In an inventory management system, different software programs are combined to keep track of stock levels and stock movements. The solution can be integrated with shipping or multichannel sales platforms.

At the very moment, one understands the meaning of an inventory management system the first thought that arises after that is what is the significance of this system? So, without any further delay let’s find the answer.

An inventory management system ensures that products are available through various channels and optimizes inventory levels. It offers a unified, real-time picture of all products, inventory, and orders across all locations and sales channels.

Businesses can carry less inventory on hand, thanks to inventory management systems, which also frees up capital for use in other areas of the company. While meeting consumer expectations, an inventory management system helps keep inventory costs low.

After understanding the meaning and significance of the inventory management system one of the big decisions is the choice of the Inventory Management System.

Choosing the right system at the right time for the right purpose is the most crucial part of this whole process. As it is a complex decision, so it requires a thorough understanding and the right evaluation of available choices.

Choosing an inventory management system requires knowing which features your company requires. Do you need to plan inventory and monitor trends, or do you need to track product movements and placement within a warehouse?

Real-time demand planning functionality, data analysis tools, and near and real-time data reporting should all be considered while evaluating a system.

Types of the inventory management systems

There are different types of inventory management systems. These systems are differentiated on the basis of

• Industry
• Technology
• Techniques
• Frequency of use

Types on the basis of industry

These management systems are different for different industries. The different types of industries are:

• Manufacturing industries
• Warehouse industry
• Retail industry

On the basis of these three main types of industries, there are three different systems.

• Manufacturing inventory management system
• Warehouse inventory management system
• Retail inventory management system

Manufacturing inventory management

The main goal of this system is to keep enough inventory on hand so that production lines can fill orders. The method keeps track of raw materials, parts, work-in-progress and finished goods.

It also enables managers to quickly see stock levels. Learn more about managing manufacturing inventory.

The required features are:

• Tracking of materials levels of inventory (parts and finish products)
• Integration of automated reordering with ERP

Warehouse inventory management

The main concern of this type of inventory management system is finding an item’s location. Accordingly, it is essential to make sure you can easily locate an item in a warehouse setting, even though maintaining the correct inventory count of things on hand is equally critical.

Software-based warehouse inventory management systems are frequently employed because they automate and optimize the way the warehouse is conceptualized, making stock choosing easier.

The required features for this type of system are:

• Accommodates multi-locations
• Sophisticated barcode system (with QR, among other standards)
• System for tracking shelves and bins
• Order picking assistance

Retail inventory management

The goal of retail inventory management is to maintain the right amount of desired product in stock—neither too little nor too much.

Retailers may meet client demand without running out of goods or carrying an excess quantity by properly managing their inventory.

Therefore, the appropriate inventory management system is crucial to maintaining a balanced inventory in line with your company’s objectives.

In order to make sure that a company has enough inventory levels, the following features are a must to have:

• Order picking support
• Automated reordering
• Barcoding support
• Inventory forecasting

Types on basis of technology

In order to choose an inventory management solution based on the hardware the organization already has or wants to utilize, it is helpful to use this type.

There are two main systems under this classification:

• Barcode system
• Radiofrequency identification system (RFID)

Now, let’s individually learn about these systems.

Barcode system

A system for quickly and accurately updating inventory levels by scanning things with a mobile device or barcode scanner. This is the fastest and easiest inventory tracking system.

Radiofrequency identification system (RFID)

RFID technology greatly decreases human error and automates data collection. RFID enables tag reading without requiring a line of sight or item-by-item scans. Multiple RFID tags can be scanned by one RFID reader at once, increasing efficiency.

Inventory movements are controlled by active and passive technologies, with the latter using handheld readers for tracking inventory movement and fixed tag readers and RFID tags in the warehouse for real-time inventory tracking.

The organization can start by limiting the features and kinds of inventory management software solutions they require once they have determined which is most effective for their company.

Types on the basis of techniques

Systems for managing inventory can be categorized based on their methods. Different industries use one or a combination of these systems to ensure efficiency and effectiveness.

Different categories on the basis of techniques are as follows:

• Just-in-time inventory management
• ABC analysis
• Drop shipping
• Cross-docking
• Bulk shipment

Types on basis of frequency of use

How frequently a company needs to run inventory can also be used to categorize inventory management. When deciding between a perpetual on-premises license, annual cloud subscription, or month-to-month SaaS package, this classification is crucial. The following two are the classifications:

• Perpetual inventory system
• Periodic inventory system

Following is the explanation for understanding.

Perpetual inventory system

A perpetual inventory system, as opposed to a physical inventory, is a program that continuously assesses your inventory based on your electronic records.

This approach starts with a physical count as a baseline and updates based on receipt of purchases and shipment of goods.

Periodic inventory system

The periodic inventory system is a technique for valuing inventories that involve physically counting stock at predetermined periods.

Choosing the right inventory system is one of the most complex and challenging processes. One mistake can ruin the hard work of months.

For this purpose, let’s introduce software that provides the best solution to this problem. It’s an Inventory management system made by Nvntri. You can use this software both on desktops and mobile. Download Nvntri now.

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