February 23, 2024

 

Retailers who sell online and through physical stores have to handle lots of critical tasks, including marketing, web design, bookkeeping, and customer service—but the most important of all is inventory management. You need to have tight inventory controls in place to ensure you have the right stock on hand to make a sale.

Software that streamlines inventory management processes has long been used by large retail brands with massive inventory catalogs that are stored across multiple warehouses and stores. But more recently, the cost of inventory control software has made it accessible to businesses of all sizes. Now, any brand can use inventory control software and a variety of tools to manage their stock.

Keep reading to learn what inventory management tools are, their benefits, and the which ones are the most important to use for your retail business.

What is an inventory management tool?

Inventory management tools make it possible to monitor the products you have on hand. They can help you count inventory faster and more accurately, see what your bestsellers are, be aware of what stock you’re running low on, and more. Considering inventory costs are some of the largest expenses you have, having processes in place to control it is critical for your cash flow.

In some instances, inventory tools are hardware like bar code scanners. But more often than not, these tools are software that automatically monitors inventory levels and other details about the product you have in stock. Inventory software can also assist with warehouse management and supply chain operations, helping you send purchase orders to suppliers or transfer stock from one store to another. Having tools to speed up these processes frees up more time to spend on more strategic work—like planning your visual merchandising strategy.

Benefits of using inventory management tools

  • Meet customer demand
  • Rotate inventory
  • Track multiple purchase orders
  • Access from anywhere
  • Integrate with your tech stack

Today’s inventory management tools let you count and track inventory faster, monitor sales and stock levels, determine your inventory valuation, and more. All of this helps ensure the return on what you invest in stock is as high as possible.

Using inventory management tools helps you:

Meet customer demand

Inventory management tools help ensure that you have enough of the right products stocked at the right store locations, and that they’re ready for sale.

Rotate inventory

If you sell seasonal products, you’ll have to rotate your store’s inventory regularly—both in your stockroom and on the sales floor. Inventory management tools help you to find, discount, and sell through products that will soon be out of season, forecast demand for seasonally relevant products, and submit purchase orders to suppliers.

Track multiple purchase orders

Your inventory may come from different suppliers located in different countries, each with their own delivery schedules and processes. The best inventory tracking software lets you manage inventory from all your ongoing purchase orders from one central hub. With Shopify POS, for instance, you can create, submit, track, and review purchase orders across all your store locations in one place.

Access from anywhere

Today’s software-based inventory systems store data on cloud servers so staff can log in and manage inventory from any device with an internet connection. Unlike an inventory database that uses on-site storage, a cloud-based inventory database protects you in case one computer fails or you lose power—you can simply log in from a new device and your data will still be there.

Integrate with your tech stack

Your inventory management software can integrate with software you use to run your business, like your point of sale and ecommerce platform. This ensures inventory data is accurate, so you have a reliable source of truth.

Unify your inventory management with Shopify

Only Shopify POS helps you manage warehouse and retail store inventory from the same back office. Shopify automatically syncs stock quantities as you receive, sell, return, or exchange products online or in-store—no manual reconciling necessary.

5 types of inventory management tools

Here are five inventory management tools that most businesses with retail stores use. Some may be packaged into one software platform, while others may need to be integrated individually:

  1. Barcode scanners
  2. Inventory dashboards
  3. Restock alerts
  4. Cycle counting
  5. Purchase order management

1. Barcode scanners

A barcode scanner helps you scan a product’s universal product code (UPC). This is useful for quickly adding products to a shopper’s cart, counting inventory, and receiving purchase orders.

2. Inventory dashboards

A dashboard is a visual representation of data from your inventory system that you can access on a laptop or mobile device. Inventory dashboards visualize data like inventory on-hand, your sell-through rate, product profit margins, and sales data. This helps you get valuable information at a glance and make decisions with confidence.

3. Restock alerts

Restock alerts are a useful tool that help you avoid inventory management issues such as stockouts. When activated, restock alerts will notify you once your stock level for a product falls below the threshold you set.

💡 TIP: Want to take the guesswork out of restocking? Set reorder points in Shopify Admin to get low stock notifications and have enough lead time to replenish inventory before you run out.

4. Cycle counting

Cycle counting is a way of auditing a small group of products to make sure the quantity you have on hand at your store aligns with the quantity listed in your inventory management system. By doing an inventory count, you’ll more effectively be able to minimize excess inventory. In the event you run into a discrepancy, you’ll have to reconcile your inventory to ensure your system reflects what you physically have on your sales floor, stockroom, and warehouse.

5. Purchase order management

A purchase order management solution can help speed up your procurement process. For instance, retailers using Shopify POS get recommendations for what products to order, and can then create, send, and track purchase orders from the moment the order is submitted to a supplier, until it arrives at their store.

Characteristics of inventory management software

The best inventory management software enables businesses to order, count, track, and manage inventory faster and with fewer errors. It also unifies warehouse and retail store inventory so that you have one reliable source of truth that updates automatically, rather than having to refer to multiple systems and routinely create spreadsheets. Leading inventory management tools include Stocky, Zoho Inventory, Finale Inventory, Shopventory, Flowtrac, NetSuite by Oracle, and inFlow Inventory.

Inventory management software for ecommerce

If you sell online and in-person, you’ll need an inventory management solution that speaks to both your ecommerce platform and POS system. For instance, if you sell online with Shopify, Shopify POS unifies your sales channels and helps you manage all your inventory from one system. Seek out an inventory management solution with key features including:

Inventory tracking

Shopify POS helps you manage warehouse and retail store inventory from the same back office. It automatically syncs stock quantities as you receive, sell, return, or exchange products online or in-store, so no manual reconciling is necessary.

Robust reporting tools

Shopify comes with custom reports that let you go as broad or as granular as you need. For instance, use an inventory management software filter to view a month-end snapshot of your inventory and track the quantity and percentage of inventory sold each day at a glance.

Demand forecasting

Shopify POS provides purchase order suggestions based on recent product historical sales data, seasonal demand, profit margins, and current inventory levels.

Inventory receiving and bar code functionality

Use bar code scanners and your POS system to quickly perform inventory counts and receive incoming purchase orders.

Reorder points

Shopify POS has a reorder point functionality that lets you set a minimum quantity for a particular product or variant. When quantities reach that threshold, you’re notified so you can order more.

Low stock reports

Receive warnings of low stock based on current rate of sales and lead time for each vendor.

Integration with Shopify apps

To further extend the capabilities of Shopify POS, you can choose from hundreds of inventory apps in the Shopify App Store.

Inventory management tools FAQ

How can an inventory management tool help me track inventory levels and avoid stockouts?

Inventory management systems can automatically track quantities of all the items you sell online and at your retail stores. For instance, Shopify POS connects to your Shopify website and adjusts inventory quantities in real time as they’re received, sold, or returned. You can also set up low stock alerts to ensure you order more inventory before you run out. Low stock alerts calculate how fast your remaining stock will sell and how long your supplier will take to ship you new inventory.

Can an inventory management tool help me optimize my inventory carrying costs?

The best inventory management tools help you sell through inventory efficiently. Some tools, including Shopify POS, can suggest items to promote or re-merchandise. This helps you clear out warehouse or stockroom space and make room for new collections, while minimizing the lost opportunity cost (and profits) that come with discounting and stock deprecation.

Can I integrate an inventory management tool with my point-of-sale (POS) system?

Yes, you can significantly streamline your inventory management processes by integrating your inventory management software with your POS system. For instance, Shopify POS comes with inventory management software out of the box and shares data in real time with your Shopify online store. This ensures your inventory data is stored in one place and always accurate without having to manually reconcile figures between sales channels.

Is it easy to set up and use an inventory management tool?

There are many inventory management tools on the market. Some are easy to set up and use, while others come with a learning curve. One of the simplest ways to integrate inventory management tools is to use the ones that come baked into or readily integrate with your POS system and ecommerce platform. Shopify POS, for instance, comes with out of the box inventory management software that integrates with your Shopify website. Without using third-party APIs your inventory is unified across sales channels.

How much does an inventory management tool cost, and is it worth the investment?

You can pay a monthly fee for a standalone inventory management tool or you can purchase a long-term license. If you use a commerce platform like Shopify, you can manage warehouse and retail store inventory from the same place and pay your subscription monthly or annually. Get Shopify’s ecommerce platform, POS system, and inventory management tools and pay just $1 for your first month. For more robust inventory management features, you can upgrade to Shopify POS Pro to unlock capabilities like demand forecasting, inventory counts, advanced reporting, and more.

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