Signs It’s Time to Consider an Inventory System for Your Organization

What to look for when researching a new inventory system

Inventory management is an important but sometimes tricky process to get right. Can you quickly check how much of a particular product you have in stock right now? What about the last order you received – do you know where that order is in your supply chain? Can you locate a specific item in your warehouse without too much delay? If you answered “no” to any of these questions, it may be time to explore the idea of implementing an inventory system.

What is an inventory system?

An inventory system, or inventory management system, is a software solution used to track inventory levels, orders, sales and deliveries. While many businesses are content for a time to track their stock levels through more manual inventory control methods, most outgrow these processes eventually and require a more automated system.

Signs you need an inventory management system

We mentioned that most businesses use some sort of process to manage their inventory levels. The level of automation will vary, but as your business continues to grow and expand, employing a more sophisticated solution for inventory management is necessary.

Inventory management problems

Some signs it’s time to consider inventory management software are:

  • Poor quality control
  • Overstocking or outages
  • A disorganized warehouse
  • Low customer satisfaction
  • Little to no reporting
  • Obstacles to revenue growth

Poor quality control

Having a good product is a key part of retaining customers and increasing sales. So is having a consistent product. One way to manage this is through quality control procedures, which establish a set of rules that assess whether an individual item meets a specific standard. Inconsistent, vague or a lack of rules that measure this standard open you up to losing customers and risk your reputation. Inventory management software helps you identify problems and meet industry and governmental regulations.

Overstocking or outages

Smaller businesses many times use manual inventory counting methods, such as ABC or cycle counting, to track inventory. However, as your business grows, a more automated inventory tracking system becomes necessary to manage inventory levels. Preventing outages ensures you also prevent revenue loss. Access to real-time data on your finished goods not only informs your demand forecasting efforts but also proactively alerts you when inventory is low (commonly called a reorder point), avoiding an outage and lost sales.

Disorganized warehouse

Remember when you were a teenager and your parents wanted you to clean your room because no one could find anything in it? Having a disorganized warehouse is kind of like that. Your parents may not be there to tell you to get your warehouse in order, but being able to locate inventory quickly is key to a well-functioning supply chain. Organizations that are unable to find specific products efficiently risk holding up the entire process. Additionally, improved warehouse management leads to more accurate stock counts and demand forecasting capabilities.

Little to no reporting

Reporting is necessary to better understanding your sales and inventory processes. You can create reports that will help you better understand a myriad of factors, such as valuation, turnover, stock level and more. In addition, reporting provides insight into your trends and overall performance, allowing you to identify areas to make adjustments and foster growth.

Obstacles to revenue growth

Slow supply chain performance, high overhead warehousing costs and more can be suppressing your profits. Implementing an inventory system positively affects your operations in order to take advantage of best practices and boost your sales over time.

Results to expect from an inventory solution

After implementing an inventory management system to manage your supply chain and warehouse, you should begin to see changes in your operations. Adding an inventory system can result in:

  • More flexibility
  • Better accuracy
  • Lower inventory costs

Lower inventory costs

Carrying costs for unsold inventory can add up quickly. Being able to make informed decisions and optimize inventory levels will help you reduce the costs associated with holding goods as you wait to sell and ship them.

More flexibility

Using spreadsheets to track inventory is not flexible. It isn’t easy to add a new product you offer, data has to be updated manually and is not available to you and your employees in real time. A cloud-based solution is especially flexible since you can access it from anywhere.

Better accuracy

Similar to flexibility, inventory management systems provide more accurate information about your stock levels. Real-time data is distinctly critical here – having the most up-to-date information allows you to be as informed as possible when making business decisions.

Key uses of inventory management software

Inventory systems can be used to manage numerous processes within your supply chain strategy. However, there are a few main areas where an inventory system acts as a catalyst.

  • Organizes inventory data: Spreadsheets can be cumbersome, disorganized and hard to follow. An inventory system stores all data associated with a specific product in one place that all employees to access.
  • Automates inventory counting: Say goodbye to counting your inventory by hand. Whether you choose to use methods such as barcoding or lot/batch control or a combination of a few, you can track inventory levels automatically and see the state of your warehouse in real time.
  • Manages inventory control processes: Regardless of which process you use for inventory counting and tracking, an inventory management solution maintains these operations and its associated data in one location.

Top benefits

Still unsure if your organization requires an inventory solution? After all, your current process for inventory control has helped you grow up until this point. However, inventory system software may be what helps take your business to the next level. Some top benefits of inventory management software include:

  • Real-time data visibility: A key component of predicting accurate demand is current inventory. As products are sold, spoil or removed from the shelf for any other reason, having an accurate, up-to-date inventory count is critical to better demand forecasting.
  • Automation: Inventory software allows you to set rules that trigger an action with little or no human involvement. An example is reorder points, which are established stock levels that alert you or automatically reorder a specific item in order to avoid a stockout.
  • Easy integration with inventory tracking systems: Tools such as a barcode system, radio frequency identification (RFID) and QR coding make inventory tracking and counting more accurate and easier.
  • Cloud deployment: Many inventory management systems are either entirely cloud-based or are able to be deployed in the cloud.

Using ERP to manage your inventory

Enterprise resource planning, or ERP, software commonly includes inventory management as part of its suite of applications. In addition to inventory control capabilities, there are numerous other benefits of ERP software, including better data and cloud security, improved customer service, cost savings and more.

An ERP solution’s suite of applications generally include tools for:

  • Financial management and accounting
  • Order management
  • Transportation management
  • Planning and budgeting
  • Product lifecycle management
  • Warehouse management
  • Supply chain management
  • Inventory management
  • Manufacturing management
  • Supplier and vendor management
  • Built-in, real-time analytics
  • Reporting tools


However, not all ERP software is alike. Choosing the right fit for your organization is a critical factor in successfully utilizing ERP as a business tool. Other important ERP selection criteria include price, project consideration, scalability and more. As you consider all your options for an inventory system, understand that an ERP system may be the solution you need to support your future growth.

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