The best inventory software solves a lot of problems – and should open up opportunities too. Below we explain the must-have inventory management software features you need when investing in a proper inventory management software solution. We’ll also look at some of the value-adding bonus features of the best inventory management software solutions on the market.
Where you’re at in the inventory management software buying journey
Before we start, let’s make some assumptions about who you are and what you’re looking for.
- You need more than what your accounting software’s native inventory management can do. Many accounting systems come with a built-in inventory management function. However these are quickly outgrown by most businesses as they have limited functionality. The same goes for the inbuilt inventory management features offered by most eCommerce packages.
- Spreadsheet inventory management is a nightmare and you know it.
- You also know you need a paid system. Because free inventory management software works as well as you would expect.
With that said, let’s look at the inventory management software features that you’ll need.
The most important inventory management software features
These are the core features that business owners and finance directors will want. If you’re considering an inventory solution that lacks one or more of these features, then look elsewhere.
1. Real-time inventory tracking
This is the number one, absolute basic requirement of an inventory management software system. Your software must show you exactly what you have, and where – and it needs to reflect in real-time any stock movements or allocations in your company. That means:
- Sales orders are reflected in your stock position. So you don’t sell the same thing twice, or sell stock you can’t deliver
- Inbound goods are reflected in your inventory management software as soon as they’re scanned at the warehouse.
- Warehouse transfers show up in real time.
- Production reserves components if you’re a manufacturer. So you don’t start a new assembly run only to find that half your parts were used up on another job.
- Consignment stock is tracked by your system, even if it’s held in someone else’s store.
2. Real-time inventory value
While warehouse managers and operations care about what stock they have and where it is, the finance team needs to know how much it’s worth.
A good inventory management system therefore needs to update – in real time – whatever accounting software you use. That means you’ll want:
- Accurate inventory values that account for variations in the price or volume of your purchases.
- A live view of inventory value by warehouse, region and country.
- Multi-currency support if you buy and / or sell in multiple countries.
- The ability to accurately track variable inventory costs like courier fees or production wastage.
- The ability to group products to give a more granular view of Cost of Good Sold (Cogs).
- A live view of the profit margin on your products according to the sales channel and location and that accounts for any variable costs.
The core inventory management software features will help you avoid stockouts and reorder at the right time.
3. Reorder points & low stock alerts
There’s not much point knowing exactly what stock you have and where if that doesn’t prevent you running out. Your inventory management software therefore needs functionality around setting automatic alerts when important stock is running low – and the ability to quickly generate a purchase order off the back of that alert.
For stock management at scale you’ll want the ability to generate a reorder report that lists everything that needs reordering so you can do your purchasing in one fell swoop.
4. Purchase management & supplier management
A key business efficiency you unlock by having proper inventory management software is gaining control of your purchasing. Naturally, when you know exactly what you have, what it’s worth and where it is, you’re in a far better position when it comes to buying more (or not buying more needlessly, as the case may be).
But you must make sure that you don’t waste time – and make mistakes – manually transferring your inventory data into your purchasing process, or endlessly copy-and-pasting your supplier details.
The best inventory management software will let you:
- Generate and autofill your purchase orders.
- Centrally store all your supplier details.
- Dynamically generate any quantity discounts your suppliers give you to make optimal purchasing easy.
- View your transaction history with each supplier.
- Partially receipt a purchase order if goods arrive in dribs and drabs.
5. Unlimited SKUs
Think twice about any inventory management software system that limits the number of products you can add. The same goes for any limits on customers, transactions, and suppliers. Investing in inventory management software is about prepping for growth. So meet the needs of today, but plan for the needs of tomorrow too.
6. Proper inventory reporting
There’s no point getting fancy new inventory management software if you have to manually extract all your data each month. After all, the whole point of any software system is to reduce admin and make operating at scale more efficient.
Look for baked-in reporting features that can deliver data like:
- Your inventory turnover rate
- Average days to sell for each SKU
- You backorder rate
- Stock age
- Unit sales
- And more…
The best inventory management software features for manufacturers
From an inventory management perspective, manufacturing is just a matter of grouping products together under a new SKU – and changing what they’re worth. That’s a view that would no doubt irritate the team in your tool room, yet it does demonstrate why managing elements of the manufacturing process via your inventory management software makes sense.
Here are the inventory management software features you’ll want if you’re a manufacturer.
Literally this is just an internal movement of stock and shifting of value from a set of individual components to an assembled product with its own SKU.
8. Bills of Material (BoM) management
BoMs are the recipes that dictate the precise quantities of components that make up an assembled product. If your inventory management software manages your BoMs too, then the process of ordering the right components in the right quantities for a planned production run becomes dramatically simplified.
The best inventory management software will autofill purchase orders directly from your BoM, taking into account what stock is on hand to fulfill the run. It should also let you nest multiple levels of BoMs for more complex assembled products, and record the value of any production waste too.
9. Batch tracking (aka lot tracking)
A core inventory management system feature for food manufacturers in particular, batch tracking keeps you on top of batches of stock so you can monitor things like expiry dates, using up goods before they become worthless. It’s also critical for manufacturers who need robust traceability systems in the event of a product recall.
10. Serial number tracking
This is similar to batch tracking, except each individual component has its own unique identifier. You’ll want serial number tracking if you manage lots of high-value, highly specific componentry. Or if after-sales servicing is a big part of your business: think of the way you buy a new printer toner by serial number according to the specific make and model of your printer.
Manufacturers benefit from some specific inventory management software features.
The best inventory management software features for the warehouse
It’s likely your warehouse manager will want a say in the inventory management software you choose. Here are the inventory management software features that your warehouse staff care about.
11. Barcode scanning
Efficient warehouses track goods in and out electronically, with barcode scanning the most popular method. You’ll typical use barcode readers for:
- Receipting Purchase Orders.
- Stock Counts.
- Sales Shipments.
So ensure your inventory management software supports 1D barcode readers, and can generate its own barcodes for printable labels.
12. Pick, pack & dispatch
Pick pack and dispatch is the meat and potatoes of warehouse life, so you’ll want good levels of control and flexibility in this important feature of inventory management software. Look for:
- Flexible pick lists to optimise your route through the warehouse.
- The ability to partially complete shipments.
- Support for International Commerce Codes if you ship overseas.
13. Stocktake support
If an inventory management software system hasn’t been designed with features specifically for stock taking, then it’s obviously not worth your time.
Manually validating stock figures is a necessary evil for all product businesses, and you’ll want your inventory management software to take as much pain out of the process as possible.
Look for features that minimise business disruption, including running stocktakes by warehouse, bin location or product group. You’ll also need a stock adjustment feature, to correct any discrepancies and variance reporting to follow up on what you find (or don’t find, rather).
The Unleashed Inventory Management Guide
Inventory management software features you hadn’t thought of
Good inventory software should cover off all your main needs. But the best inventory management software will have features that take your business to a whole new level. Here are some of the features you might not have considered, but are very much worth having.
14. A mobile sales app
These are popular with shop-floor staff, and let them answer questions about what’s in stock and where without going back to a terminal. They’re also great for sales staff on the road: a mobile sales app means big sales orders can be placed with full visibility over lead times and your ability to fulfil the order.
15. Support for multiple sales channels
If the pandemic taught product businesses anything, it’s that having multiple sales channels is critical for weathering disruptions. For inventory management software that means:
- Integrating with eCommerce platforms like Amazon and Shopify for B2C selling.
- Integrating with point of sale apps.
- An efficient way to take B2B orders.
- A sales order management system that flows seamlessly from all your different sales channels, to your inventory – and through to purchasing if needed. All while maintaining accurate margin visibility across all channels.
Is it too much to ask?
The best inventory management software will support your sales channels too.
16. Modern data security
Depending on your location and type of business a certain level of data security may actually be a legal requirement of doing business. Regardless, it’s simple common sense for modern companies. Ask your software provider about their encryption standards, and whether they support 2-Factor authentication.
17. Compatibility with your other apps
If your company lives and breathes Salesforce, for example, there’s no point buying an inventory management software system that can’t talk to your CRM. The same goes for the other software that ends up affecting your stock levels. Doing half your business through Amazon? Don’t buy an inventory app that locks you into manually transferring sales details for years to come.
At a minimum, look for the ability to integrate with your other software via API. While a best-case scenario is an actively managed integration that lets you simply plug and play.
18. Advanced analytics
With all those advanced inventory management features you’ll be generating screeds of data. So bonus points if your inventory management software provider includes a native Business Intelligence interface.
19. Your advisor approves
Perhaps the last thing to consider, but still worth mentioning: if you have a business advisor, you’ll want their input on your choice of software too. An inventory system that they like and / or are familiar with is almost a feature in itself. And it’s helpful if they get their own access to the software too.