December 4, 2023

Inventory Management System - Do you need one?

No matter at what stage your company is most likely, you will need an inventory management system. From manual to fully automated the options are endless..

What is inventory management?

Inventory management is the process of monitoring and controlling the products you have and sell put simply. Doesn't matter what you sell, physical products or services, or digital products, most likely you need an inventory management system. Your products and services are not all that needs to be inventoried as you also need to track your raw materials.

Some companies can still go pen and paper while others use Google Sheets or Excel and it might be ok but many companies, because manual input takes time, and if a mistake is made negatively impacts your business for months or years, have implemented inventory management software or inventory automation for their inventory system.

What is inventory automation?

Inventory management automation is inventory management software or technology that simplifies your inventory management processes by tracking the goods, products, and raw materials you have in stock. Normally it integrates with your sales channels to give accurate results. Depending on your wishes and needs the cost can vary from free to 30€ / 40€ a month to a few hundred a month. For example, you still will need barcodes RFID tags, or QR codes to be able to track your inventory.

The costs of not having an inventory management system

Not playing devil's advocate here but while I understand and agree that some companies have their reasons for not investing in inventory management software, there are costs attached to this decision:

  • Increased costs and time-consuming

If you go manual or you need someone to allocate to this task, or even if you do it yourself, it’s a task that consumes time that could be spent on other tasks, So you still have to pay someone to do this. If you do all the math and consider the cost (salary, insurance, productivity, probabilities for error) and the time spent, in some cases is the same value you will pay for an inventory management system.

  • Inventory tracking challenges

Not knowing in real-time when a product is sold or the raw material is used up, leads to tracking inventory more difficult, most likely leading to a lack of balance in the inventory. Also can lead to theft and inventory that is obsolete.

  • Productivity and lack of organization

When there is no system implemented, someone needs to do tasks that could be automated. That causes productivity to be reduced and of course lack of organization in the warehouse

  • Decision and Strategy

Not having the right information at the right time can lead to wrong decisions or there might be a trend that you are overlooking.

  • Poor customer service

Stock out, increase times in delays and shipping that could be avoided with the right system, cause your customer to blame your company for it, and well, becoming your ex-customer.


Let’s see now some of the benefits of using an automated inventory system

  • Real-time inventory

You do a sale and your inventory is updated automatically. Not only that with a more complete system in case you use raw materials it can also update automatically the goods that were used for the products you sell. A good example is food from a restaurant when a dish is sold, the ingredients used are automatically updated.

  • Order Management

So if you have an update system, it can alert you if you are running out of a product, therefore you can order it before it runs out

  • Trend analysis and planning

As it can alert you to order a product before it runs out, you can also know when a product is becoming trending that you need to order more of it. It can analyze the sales channels and plan your stock for more-demanded or less-demanded seasons.

  • Cost Control

Being able not to order too much, knowing what you have in stock, and knowing for example when a product is getting out of date is a big step to control your costs.

  • Order automation

You know that product that you need to order, the same amount every month? Or maybe you don’t know but the inventory management will inform you as analyze the sales channels and will inform you what needs to be ordered and when.

  • Integrate and automate

Again it depends on the type of inventory management system you have and the investment that you want to make. That being said with an inventory system you can integrate with ( just some examples):

  1. Points of Sale - Sales are automatically recorded and stock levels are kept up to
  2. Eccomerce- Selling of Shopify or Woocommerce is automatically managed and sales and inventory kept on track
  3. Accounting- Not only does it help you but also the accountant when the process is done seamlessly and automatically.
  4. Suppliers- Connected with suppliers and order and reorder can be done automatically.

Use cases

Below are 4 but there are many more use cases that one can explore.

  • Real-time inventory

A small online store can every time it makes a sale having the system update in real time. So the store always reflects the current inventory.

  • Order management

A microbrewery may use inventory management software to track the raw materials and alert when they are low, therefore you always avoid production delays

  • Expiration date Management

If your business uses perishable goods, you can track expiration dates and receive alerts if a certain item is close to the due date.

  • Automate reordering

A management inventory system that can analyze sales patterns and automatically reorder products before they run out.


Impossible to list them all and also a challenge to tell which one is better but below are some of the ones that you can take into consideration when searching for an inventory management tool.

Market Man - A restaurant management platform 

Odoo- Open Source inventory and management platform

Katana - A retail inventory management tool integrated with multiple sales channels

Square - A POS platform that allows you to manage inventory,

Zoho -  A management inventory for growing companies

Fishbowl - Warehousing and manufacturing software

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