Inventory management software is a computer-based system for tracking inventory levels, orders, sales and deliveries. It can also be used in the manufacturing industry to create a work order, bill of materials and other production-related documents. Companies use inventory management software to avoid product overstock and outages. It is a tool for organizing inventory data that before was generally stored in hard-copy form or in spreadsheets.
Should inventory reach a specific threshold, a company’s inventory management system can be programmed to tell managers to reorder that product. This helps companies avoid running out of products or tying up too much capital in inventory.
When a product is in a warehouse or store, it can be tracked via its barcode and/or other tracking criteria, such as serial number, lot number or revision number. Systems. for Business, Encyclopedia of Business, 2nd ed. Nowadays, inventory management software often utilizes barcode, radio-frequency identification (RFID), and/or wireless tracking technology.
Companies that are primarily service-oriented rather than product-oriented can use inventory management software to track the cost of the materials they use to provide services, such as cleaning supplies. This way, they can attach prices to their services that reflect the total cost of performing them.
Barcodes are often the means whereby data on products and orders is inputted into inventory management software. A barcode reader is used to read barcodes and look up information on the products they represent. Radio-frequency identification (RFID) tags and wireless methods of product identification are also growing in popularity.
Modern inventory software programs may use QR codes or NFC tags to identify inventory items and smartphones as scanners.This method provides an option for small businesses to track inventory using barcode scanning without a need to purchase expensive scanning hardware.
A fully automated demand forecasting and inventory optimization system to attain key inventory optimization metrics such as:
- Reorder point: the number of units that should trigger a replenishment order.
- Order quantity: the number of units that should be reordered, based on the reorder point, stock on hand and stock on order.
- Lead demand: the number of units that will be sold during the lead time
- Stock cover: the number of days left before a stockout if no reorder is made
- Accuracy: the expected accuracy of the forecasts