Inventory management software is about more than just knowing what you have in your Store. It’s also about knowing what’s in your parts department. How those parts are used to create other products and services. Additionally, inventory management involves understanding what your supply partners or customers have on hand.
There are a lot of factors to consider when choosing inventory management software for your small or medium-sized business. You need to find a package that has all the features you need, but that’s also affordable. To help you make your decision, we’ve tested and compared nine different software packages.
Inventories are complex and multi-faceted, so an inventory management system needs to be able to handle a lot of different data points. The system should be able to integrate with at least one other back-end office system, like accounting or enterprise resource software. Additionally, the inventory management system needs to be able to track items through acquisition, sales, or use processes; locate them across one or many places; and price the inventory (in multiple currencies) so you can keep track of the value of items in your inventory.
Point of Sale System
In many cases, the functionality of inventory management software overlaps with that of asset management software. Both types of software allow you to track and manage your inventory levels, but inventory management software also typically includes features for tracking sales, purchase orders (POs), and deliveries. In addition, in many retail and service operations, inventory management software is integrated with point-of-sale (POS) software.
Small businesses can usually get by with just using a spreadsheet to keep track of inventory. However, once a business grows to a certain size, it will need the asset identification, order tracking, and supply chain optimization capabilities that a good inventory management system can provide.
Inventory is considered a business asset. As such, it is accounted for in the Assets section of a company’s balance sheet. When assets are sold or used, those results are also recorded in the Cost of Goods Sold (COGS) or Cost of Goods Used section of the income statement. That figure is computed by using one or more pricing methods.
There are several methods used to value inventory in the United States, including First In First Out (FIFO), Weighted Average Costing, Standard Costing, and Specific Costing (or Specific Identification). Last In First Out (LIFO) was once popular but is no longer used in most countries.