventory and keeping track of every single unit. When using such software in their operations, the subject leverages the following benefits- 

1. Centralized Storage 

Managing the inventory stored in different warehouses at different locations might be difficult. At the same time, sending the right product to the customer becomes even more complex. So, an inventory management system informs you all about the quantity as well as the location of the product and delivers the right product ASAP to the customers. 

2. Enhanced Sales Productivity 

The software keeps complete track of the product’s availability and informs when anything is about to go out of stock. Such information ensures that store owners don’t have to face a lack or excess of inventory and always fulfill the demand of customers. 

3. Better Adjustment in Order Frequency

Right order frequency can help prevent the overstocking or shortage of inventory in the store, thus significantly boosting the business’s revenue in any industry. An inventory management system ensures the same by informing about the product’s availability in the warehouse, store, or any point. 

4. Instills Automation

An automated inventory tracking system can avoid manually checking inventory stocks, delivery time, order frequency, shortage of products, billing, and shipment details. Not only does it save a lot of time, but it also reduces the chances of errors and mistakes. 

5. Accurate Planning and Forecasting

An inventory tracking system even assists in forecasting the future demand of a product and making smart decisions in advance. If there is a forecast that will increase a product demand in the near future, one can keep the stock of that product. Similar is the case with vice-versa. A good inventory tool has at least one integrated analytical tool that helps to know the market demand for a particular product. 

6. More Satisfied Customers 

The inventory management system is core to enhancing customer satisfaction in different ways. First, it helps ensure you always have the inventory stock to meet the customer demand. Second, you can communicate the exact delivery date to the costumes. Other than that, customers get complete tracking of their order processing which enhances their reliability in the business. 

7. Reduced Errors and Discrepancies

Humans can never avoid errors and mistakes, but software and machines can. Inventory management apps help prevent basic mistakes in calculation, updation, alarms, etc. It increases the overall efficiency of the supply chain. 

Features that Boost the Usability of Inventory Management Software

The inventory management software’s features determine the system’s overall usability and functionality. The only reason why a particular software outperforms another is the feature it carries. Below are the essential features that inventory management software must carry-

Types of Inventory Management Software

Different businesses have different preferences and needs. So, to meet these preferences and needs, there are multiple types of inventory management systems/software. Here are three major types of inventory tracking system being used in different types of organizations- 

1. Manual Inventory Management System

A manual inventory management system has been in place with the least technology implementation. The human workforce does all the inventory tracking tasks manually, where the logistics is counted manually, creating huge chances of errors. Currently, small and local businesses are relying on manual inventory management systems as there needs to be more logistics to manage, and the human workforce can easily do the task. Also, human errors are more affordable at this scale than an automatic inventory management system. 

2. Perpetual Inventory Management System

This fully automated inventory management system tracks the cost and stock levels of inventory on a transaction-by-transaction basis. The cost associated with the product automatically gets updated with the product lifecycle phase. The perpetual inventory management system keeps a record of everything, including stock items, storage locations, slow-moving products, expiration date, and maintains optimum reorder level. Thus, the store owners always have enough stock in terms of inventory. Large businesses and firms use the perpetual inventory management system as daily inventory dealing is vast, and one can not afford any type of error in the process. 

3. Periodic Inventory Management System

A periodic inventory management system lies between manual and perpetual, using both methods for efficient inventory management. This inventory management is mainly employed in businesses where the owner only stocks sellable products. The physical inventory counts occur weekly, monthly, or yearly, according to the need of the business. The items are not tracked on a transaction-by-transaction or item-by-item basis; thus, the chances of errors are very high. At the same time, the inventory movement is also not tracked efficiently, making it harder to calculate the cost of goods sold (COGS).

Latest Technology Trends Integrated with Inventory Management Software

While inventory management software has already reshaped how the business handles its logistics and maintains a complete record of incoming or outgoing logistics, the advancements are not in the mood to pause. The new technological trends are busy making the system even more advanced for a better user experience. Following technological trends are at the core of further redefining the capabilities of inventory management software- 

1. Artificial Intelligence 

Forecasting the future demand for products and making decisions accordingly can be a game-changing concept and help multiply sales. Artificial intelligence makes this possible by giving a rough estimation of the demand for a particular product in the market based on product data from the past. At the same time, artificial intelligence also ensures that inventory doesn’t get out of stock and thus automatically places the order whenever any item touches the minimum quantity line set by the store owner. 

2. Machine Learning 

Repetitive tasks performed by humans consume a lot of time and raise the chances of errors during the process. So, an inventory tracking system equipped with machine learning capabilities does the job very efficiently. Using ML, customers can find the product with voice search as well as predict the future inventory stock needs; at the same time, it automatically informs the relevant stakeholders if there is any disruption in the supply chain. 

3. Blockchain

Blockchain is a decentralized platform that makes sure that information uploaded to the system is unbiased and can not be edited by any one stakeholder. It enhances the reliability of inventory tracking system as all the data has to be accurate and agreed upon by all the stakeholders. Moreover, blockchain also allows warehouses, manufacturers, production sites, suppliers, and retail partners to connect and share real-time information.  

4. Drones

Modern inventory management software can be integrated with drones, making the task even more accessible. Drones can be used to scan the inventory lying in the different parts of the warehouse and feed the information into management software. At the same time, quantity and quality inspection of logistics can also be performed easily with inventory management software. 

Development Lifecycle of An Inventory Management Software

The efficiency of inventory management software depends a lot on how it has been developed. Here are the major steps of an inventory management software development project- 

1. Understand the Requirements 

First, one must be clear about their requirements regarding the inventory management software. As we interpreted in the earlier section, every business has its particular needs and requirements, the inventory management systems are also designed accordingly. Understand if it is going to be software only or the barcode/RFID supported. Also, if there is a need for ERP, CRM or accounting system integration, etc. 

2. Project Planning

Draw a blueprint of the project so that one can achieve the key milestones during the lifecycle. The project blueprint should also carry all the information regarding the possible risks, objectives, KPIs, mitigations, and expected outcomes of the project. Planning about the technologies that will be used during the project, cost evaluation and breakdown, and expected project timeframe are also discussed in this phase. 

3. Inventory System Development 

This is the phase where the core development of the project happens. For the same, one needs to hire a software development partner who can do all the coding and technical work to build the software. The development partner will develop a prototype and submit it for review. Once the respective stakeholders have passed the prototype, the development team continues with the coding work and builds the backend of the software. Having developed the software, the quality analysis team conducts several tests to ensure that the final outcome doesn’t carry any bugs and works best to its capabilities.

4. Third-Party Integrations 

Third-party integration enhances the usability of inventory management software to the next level. If a warehouse already operates with an existing software, application, ERP, CRM, accounting system, or anything else, it can be integrated with the new inventory management software. Integrating this software greatly eases the various tasks as a warehouse owner doesn’t need to move big data from one place to another. 

5. Deployment of The Software

Now the software is ready for deployment in the warehouse or store. First of all, software configuration will take place to ensure the backup and data recovery procedure. Having met these requirements, the software is deployed for the real-life testing operations of the firm. Once the software has completed the expected performance and outcome, it is deployed in the system for permanent functioning. 

6. User Training 

When the software has been deployed in the system, the relevant stakeholders must have the software knowledge. For the same, the respective software users are trained to use the new system and update the new information on time. It ensures that the software’s capabilities are being fully leveraged in the firm. 

7. After Launch, Support and Maintenance 

Deploying the software is only part of it, as it is going to need post-maintenance support and maintenance as well. If glitches are reported by the users or any function is not working as expected, it has to be communicated to the respective development team for improvements. 

Tech Stack for Inventory Management Software

The technology stack is the backbone of any software or system, which brings all the features and functionalities into place. While working with the development team, you must pick the right technologies for your software. Following tech stack can be helpful while building your software- 

Inventory Management Software Development Cost

Businesses are meant to generate profit, and while implementing this kind of software, the cost of implementation remains a significant concern. While no particular price tag can be attached to the inventory tracking system or any type of software, some factors determine the cost.

One has to be ensured of these factors, and the development team can communicate the estimated cost. Let’s have a glance at these factors- 

• The number of features is directly proportional to your cost of software development.
• The features’ type and complexity determine the estimated cost of your software development.
• The country of the development team will say a lot about their per-hour charges for the services.
• Hours required by the development partner to develop the software adds or subtract the dollars from the final cost. 
• The software design you want to see in your software will also describe the development cost. 
• If you opt for the after-support and maintenance in the long term, the cost will also be added to the bill. 
• The third-party integrations you wish to see in your app will also alter the cost of software development. 

As we saw, there are multiple things on which the cost of the software depends, but on average, the cost of an inventory management system is $150 per month and can also go up more than $1 million per year.

How Can Emizentech Be the Best Choice as Your Development Partner?

Emizentech is a renown name in the software development industry, having an experience of more than a decade in developing different types of software, apps, and websites. We currently operate with a team of 250+ developers with expertise in different technology types. More than 50% of this workforce is experienced and skilled staff, ensuring your project is safe. Moreover, the firm works with every type of technology; thus, you get all the solutions under one roof. In our experience of more than a decade, we have developed a range of similar software for our clients. So, we are well aware of the key areas where the cost can be saved without compromising the quality or capability of the software. 

Final Words

With increasing demand of products and services in the different markets, the supply chain has been transfigured. The logistics exchange has come to a scale where a normal pen and paper can not maintain accurate calculations. Inventory Management software arrives as an effective solution in the landscape to keep track of each item even among the inventory of thousand boxes. Be it a retail store, warehouse, or any inventory storing location, these system provides different details like inventory quantity, expiry date, reorder requirements, location of inventory, raw material availability, demand forecast of products, and much more.