storage and inventory control system business plan

• Marketplaces
• Shopping Cart
• Advertising
• Content Marketing
• Contact Center
• Customer Experience
• Distribution Center
• Fulfillment
• Order Management
• Sector Spotlights
• Media & Marketing Events
• MCM Advisory Board
• Submit A Release
• Advertise with Us

Storage and Inventory Control Best Practices

Storage and inventory control processes include activities related to holding material and the processes of counting and transacting it as it moves through a fulfillment or distribution center.

The layout of a facility supporting an adjoining manufacturing operation will have different requirements than one supporting distribution to stores or consumers. Some operations place emphasis on replenishment, others on picking and order fulfillment.

Regardless, best-practice companies have designed storage systems to meet the needs of the current and planned mix of storage types. This includes optimization of storage locations and layouts to fit product without the need to restack or re-palletize once received. The warehouse management system (WMS) will track storage location profiles and properly assign items to the optimal storage location. As a result, top performers have excellent cube-fill rates.

In addition to optimizing the cubic fill of storage locations for better inventory control, another best practice is to minimize travel time. If a particular SKU is in high demand, it should be placed closer to its next point of use. In this case, demand is based on the number of times the SKU is required, not on the number of units sold. The difficulty of retrieval should also be considered in terms of travel time. Higher-demand product should be placed on the most easily accessed storage space in a “hot zone,” typically at floor level for racking and between waist and shoulder level in pick racks.

Not all companies need to track product by lot or serial number, but if required, best-practice companies have integrated that capability into their DC or FC and and shipping processes, using the system of record to manage the lot and serial number data.

Most companies put a lot of effort into the initial facility layout. However, industry surveys will tell you that as many as half of companies don’t have an ongoing process to review their layouts. Reviewing how storage areas are configured and having processes in place to reconfigure them as product mix changes is considered a best practice and is critical to maintaining high levels of space utilization and efficiency. Making continuous small adjustments to racks, shelving or other storage equipment can greatly improve space utilization.

All warehouse software runs on data, so product and storage locations must be kept current and accurate. Best-practice companies maintain all information on a single system of record and keep it current and accurate. Product data should include all characteristics including cube, lot/serial number information and special requirements so it can be directed to special storage areas. Special storage areas may be used to segregate items with odor transfer or fire risk, or that require temperature control. High-value product might require caged or controlled-access storage.

Kate Vitasek is the founder of Supply Chain Visions

This article was originally published in 2007 and is frequently updated

Don't bother with copy and paste.

Get this complete sample business plan as a free text document.

Inventory Control Software Business Plan

Start your own inventory control software business plan

Royal's Software

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Royal’s Software has embarked on an ambitious plan to create a new software product, Royal’s Inventory Basic–a scalable inventory software product. The new product is scheduled to be released in May and will be sold by Pursuit Solutions.

Pursuit Solutions, a $50 million company hardware integration reseller, will distribute Royal’s Inventory Basic to over 1,100 Valued Added Resellers (VARs). The product will sell for $2,499. Royal’s Software will receive $1,250 on each unit sold. It is projected that Pursuit Solutions will sell 250 units by month six. It is projected that Royal’s Software will gross $313,000 from sales the first year.

A critical component of software sales will be tech support and product modifications. Royal’s Software projects $63,200 in product modification by the end of six months.

In addition, Royal’s Software has entered into a business agreement with Pursuit Solutions and Johnson and Roe (CPA firm) to create a MAS 90 portable data collection interface that will be sold to accounting firms. The software product has been in development over the past ten months.

John Royal and Dan Whiteaker have been an integral part of the product development. MAS 90 is not a packaged product, rather it is bundled with software customization services ($2,000-$3,000) that will be performed by Royal’s Software. This software product will sell for $2,500.

Royal’s Software will receive 1/3 of gross sales ($833). It is projected that Royal’s Software will gross $500,500 by May of next year from product sales and customization services.

The two co-owners of Royal’s Software, John Royal and Dan Whiteaker, will each invest $50,000. In addition, the company will obtain a $100,000 short-term loan.

1.1 Objectives

The objectives of Royal’s Software are as follows:

• Establish the company as a leader in inventory software products.
• Increase sales by 20% each year.
• Develop one new inventory product per year.

1.2 Mission

The mission of Royal’s Software is to create inexpensive inventory software that will be scalable, so customer modification can be easily added.

1.3 Keys to Success

The ability to produce products on time and on budget, that meet the user’s needs and specifications.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Royal’s Software creates scalable inventory software products that can be customized to meet customer’s needs. Royal’s Software is unique in that it sells a product that can be used in any inventory environment. The engineers can then add enhancement to the product that will tailor the product features to the customer’s specific needs.

2.1 Company Ownership

Royal’s Software is owned by John Royal and Dan Whiteaker. The company will be set up as a C Corporation. It is expected that this form of incorporation will allow room for growth and an exit strategy of selling the business in five to seven years.

• John Royal has ten years of experience as an application software developer for Rogue Wave Software. John was the Lead Developer for New Products for the last four years. He was the principal designer of Rogue Wave’s Ace Software Suite.
• Dan Whiteaker has seven years of programming experience with Rogue Wave Software. Dan assisted the Ace Software Suite Development Group. He lead the Customer Modifications Group for the past two years.

2.2 Start-up Summary

The following is the start-up summary for Royal’s Software. As is typical for software companies the largest portion of start-up funds will go towards product development.

Royal’s Software products and services include the following:

• Royal’s Inventory Basic.
• MAS 90 portable data collection interface.
• Custom Modification Royal’s Inventory Basic.

In addition to selling software, the company will provide extensive customization services to meet the unique needs of its business customers.

Market Analysis Summary how to do a market analysis for your business plan.">

Software products for inventory management are a $1 billion dollar industry. The lions share of the sales are with the largest companies with billions of dollars of inventory. This is where there is the greatest competition between inventory software products.

This category of the industry also faces competition from the enterprise resource planning software vendors. At the low end, with small and emerging businesses, there is very little competition.

Usually, the smaller businesses will spend no more than $5,000 on an inventory solution which will include software and hardware. Royal’s Software believes this a tremendous opportunity for a software product with a $2,500 price tag.

Another opportunity area is the growing demand for software interfaces that improve the portability of data. The interface improves the ability of businesses to move data between systems. In an age where new management products are introduced each year, a company’s ability to move its data quickly and efficiently is becoming essential to a successful business.

MAS 90 portable data collection interface is designed to be used by accounting firms to improve the portability of data the firms stores for customers.

4.1 Market Segmentation

Royal’s Software is targeting small- and medium-sized businesses. Specifically it will focus on these two target groups:

• Smaller businesses that will spend no more than $5,000 on an inventory solution, including software and hardware.
• Accounting firms demanding MAS 90 portable data collection interface.

Strategy and Implementation Summary

During the first two months of operation, the company will focus on completing and testing beta copies of Royal’s Inventory Basic and the MAS 90 portable data collection interface. Sales will begin in May and grow steadily for the next 10 months.

5.1 Sales Strategy

Royal’s Software will not do any direct selling, instead it will work closely with Pursuit Solutions’ VARs to sell and service Royal’s Inventory Basic. The two owners have existing relationships with a number of VARs through their existing positions, and since this product is unique in its price range, it is not expected that it will be difficult to find VARs to represent it.

MAS 90 customers will be developed by the CPA firm, Johnson and Roe. It is projected that the MAS 90 product will have over a 100 customers by June of 2003. A large number of small- to medium-sized businesses use MAS 90 in their dealings with Johnson and Roe, and it is expected that sales will be healthy through this channel.

5.1.1 Sales Forecast

The following is the sales forecast for the next three years.

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

Personnel Plan

The current staff of Royal’s Software are the two co-owners of the company. The owners have been working on developing the product on their own time over the past year, are beta testing the product and now feel that they are only a couple of months away from having a final product. It is envisioned that Royal’s will need to ramp up significantly as sales take off and they are pulled away from product development and support in order to run the company. Three new hires are planned in March to meet the anticipated demands of software sales. The following positions will be filled:

• Application Engineer (1)
• Support Engineer (1)
• Technical Support Staff (1)

To keep fixed costs to a minium and to keep existing technical staff committed to the development of new products, much of the customization will be done by outside consultants. This expense is illustrated in the profit and loss table.

In addition, we will not have large sales and marketing costs, because VARS will take on this role on our behalf, and their large commissions shall reflect this.

Financial Plan investor-ready personnel plan .">

The following is the financial plan for Royal’s Software. The plan includes:

• Break-even point;
• Projected profit and loss;
• Projected cash flow;
• Projected balance sheet.

7.1 Break-even Analysis

The estimated monthly fixed cost and monthly break-even point are shown below.

7.2 Projected Profit and Loss

The following table and charts highlight the projected profit and loss for the next three years.

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for the next three years.

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for the next three years.

7.5 Business Ratios

Industry profile ratios based on the Standard Industrial Classification (SIC) code 7372, Prepackaged Software, are shown for comparison.

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

Inventory Control Guide: Definitive Plan for Business Owners

Inventory control is one of the key ways a business can keep its costs low. This in turn can lead to higher profit margins and increased sales.

If you're an inventory control manager or looking to become one, understanding how to control inventory is paramount. We'll walk you through all aspects of inventory control and management.

Let's start with a brief overview of what inventory control is.

Inventory Control Overview

Inventory control is the maintenance of a business's inventory level to fulfill orders and minimize costs. It involves managing inventory storage, movement, and maintenance. It also includes using data to make decisions that can increase the profit you make off this inventory.

The Purpose of Inventory Control

The primary purpose of inventory control is to protect inventory from damage or theft and to track inventory in the financial statements. Inventory control ensures a warehouse operates smoothly while keeping costs low and meeting customer demand. All stock must be recorded and this data can be used to make a variety of decisions.

The Application of Inventory Control Data

Using inventory control in your business requires investing time and money. This is done through either physical inventory counts or investing in a perpetual inventory management software. Both result in the accumulation of data regarding inventory levels and trends to plan for purchasing, controlling, and shipping goods.

The Value of Inventory Control

Inventory control is a vital part of any business' ability to make a profit. The major reasons it is valuable to control inventory are that it increases warehouse efficiency, ensures the accuracy of inventory data, can lower costs and increase revenue, and keeps your customers satisfied.

Without inventory control, a business's warehouse can quickly become a liability. If inventory is allowed to move about with no control, a manager risks running into skyrocketing costs and plummeting profits. This in turn will lead to the loss of their job and possibly the closure of the business.

Invest in Automated Inventory Control Systems

One of the best ways to take control of your business's inventory is to purchase a subscription to an inventory management software. This software tracks inventory levels, sales trends, and inventory cycles. Most of these programs can also be hooked to your POS system to provide a perpetual inventory count. This updates your inventory levels each time a sale is made. This feature is built into some of the best inventory control software and allows you to take a more hands-off role.

The other major component of inventory control is inventory management.

Inventory Management Process

Inventory management is the act of reducing inventory costs and optimizing the ability to meet demand. This is done using a variety of methods like reducing dead stock or calculating optimal reorder points.

This most important part of inventory management is that it requires a dedicated focus on inventory tracking.

Inventory management requires creating and following a simple set of processes to limit the chance of improperly managing your inventory.

There are eight steps in the inventory management process. These are: Receiving product, inspecting and sorting product, monitoring inventory levels, receiving orders, picking and shipping product, updating inventory levels, and placing reorders.

These eight steps can be done more efficiently with a properly managed inventory process flow. Each step can be optimized by tracking and reviewing each step. You can eliminate inventory shrinkage , discover flaws, and reallocate resources to any step that needs it to increase your profit and limit your costs.

How to Improve Inventory Management Process

There are many ways you can improve your inventory management and get the most out of your inventory. A few of the most common including communicating inventory needs to your suppliers, tracking product lead time to plan for reordering, hiring an inventory control manager, and using inventory management software.

The two major tools we recommend are the creation of an inventory management process map and the purchasing of an inventory management system.

Inventory Management Process Map

An inventory process map is a flowchart that shows every step in your inventory program. Though the eight steps are fairly standard, there are many variables that are specific to your businesses. By mapping out all steps and options, you can always be prepared for any changes in supply or demand.

Inventory Management System

An inventory management system is a program that tracks and manages all aspects of a company's inventory. This includes purchasing, shipping, tracking, storage, turnover, and reordering. This type of all-in-one inventory management software can be integrated into your POS system to provide a perpetual inventory count.

Now that you understand inventory control and management, let's dive deeper into the individual methods you'll need to know. We'll start with the most obvious, inventory tracking.

Inventory Tracking

Inventory tracking is one of the most important inventory control methods. Inventory levels influence all decisions you make and can quickly increase or decrease your revenue. They can be tracked manually or perpetually.

How to Track Inventory

The basic way to track inventory is to manually count your inventory every two weeks and compare the numbers versus sales. That's known as periodic inventory.

The other option is a perpetual inventory, where an inventory management app or software is integrated into your business's POS. This gives you access to live data at all times and lets you have more control over inventory tracking.

Inventory Tracking Best Practices

There's no single way to track inventory, but there are a few best practices that all businesses should adopt. The six main practices are to establish specific goals for your inventory, use ABC inventory analysis to bucket your products by value, keep safety stock, optimize inventory turnover ratio , increase packing efficiency, and adopt the FIFO method .

These practices can all be applied by manually tracking inventory or by using inventory tracking software.

How to Track Inventory Manually

To track inventory manually you need to physically take inventory at least twice. The first to establish baseline stock levels and again to determine usage. These two inventories are usually taken on the first and last days of the month.

Manual inventory tracking is much more labor-intensive than using tracking software, but can still make use of technology. This is by making use of a spreadsheet to track the data you collect. Still, inventory software offers a much less labor-intensive inventory tracking program.

Inventory Tracking Software

Inventory tracking software is a digital program or application that provides a perpetual inventory count. It is generally integrated into your POS and updates instantly every time an item is scanned as it's sold or shipped. It offers many long-term benefits to a business and eliminates the need for full, physical inventory counts every month.

Whether you use physical or perpetual inventory counts, the next important step is to perform inventory audits to ensure all information is correct.

Conducting an Inventory Audit

An inventory audit is when a business cross-checks its financial records against its inventory records. It is a vital part of inventory management and is done to ensure all records are accurate. These audits also uncover any discrepancies in inventory count or financial records.

How to Conduct Inventory Audit

Conducting an inventory audit requires pulling current data from a variety of sources. This may include inventory counts, sales records, shipping manifests, or other records.

Though there are many forms of inventory auditing, the workflow is mostly the same. You acquire at least two records that should reflect the same inventory numbers. Then check them against each other to discover if they do match. If not, flag the areas with issues and look into any problems that arise like missing inventory, damaged product, or inaccurate sales figures.

Inventory Auditing Procedures

Inventory audits can be completed by using a variety of auditing procedures. Some of the most common include performing a physical inventory count, performing a series of smaller cycle counts, or matching shipping invoices to financial records. In addition, a number of analyses may be conducted including an ABC inventory analysis, cutoff analysis, overhead analysis, finished goods inventory analysis, or freight cost analysis.

All of these procedures are intended to help you verify the information in your records is correct and to uncover any areas where you may be losing money. They are conducted according to strict inventory auditing standards.

Inventory Auditing Standards

Inventory auditing standards must be established by the business if they expect to achieve results. There are two rules that make inventory audits easier and more accurate.

First, audits need to be performed regularly and in the same method each time. If not, the data uncovered will not be particularly helpful as it could be incorrect. Second, inventory control needs to be practiced at all times, otherwise audits will become overwhelming and difficult for the team.

Now that you have a better grasp of the different ways you can audit your inventory, you can start working on limiting waste. One of the biggest issues uncovered during audits is dead stock.

What Is Dead Stock?

Dead stock is a form of surplus inventory that a business is unlikely to sell in the near future. It is a drain on warehouse resources and actively prevents a business's ability to increase its profits.

These products are not to be confused with buffer stock as they were not ordered with the intention of storing them for a long time. Dead stock continues to depreciate in value and may eventually expire or become obsolete and have to be written off as a loss.

Dead Stock Management

Dead stock inventory control consists of selling what you can and finding ways to minimize the expenses associated with dead stock. The key is that the inventory control manager needs to determine the causes of their dead stock.

Two major causes of dead stock are poorly managed lead times and reorder points. They can cause customers to cancel their orders and result in stock that was expected to be sold left sitting in the warehouse.

Inventory tracking is also a vital part of managing and eliminating issues with dead stock. It helps create inventory forecasts so you only order the correct amount of goods in the future and recognize sales trends and inventory cycles.

How to Get Rid of Dead Stock

Getting rid of dead stock can be very difficult, but it is important to limit losses. Some of the most common ways to offload dead stock is through kitting , limited-time sales, internal store transfers, selling to wholesalers, or returning the goods to the manufacturer.

Not all options are available to all businesses, so an inventory control manager needs to be flexible with dead stock. You can also find more customers for your products by listing them on an online marketplace .

Going forward you should also try to avoid running into issues with dead stock entirely. The first thing that needs to be controlled is product lead time.

Lead time is the amount of time that goes by from the start to finish of any given process. Lead time is one of the most important measures in inventory control.

Calculating, understanding, and acting on changes in lead time allows a business to prevent losses and fulfill orders quickly and efficiently. This is true for both retailers and manufacturers. It affects all businesses within a supply chain and can cause major issues if it gets out of control.

Lead Time in the Supply Chain

Total lead time is affected by every step within a supply chain. Production takes time, shipment takes time, and all other intermediary steps take time. As such, lead time in inventory management needs to be monitored and planned for regardless of business type.

Lead Time Is Bad

Long lead times can cause many problems that interfere with a business being able to fulfill orders.  

For retailers, long lead time means a loss of sales and angry customers. For manufacturers, long lead time can cause production to halt entirely. It also leads to increased lead time for the retailers and strains relationships. Every additional day that goods are delayed, money is lost so you should always try to reduce it.

Lead Time Reduction

Lead time reduction can take a lot of time, but will help your business improve its sales and fulfillment capability. The most important factor when trying to reduce lead time is to look at your historical data.

There are a few ways you can use this information to reduce your lead times. These include switching suppliers, sharing data with your suppliers, and increasing reorder frequency.

Before you can try any of these methods, you need to know how to calculate your lead time.

Lead Time Formula

Calculating lead time requires a simple formula. There are two versions of the formula depending on if you're a manufacturer or a retailer.

For manufacturers, the lead time formula is:

Total Lead Time = Manufacturing Time + Procurement Time + Shipping Time

For retailers, the lead time formula is:

Total Lead Time = Procurement Time + Shipping Time

Using the inventory tracking tools and formulas above, you can keep your business operating smoothly and focus on increasing sales and revenue by calculating optimal reorder points.

Reorder Points

The reorder point is the level of standing inventory on-hand that alerts you to reorder. Essentially, when you hit this particular number, you should place an order to ensure you can continue to meet demand without any gaps.

Reorder point is not a stable number, but is flexible based on sales trends and the demand cycle of a given product. This means you need to have an understanding of each product's inventory levels and sales to optimize its reorder point. This is easily done using inventory management software that tracks everything you need to know about your inventory.

Reorder Point Formula

Uncovering the reorder point for a product can be done using a very simple formula.

Here's that formula:

Reorder Point = (Average Daily Usage x Average Lead Time) + Safety Stock

How to Calculate Reorder Point

To calculate the reorder point for a given product first requires that you determine a product's average daily sales, lead time, and amount of safety stock. Daily sales information can be pulled from your POS system if you have one. If not, you can look at inventory numbers and divide by the number of days between taking inventory. Safety stock can also be found in inventory counts.

Lead time can also be calculated for the product using the formula listed in the previous section. With these three numbers in hand, it's as simple as plugging them into the formula above to determine that product's reorder point.

Reorder Point Problems and Solutions

There are a number of issues that can hamper your ability to make the most informed reordering decisions. Here are just a few of the issues you may encounter.

Safety Stock and Reorder Point

Safety stock is additional stock you keep on hand in the event that demand suddenly increases. The issue here is that you may go through it more quickly than anticipated. This means you need to reorder earlier as well. Luckily, that is exactly why you keep safety stock on hand.

To combat any sudden shifts in demand and safety stock usage, track daily sales and recalculate your reorder points regularly.

Lead Time and Reorder Point

Lead time is the other major issue that may interfere with calculating your optimal reorder point. Unfortunately, you don't have much control over lead time as it is dependent on the supplier and shipper. However, this can be mitigated by keeping an adequate safety stock on hand. You should also calculate your reorder point daily to notice any changes in lead time as they occur.

Reorder point calculations are also a very important part of determining the correct amount of product to order. This is known as economic order quantity.

Economic Order Quantity

Economic order quantity is the ideal amount of product a company should purchase to minimize inventory costs. Essentially, it is the amount of product you need to order to meet demand without having to store any excess inventory.

Finding your optimal order quantity for a product is the goal of calculating its EOQ. However, it is very difficult to achieve as any slight variance in demand, cost, or price will throw the numbers off.

Economic Order Quantity Value

Managing economic order quantity can help avoid issues like excess stock or dead stock and keep avoidable losses to a minimum. It also helps establish goals for inventory KPIs, informs inventory forecasting decisions, and helps increase the company's sales and revenue. It is also a vital part of the just in time inventory model.

Advantages and Disadvantages of EOQ

Utilizing EOQ for your business has both advantages and disadvantages. On the plus side, economic order quantity allows you to minimize all costs associated with inventory and can easily be adapted to your business model. This will lead to higher profit margins and a streamlined workflow in the warehouse.

However, there are also a few drawbacks that you need to be aware of. Calculating EOQ can be difficult. You'll see the formula used for EOQ calculations below, and it's safe to say it isn't the easiest to use. The calculation is also based on assumptions, so your number will not be completely accurate if any of the numbers you use are not perfectly steady.

Economic Order Quantity Formula

Calculating the economic order quantity for a product can be done using a slightly complicated formula.

EOQ = √ (2 x Demand x Order Cost / Holding Cost)

Calculating the economic order quantity for your products can help you make the most out of your warehouse space, minimize costs, and increase revenue. It also allows you to make the most out of your inventory forecasting.

Inventory Forecasting

Inventory forecasting is used to predict future inventory levels needed to meet demand. This is done by combining historical data with future assumptions on demand cycles and sales trends.

Collecting data is the most important part of inventory forecasting. This requires a strong inventory management program. Sales trends, stock issues, and dead stock are just a few of the issues that can be uncovered by taking regular inventory.

How to Forecast Inventory

To forecast inventory levels, you must first take inventory at least twice. This can be done through physical inventories, cycle counts, or the use of a perpetual inventory program. Next, determine what products are selling well and if they are nearing their reorder point. This lets you predict future sales trends based on historical sales.

Each new inventory taken will provide further insight into inventory trends. You can use any shifts in sales or stock levels to make more informed forecasts.

Keys to Inventory Forecasting

There are many ways any business looking to forecast for inventory management and control can achieve their goals. There are three best practices you should use to get the most of your forecasting.

First, consistently track and record your inventory levels. If you don't, all of your forecasts will be based on faulty data and can lead to wasted money. Second, include all key players in decision-making. People not involved in inventory management are still affected by the decisions and have points of view that can be very helpful. Third, investing in inventory management software can pay dividends. Forecasting can be updated in real-time and you can minimize the chance of flawed forecasting.

Now that you know all of the major tools of inventory control, you're set to become a star inventory control manager.

Inventory Manager Salary and Job Description

Inventory control managers are in charge of all aspects of a business' inventory management and inventory control programs. They are a vital part of a company's management team and are responsible for warehouse operations and inventory tracking.

Inventory control managers are responsible for everything from inventory tracking to inventory auditing to inventory maintenance and more. They must also manage and direct warehouse personnel.

Inventory Control Manager Skills and Responsibilities

Due to the importance and varied nature of this role, inventory control managers must have a wide variety of skills. These skills include the ability to lead and direct others, solve complicated problems, use data in their decision-making, and have a sense of organization and attention to detail.

These skills are all used when meeting their responsibilities. These include managing and monitoring all inventory counts, performing inventory audits, forecasting inventory needs, tracking shipments, and training and leading warehouse staff.

Luckily, using the tools listed above, you can be prepared to become a talented inventory control manager.

Now, you're ready to take control of your inventory.

Get It Under Control

Whether you are an old hand at inventory control or you're new to the field, we can help. Just request a BlueCart demo, and we’ll get you on top of your inventory control. Warehouse inventory control is a vital part of all businesses and can help you spend less on inventory and increase profits. ‍ ‍

The Best Inventory Storage Strategies For Small Businesses

Introduction.

Welcome to your ultimate guide to small businesses’ best inventory storage strategies. Effective inventory management is essential for any small business aiming to thrive in a competitive marketplace. Dealing with excess inventory levels can be daunting, but finding the proper storage solutions and maintaining an organized warehouse inventory can significantly streamline operations. Your storage unit choices, whether self-storage or shipping containers, play a crucial role in inventory control and fulfillment. Utilizing inventory management software or a comprehensive system can enhance inventory visibility, ensuring you keep your stock and goods in check. So, whether you’re a warehouse manager or a small business owner looking for efficient storage and fulfillment methods, this guide will equip you with tactics to optimize your storage space and manage inventory costs effectively. Let’s dive deeper into these inventory storage solutions to ensure your business is always ready to meet customer demand.

What You’ll Learn In This Blog

Welcome to this comprehensive guide on small businesses’ best inventory management strategies. We understand that keeping a check on inventory levels can be overwhelming. That’s where effective inventory management plays a pivotal role. Every aspect holds significant importance in the supply chain, from deciding on the proper storage unit to managing excess inventory. This blog aims to help warehouse managers and small businesses navigate the complex realm of inventory control. You’ll learn how to optimize storage space, handle stock, manage goods, and get a grip on economic order quantity for smooth fulfillment. We will also touch upon the role of inventory management software and highlight how a well-executed inventory management system can enhance inventory visibility. It’s all about adopting the proper inventory storage solutions to keep your inventory count in check and meet customer demand efficiently.

What Is Inventory Storage?

In simple terms, inventory storage refers to housing your products before they are sold. It’s the mechanism businesses use to organize and store their goods ready for sale. How you hold your inventory plays a crucial role in your fulfillment process and can significantly impact your business’s efficiency and profitability. Optimal storage solutions enable easy navigation, streamline access to stored goods, and ensure that products are kept in suitable conditions to minimize damage and waste. Whether you’re using a traditional warehouse, a self-storage unit, or a high-tech fulfillment center, your inventory storage practices directly affect your inventory control and management. Efficient inventory storage is about more than finding space for your products. It’s about organizing your inventory to enhance visibility, optimize space utilization, speed up picking and packing processes, and ultimately lead to smooth and effective fulfillment.

Why Is Inventory Storage Important?

It keeps merchandise organized.

Proper inventory storage is the backbone of successful small businesses, significantly influencing their fulfillment process, efficiency, and profitability. This guide is a comprehensive tool to assist small companies and warehouse managers navigate the intricate world of inventory management. You’ll learn to select a suitable storage unit, manage excess inventory, optimize storage space, and leverage inventory management software for increased visibility and control. Through effective storage strategies and solutions, you can ensure your goods are always ready to meet customer demand, thereby enhancing your business’s efficiency and profitability. Let’s delve into the importance of inventory storage and how it keeps your merchandise organized.

It Can Help Minimize Theft

Inventory storage is a dynamic aspect of a successful small business, influencing efficiency, profitability, and fulfillment processes. This guide aims to equip small businesses and warehouse managers with efficient inventory storage strategies, from choosing the appropriate storage units to managing excess inventory and optimizing space utilization. Inventory management software and systems can enhance inventory visibility, ensuring effective stock control. This piece will delve into the significance of inventory storage, mainly how it aids in organizing merchandise and minimizing theft. The ultimate objective is to ensure that your business consistently meets customer demand, optimizes space, and keeps inventory costs in check. Let’s explore the importance of inventory storage and its impact on small business operations.

Inventory Storage Is Essential For Accurate Stock Counts

Accurate stock counts lie at the heart of effective inventory management. It is essential for gauging the state of your inventory, understanding your storage capacity, and identifying potential discrepancies before they escalate into costly issues. A well-organized inventory storage system enables accurate stock counting, ensuring your business is always prepared to meet customer demand. Inventory management software and procedures can be crucial by providing real-time visibility into your stock levels and facilitating efficient inventory control. Let’s delve into why inventory storage is a key component in maintaining accurate stock counts and how it can optimize your business operations.

Inventory storage is more than just a place to house your business’s stock. It’s a crucial component of your logistics and order fulfillment process, impacting your efficiency, profitability, and overall business success. This guide’ll delve into everything you need about adequate inventory storage. From optimizing your physical storage space and managing excess inventory to leveraging inventory management software for real-time stock visibility, we’ll provide you with the best strategies to streamline your storage practices. By following these strategies, you can organize your goods, minimize theft, maintain accurate stock counts, and efficiently meet customer demand. This guide is your pathway to mastering inventory storage and taking your small business to the next level.

It Can Help You Track What Sells And What Doesn’t

Adequate inventory storage is a critical strategic component in organizing goods and tracking what sells and what doesn’t. It offers insightful data into consumer buying behavior, helping businesses streamline their inventory and focus on products that have a higher turnover rate. This, in turn, optimizes storage space and reduces carrying costs associated with slow-moving items. Software solutions can further enhance tracking, providing real-time data on stock levels, sales trends, and inventory turnover. This allows businesses to anticipate demand, adjust their stock levels accordingly, and make informed product ordering and storage decisions. Consequently, efficient inventory storage strategies contribute significantly to a small business’s profitability and success.

Inventory Storage Contributes To A Positive Customer Experience

Inventory storage significantly contributes to a positive customer experience, a paramount factor in today’s competitive retail landscape. Efficient storage strategies guarantee that popular products are always in stock, ensuring that customer orders can be fulfilled promptly and accurately. This not only leads to customer satisfaction but also fosters loyalty, as customers are more likely to return if they have a seamless shopping experience. Moreover, inventory storage offers insights into buying behaviors, helping businesses cater to their customers’ needs more effectively. Inventory management software plays a crucial role in this process, providing real-time stock levels and sales trends, allowing businesses to anticipate customer demand and adjust their stock levels accordingly. In essence, effective inventory storage is vital for enhancing customer experience and fostering business growth.

Where Is Inventory Typically Stored?

How to store inventory at home.

Storing inventory at home is a feasible solution for many small businesses, especially those operating on a tight budget or dealing with a limited number of products. To effectively store inventory at home, you need to focus on organization. Using areas such as spare rooms, basements, or garages can provide ample space for your inventory. You can employ shelving units, bins, or boxes to keep your products organized and easily accessible. It’s crucial to label everything clearly and maintain an organized system to ensure quick and accurate order fulfillment. Implementing an inventory management software can further simplify the process, providing real-time updates on stock levels and helping to avoid overstocking or understocking. Remember, while storing inventory at home can save costs, it’s important to ensure the space is secure, clean, and suitable for your products to maintain their quality.

How To Store Inventory In Your Back Office

Storing inventory in your back office can be a practical choice for businesses with modest inventory needs. This choice requires a systematic approach to avoid clutter and ensure efficient fulfillment. You can use shelves, bins, and cupboards to keep your items organized. Labeling items and having a consistent system in place is critical for easy navigation and quick order fulfillment. Consider investing in an inventory management system or software to track stock levels and sales trends. This will aid in preventing overstocking or running out of stock. Ensure your back office is clean, secure, and well-ventilated to maintain the quality of your products.

How To Store Inventory On Your Shop Floor

Storing inventory directly on your shop floor can be an efficient strategy, particularly for retail businesses. The key to successful on-floor inventory storage is creating a balanced display that is both aesthetically pleasing and functional. Use fixtures and shelving units that cater to your product sizes and shapes, optimizing space and ensuring easy access to items. Always keep high-demand products within easy reach to facilitate quick sales and restocking. Implement an inventory management system to monitor stock levels directly from the shop floor, helping to prevent overstocking or stockouts. Maintaining a clean, safe, and organized shop floor is crucial not just for inventory management, but also for providing a positive customer experience.

How To Store Inventory In A Warehouse

Storing inventory in a warehouse is a common strategy for businesses with large volumes of merchandise. Warehouses offer ample space and are designed to accommodate different types of goods with varying storage requirements. Effective warehouse storage starts with a well-organized layout to facilitate easy access to items, optimize space utilization, and streamline the picking and packing processes. Use pallet racking systems, stacking shelves, and bins to keep your products well-organized. Incorporate a labeling system for easy navigation and quicker order fulfillment. Equally critical is the use of inventory management software for real-time tracking of stock levels, managing excess inventory, and preventing stockouts or overstocking. Ensure the warehouse is clean, secure, and well-ventilated to maintain the quality of your products. Ultimately, efficient warehouse practices lead to improved fulfillment processes, customer satisfaction, and overall business success.

What About Dropshipping?

Dropshipping is a distinct inventory management method that eliminates the need for businesses to maintain a physical inventory. Instead, it allows them to purchase products from a third party, typically a wholesaler or manufacturer, who then ships the goods directly to the customer. This model can be a game-changer for small businesses, enabling them to sell a vast variety of goods without having to worry about inventory or storage costs.

Understanding The Dropshipping Model

In the dropshipping model, the retailer acts as a middleman between the supplier and the customer. When a customer places an order, the retailer forwards the order details to the dropship supplier, who handles the inventory control and order fulfillment. This model minimizes the risk associated with carrying excess inventory and reduces the operational costs related to storage and shipping.

Advantages Of Dropshipping

• Low overhead : Dropshipping eliminates the need for a storage unit or warehouse space, reducing inventory costs.
• Wide range of goods : Small businesses with limited resources can offer a variety of products due to reduced inventory costs.
• Convenience and flexibility : Retailers can easily add or remove products from their inventory, adapting to market trends and customer demand.

Dropshipping And Inventory Visibility

While dropshipping can simplify the inventory management process, it also poses some challenges. One of these is maintaining inventory visibility. With goods stored and shipped by a third party, maintaining an accurate inventory count can be difficult. Investing in a robust inventory management system can mitigate this issue, allowing retailers to keep track of stock levels and sales in real-time, thus enhancing inventory control.

The Impact Of Dropshipping On Fulfillment

The dropshipping model can also have significant implications for order fulfillment. Since the retailer does not physically handle the goods, the control over order fulfillment falls to the supplier. This can lead to potential issues with product quality, shipping delays, or incorrect shipments. Retailers must put in place strict supplier agreements to ensure the smooth execution of the fulfillment process.

Incorporating Dropshipping Into Your Business Model

When deciding whether to incorporate dropshipping into your business model, it’s essential to consider your business’s specific needs and capabilities. If you’re a small business owner dealing with limited resources, dropshipping can provide an efficient and cost-effective solution. Remember, though, that successful dropshipping relies heavily on finding reliable suppliers, maintaining good communication, and leveraging a robust inventory management software to maintain inventory visibility and control.

In conclusion, dropshipping offers a unique approach to inventory management. While it does present its own set of challenges, with the right strategies and tools in place, it can be an effective solution for businesses looking to expand their offerings without the added burden of inventory and storage management.

Should You Store Traveling Inventory Separately From The Rest Of Your Stock?

Inventory storage is vital for small businesses, influencing their efficiency, fulfillment process, and profitability. It’s not only about finding space for goods, but also organizing inventory in a manner that enhances visibility, optimizes space utilization, and expedites picking and packing. A well-organized inventory storage system allows accurate stock counts, and inventory management software keeps track of real-time stock levels. Aided by such systems, businesses can anticipate customer demand and adjust their inventory accordingly. Effective inventory storage strategies yield insights into customer buying patterns, helping businesses focus on fast-selling products. Such strategies are foundational to a positive customer experience, ensuring prompt and precise order fulfillment. Inventory can be stored at home, back offices, the shop floor, or warehouses, each requiring a systematic approach for organization and easy access to goods. Ultimately, a well-planned inventory storage strategy contributes significantly to a small business’s success.

Best Practices

1. free up floor space.

A key component for small businesses’ success lies in effective inventory storage. It significantly influences efficiency, fulfillment processes, and profitability. It’s not merely about having a place for goods but entails strategic organization to enhance visibility, optimize space, expedite order fulfillment, and maintain accurate stock counts. With the aid of inventory management software, businesses can keep track of real-time stock levels and anticipate customer demand. Moreover, efficient inventory storage strategies provide insights into customer buying patterns, allowing businesses to focus on fast-selling products and contribute to a better customer experience. Whether storing at home, back office, shop floor, or warehouse, each choice requires a systematic and organized approach for the smooth functioning of operations. Ultimately, robust inventory storage strategies significantly underpin a small business’s success.

2. Store By Season

For small businesses, successful inventory storage isn’t just about finding space for goods; it hinges on strategic organization. This boosts visibility, optimizes space, speeds up order fulfillment, and ensures accurate stock counts. With an effective inventory management system, businesses can track real-time stock levels, anticipate customer demand, and gain insight into customer buying behaviors. This, in turn, allows businesses to focus on fast-selling items and enhance customer experience. Inventory can be stored at various locations – home, back office, shop floor, or warehouse, each needing a systematic and organized approach for smooth operations. Ultimately, efficient inventory storage is a critical success factor for small businesses, influencing efficiency, fulfillment processes, and profitability.

3. Get The Right Software

In the small business sphere, inventory storage is a critical aspect influencing success. It plays a significant role in managing efficiency, order fulfillment, and profitability. The key lies not just in securing space for goods but in strategic organization, which enhances visibility, space optimization, and accelerates order fulfillment while ensuring accurate stock counts. Employing inventory management software enables real-time stock level tracking, anticipating customer demand, and gaining insights into customer buying patterns, thus enhancing customer experience. Whether stored at home, in the back office, on the shop floor, or warehouse, each venue requires a systematic approach to ensure smooth operations. In essence, effective inventory storage is pivotal for small businesses, laying the groundwork for efficiency, profitability, and a positive customer experience.

What Are The Best Methods For Organizing And Tracking Inventory In Storage?

Effective inventory storage strategies are vital for small businesses, significantly impacting efficiency, fulfillment processes, and profitability. These strategies encompass more than just finding room for goods – they entail systematic organization to enhance visibility, optimize space, expedite order fulfillment, and ensure accurate stock counts. Utilizing inventory management software can offer real-time stock level tracking and customer demand insights, enabling businesses to cater to customer buying patterns. Depending on the volume and type of inventory, it can be stored at various locations such as homes, back offices, shop floors, or warehouses. Each location requires a systematic and organized approach for smooth operations. Essentially, robust inventory storage strategies not only contribute to efficiency and profitability but also foster a positive customer experience.

Storing Inventory With Growth In Mind

Ensuring efficient inventory storage is a cornerstone for small business success, impacting efficiency, order fulfillment, and profitability. Key strategies involve careful organization and the use of inventory management software for real-time stock level tracking and customer demand anticipation. These systems aid in understanding customer buying behaviors, which in turn, improve customer experience. Inventory can be stored in various locations, including homes, back offices, shop floors, or warehouses, each requiring a systematic approach for smooth operations. Ultimately, proper inventory storage is not just about having space but is about strategic organization that maximizes visibility, optimizes space, and ensures efficient order fulfillment. This, combined with the insights from inventory management software, significantly contributes to business growth and customer satisfaction.

Conclusion 

In conclusion, efficient inventory storage is paramount to the success of small businesses. It’s more than just finding a place to store goods. Strategic organization enhances visibility, optimizes space, increases order fulfillment speed, and ensures accurate stock counts. By leveraging inventory management software, businesses can track real-time stock levels, anticipate customer demand, and gain valuable insights into customer buying patterns, leading to better customer experiences. Regardless of where inventory is stored – be it at home, in the back office, on the shop floor, or in a warehouse, each requires a systematic and organized approach to ensure smooth operations. Overall, a robust inventory storage strategy is a significant contributor to business growth and customer satisfaction.

Now that you have a comprehensive understanding of the best inventory storage strategies for small businesses, it’s time to put this knowledge into action. Experience firsthand the benefits of streamlined inventory management with Orderific. Book a demo today and begin your journey towards improved efficiency, profitability, and customer satisfaction.

Why is efficient inventory storage important?

Efficient inventory storage optimizes space, improves order fulfillment, and boosts profitability.

What are some common inventory storage methods?

Common inventory storage methods include storing at home, in the back office, on the shop floor, and in a warehouse.

How do I determine the right storage solution for my inventory?

The right storage solution depends on your inventory volume, storage space, and operational needs.

What’s the role of inventory management software in storage?

Inventory management software aids in tracking stock levels, forecasting demand, and providing insights into customer buying patterns.

How can I optimize limited storage space?

Optimize limited storage space by utilizing vertical space, employing efficient shelving systems, and keeping your inventory well-organized.

Introduction In the dynamic realm of event planning, professionals constantly seek new ways to streamline their operations with software customization Read more

Introduction The event registration process is a critical component in event planning. It shapes the initial experience of future attendees Read more

Introduction Event management software can be a game-changer for event professionals seeking optimized outcomes. This robust tool streamlines event planning, Read more

Introduction Every detail counts in orchestrating a successful event in the bustling sphere of event planning. Amidst the complexities, event Read more

You might also like

Fight against the restaurant worker shortage with tech, a guide to michigan’s minimum wage: fair compensation unveiled, pof login: easy steps to connect, microbrewery 101: different brewery types explained, what’s the recipe for rolled ice cream to make at home, enhance your workstation: the perfect iphone stand for your desk, get a free demo now, turn your food business into a smart restaurant for free with orderific pay at the table software.

• Inventory Management
• Order Management
• Warehouse Management
• Shipping Management
• Picking & Packing
• Omnichannel

• Wave Picking
• Realtime Inventory
• Store Fulfillment
• Consumer Goods
• Food & Beverage

A Comprehensive Guide to Inventory Control Management: Benefits, Challenges, and Best Practices

What is the Inventory Control Process?

Inventory control is the process of managing and tracking the inventory levels, orders, sales, and deliveries of a business. It can involve manual or automated processes to ensure that the right amount of stock is available at all times, while also keeping costs low by preventing over-ordering or under-ordering. The goal of effective inventory control is to maintain cost-effective levels of stock, avoid stock shortages or surpluses, and maximize customer satisfaction with on-time orders. Automated inventory control systems are increasingly used for their ability to track stock in real time, plan for future needs based on historical data, and quickly generate reports.

Types of Inventory Control Systems

Inventory control systems are a set of technologies, processes, and procedures used to monitor and manage the ordering, storage, and use of materials within an organization or business. They help companies keep track of their inventory in real-time, make sure it is available when needed, and also help monitor inventory cost and quality control.

There are three main types of inventory control systems: manual record keeping, automated inventory management systems, and enterprise resource planning (ERP) software. Manual record keeping involves tracking inventory by hand-written records or spreadsheets while automated systems use computer hardware and software to track stock levels. ERP software integrates all aspects of a company’s operations into a single system that allows for the automation of many processes such as order management, production scheduling, supply chain management, and more.

Benefits of Inventory Control Systems 

Improved accuracy and productivity .

A proper inventory control system helps improve accuracy and productivity by managing and tracking the movement of goods and products. It accurately records product information, such as quantity, availability, location, and price, allowing for better forecasting of inventory needs. By automating processes like stock counting and ordering, it eliminates manual errors and reduces the time needed to manage inventory. This ultimately leads to more accurate record-keeping, improved efficiency in operations, and increased cost savings.

Reduce Costs and Overstocking/Understocking Issues 

An inventory control system helps reduce costs and overstocking/understocking issues by allowing for more accurate tracking and forecasting of inventory needs. These control techniques can help a business achieve its goal of holding the least amount of inventory necessary to meet customer demand while increasing inventory turnover. Automated processes (stock counting, ordering, invoicing, etc.) help to optimize inventory levels and eliminate manual errors, while regular reporting provides visibility into the performance of current stock levels. This information can be used to optimize purchasing decisions, reducing the chance of costly excess inventory or understocking issues. Additionally, inventory control systems can help identify waste and inefficiencies in operations.

Data and Supply Chain Visibility with Real-Time Updates & Tracking Capabilities

An inventory control system increases data visibility with real-time updates and tracking capabilities. Data is automatically updated when goods are received and shipped, providing an accurate overview of current stock levels and inventory availability. Additionally, tracking capabilities enable the monitoring of product movements across multiple locations in real time. This provides greater transparency into the performance of the supply chain, allowing for faster decision-making and improved customer service.

Increased Customer Satisfaction & Better Business Decisions 

An effective inventory control system helps achieve customer satisfaction by having the right products available in the right quantity at the right time. Good stock control also helps businesses make better decisions about production, when to purchase inventory, and sales, and helps ensure they don't carry too much inventory relative to customer demand. Inventory control is the process of managing the availability, storage, and use of products in a business. A periodic inventory system requires a physical count of stock at certain intervals. A perpetual inventory system keeps a continuous record of stock on hand. Inventory control requires careful management of ordering and stocking levels, accurate tracking of stock, and efficient use of resources. 

More Efficient Warehouse Operations with Optimized Inventory Control Methods

An inventory control system makes warehouse operations more efficient by automating processes such as stock counting, ordering, and invoicing. It also provides visibility into current stock levels and product movements across multiple locations in real time. This helps to ensure that the right products are in the right place at the right time, allowing for faster order fulfillment and improved customer service. Additionally, it eliminates manual errors, eliminates redundant tasks and reduces wasted effort, ultimately leading to a more efficient warehouse operation.

Major Inventory Control Challenges

Manual processes can wreak havoc with your inventory.

Man ual processes for inventory control can be extremely difficult and time - consuming . Without automation , it is difficult to keep track of all the changes in inventory data , such as stock levels , ordering , and pricing . Manual processes are prone to errors and can be difficult to scale as inventory needs increase . In addition , without real - time updates , manual processes are often not as efficient as automated solutions , making it difficult to ensure accurate inventory control .

Inventory Control is Important, TOO Important to Rely on Outdated Technology

In addition to inefficient and error-prone manual processes,  older systems may lack the capabilities to track items in real - time . T he use of outdated technology can also result in slow response times , difficulty accessing data , and siloed information . To overcome these challenges , organizations must invest in modern and efficient technologies that enable them to accurately track and manage inventory , while also providing visibility into their supply chains .

Communication Breakdowns are Significant Challenges of Inventory Control

Without accurate information and efficient communication, it can be difficult to know when to restock or replenish items, leading to inventory shortages or overstock. Poor communication can also lead to incorrect orders, delayed shipments, and other issues that can disrupt the inventory process. To avoid this, businesses must ensure that communication between departments is clear, concise, and up-to-date, to effectively manage and maintain inventory control.

Disorganized Systems Make Inventory Control Impossible to Fully Achieve

Dis organized systems can be a major challenge to maintaining inventory control . With no clear structure   in place , it can be difficult to track inventory levels, locations, and to know when items need to be re - ordered . A lack of  accurate tracking can lead to over st ocking or stock - outs , both of which can create costly problems for businesses . To ensure proper inventory control , it ’ s important to create and maintain an organized system that can easily be managed and updated .

Different Types Of Inventory Control Software Solutions 

Warehouse inventory control software solutions.

Warehouse inventory management software solutions provide businesses with the tools they need to effectively manage their inventory. These solutions allow businesses to track stock levels, optimize order fulfillment, automate replenishment, and analyze data for insights into inventory performance. Warehouse inventory control software helps businesses save time and money by streamlining the inventory process.

Enterprise Resource Planning (ERP) Software Solutions

Enterprise resource planning (ERP) software solutions provide businesses with the tools they need to manage their operations effectively. These solutions allow companies to integrate and streamline their processes, from accounting and finance to human resources and operations. ERP software helps businesses save time and money by simplifying the management of their operations.

Cloud-Based Warehouse Management Systems (WMS)

Cloud-based warehouse management systems (WMS) provide businesses with the tools they need to effectively manage their warehouse operations. These solutions allow businesses to automate and optimize their processes, from inventory control to order fulfillment. Cloud-based WMS helps businesses save time and money by streamlining their warehouse operations.

Radio Frequency Identification (RFID) Technology

Radio frequency identification (RFID) technology is a cost-effective solution for businesses to track their inventory in real time. RFID technology uses radio waves to transmit data from tags attached to items, helping businesses automate the identification, tracking, and management of their inventory. By automating their processes, businesses can save time and money with RFID technology.

Barcode Scanning Technologies

Barcode scanning technologies are an efficient and cost-effective solution for businesses to track and manage their inventory. This technology uses scanners to read barcodes on items, helping businesses automate the identification, tracking, and management of their inventory. Barcode scanning technologies help businesses save time and money by streamlining their processes.

Automated Data Collection (ADC)

Automated data collection (ADC) is a technology used by businesses to collect data in real time from various sources. ADC technology uses sensors to detect and collect data from items, helping businesses automate the identification, tracking, and management of their inventory. ADC helps businesses save time and money by streamlining their processes.

Automatic Identification and Data Capture (AIDC)

Automatic identification and data capture (AIDC) is a technology used by businesses to automate the identification, tracking, and management of their inventory. AIDC technology uses scanners, barcodes, and RFID tags to collect data from items, helping businesses save time and money by streamlining their processes.

Mobile Devices/Mobile Computing Technology

Mobile devices/mobile computing technology is a cost-effective solution for businesses to manage their operations on the go. This technology uses smartphones, tablets, and other devices to access data and applications from anywhere, helping businesses automate their processes. Mobile devices/mobile computing technology helps businesses save time and money by streamlining their operations.

Steps for Implementing an Inventory Control System For Your Business 

Analyze existing processes to identify areas for improvement or automation.

A business should analyze existing processes to identify areas for improvement or automation. This can be done by collecting and analyzing data to identify areas where processes can be simplified or automated, determining which tasks can be outsourced or automated, and evaluating how technology can be used to improve efficiency. Doing so can help the business reduce costs, improve customer service, and increase profitability.

Select a System to Control Inventory that Suits Your Needs

A business should select the right type of inventory control system that suits its needs. This can be done by assessing the business’s current inventory needs and processes, researching different inventory control systems, and comparing features and costs to determine which system best meets the business’s needs. This will help the business stay organized and ensure that the right amount of inventory is available at the right time.

Train Employees in Using the New Inventory Control Management System

To train employees how to use a new inventory software control system, the business should provide clear instructions and demonstrations, create a user manual and other training materials, and offer support and guidance as needed. It is also important to give employees time to practice using the system and to provide feedback so that any issues can be addressed. Doing so will help the employees gain confidence in the system and ensure successful implementation.

Monitoring Usage and Performance of the New System is a Critical Control Technique

To monitor the usage and performance of an inventory control system, the business should regularly review reports and data, track user activity, and assess key performance metrics. This will help the business identify possible issues and areas for improvement, and ensure the system is being used effectively. Doing so will help the business optimize the system and maximize its benefits.

Adjust Settings as Needed

To adjust settings as needed, the business should review user feedback and data, assess the impact of any changes, and make necessary adjustments. This will help the business ensure that the settings are optimized for the business’s needs and that the system is running as efficiently as possible. Doing so will help the business get the most out of its inventory control system.

Explore Options for Expanding the Use of Your Current System

To explore options for expanding the use of your current system, the business should research new features and capabilities, determine if they are compatible with the existing system, and assess the cost and potential benefits of implementing them. Doing so will help the business get the most out of its current system and ensure that it meets its evolving needs.

Advantages Of Using An Inventory Control Management System For Small Businesses

Process of inventory control saves money with improved accuracy & fewer errors.

An inventory control system helps to improve accuracy and reduce errors by tracking the movement of goods and materials, monitoring stock levels, and providing real-time visibility into inventory on hand. It also helps to streamline processes and optimize workflow, resulting in more efficient stock replenishment and better inventory management. Additionally, it can generate automatic alerts for low stock levels and provide reporting capabilities to help businesses better manage their inventory and maximize profits.

Enjoy Easier Tracking and Auditing Capabilities

Control over your inventory enables easier tracking and auditing capabilities by providing real-time updates on stock levels, inbound and outbound shipments, and stock location. It also records and stores detailed information, such as product serial numbers, expiration dates, and lot numbers, to help businesses keep a complete inventory audit trail. This helps to prevent errors, reduce theft, and ensure accurate reporting for compliance purposes.

Effective Inventory Control Best Practices Help Streamline Workflow Processes

An inventory control system streamlines workflow processes by providing automated alerts for low stock levels, generating automated purchase orders, and helping to optimize order fulfillment. It can also help to reduce labor costs by automating manual processes, reducing the need for manual data entry, and enabling more efficient inventory management. This ultimately helps businesses to save time and money, while ensuring accurate inventory tracking and improved customer satisfaction.

Cloud-Based Storage Means You Can Manage Inventory Anytime, Anywhere

An inventory control system is accessible anytime, anywhere due to cloud-based storage. This allows businesses to access all aspects of inventory records and data from any device with an internet connection, enabling real-time visibility of stock levels and inventory movements. Additionally, cloud-based storage ensures data is secure and backed up, allowing businesses to easily access their inventory information whenever and wherever they need it.

Real-time Information Access Informs Inventory Decision-Making

An inventory control system provides effective decision-making via real-time information access. By providing up-to-date data on inventory items and movements, businesses can make informed decisions about when to order more stock, when to restock shelves, and how to optimize their supply chain. This allows them to maximize their profits and ensure that customers always have access to the products they need.

Provide Better Customer Service Through Accurate Order Fulfillment

An inventory control system improves customer service through accurate order fulfillment. By providing real-time visibility into stock levels and inventory movements, businesses can ensure that orders are fulfilled quickly and accurately. This helps to reduce wait times and improve customer satisfaction, resulting in increased sales and customer loyalty.

Improved Team Collaboration Helps Everyone in Your Company

A system for controlling a business's inventory improves team collaboration by automating tasks and providing shared access to inventory data. This allows teams to work together more efficiently, by sharing data and insights in real time. Additionally, automated tasks help to streamline processes, ensuring that inventory management tasks are completed quickly and accurately.

Automated Stock-Level Alerts Ensure Enhanced Security

A physical inventory control system enhances security by providing automated stock-level alerts. By keeping track of stock levels in real-time, businesses can be alerted when stock levels are running low, protecting against theft and loss. This helps to ensure that stock levels are always accurate and up-to-date, resulting in improved efficiency and more secure operations.

Never Wonder About Your Inventory Again with SkuNexus

For eCommerce brands of any size, an array of challenges exist at the intersection of inventory, order management, and warehouse fulfillment, and even the slightest disorganization has the potential to devolve into chaos. To counter this, the establishment and maintenance of an inventory control system is mission-critical.

Sk u N ex us   offers a suite of powerful  tools that can help e Commerce companies identify any in effic iencies in their  processes and maintain tight inventory control . Our integrations with major eCommerce platforms automatically synchronize product data and inventory levels across channels, so companies can ensure accurate and up-to-date information is available at all times. With these tools , merchants  can also gain insight into their product performance and make informed decisions about their inventory .  

At SkuNexus, control is at the center of the management software solutions we design. Helping eCommerce businesses take, and keep, control over all their backend operations is a core element of what we do. If you would like to learn more about how we can help your business optimize its inventory control and reap a host of other benefits, please contact our team to schedule a thorough product demo .

SkuNexus is an order management system that allows users full access to the source code, allowing complete control.

• Marketplace
• Privacy Policy

Get our newsletter

• ERP Services

Next Chapter:

Inventory Control and Planning: Definition, Importance, and Challenges

Inventory control and planning is one of the primary tasks every company needs to pay close attention to since inventory is typically the second largest expense for businesses.

While some business owners understand the significance and importance of control and planning inventory regularly, others do not, causing their businesses to fall through the cracks.

And you can’t let that happen to your company. Companies that generate most of their revenue from inventory sales benefit from inventory planning and control in several ways.

Inventory control and planning refers to inventory management. To optimally manage your company’s inventory, a set of inventory tools called an Inventory Management System is needed.

This article covers an easy guide to inventory control and planning, along with its definition, benefits, and the challenges you may overcome during the process. 

Table of Content

What is Inventory Control and Planning?

The process that any organization uses to determine the optimal quantity, as well as the timing, is known as inventory planning. This process aims to align such plans with the organization’s capacity to produce and make sales.

In most cases, the inventory planning process will affect the company. For instance, it directly determines any organization’s cash flow and profit margins, particularly concerning businesses that rely excessively on quick turnovers of materials and goods.

It should come as no surprise that proper inventory planning is an essential component of the success of any company.

The Importance of Inventory Control and Planning

Inventory is kept by nearly every Business because it is one of the most valuable assets. So, why is it crucial to plan and control your inventory? There are a variety of business-related causes for stockpiling goods.

Keeping an inventory in production or retail facilities enables continuous, independent operation and protects against fluctuations in consumer demand or stock delivery. Having enough stock gives factories more production flexibility.

You can save money on bulk orders if you plan your inventory well. Moreover, the following are reasons why it is crucial to control and plan your inventory:

1. Sales growth

Planning and controlling inventory levels can boost sales. Which also will gain more profit. On your balance sheet, the inventory shows the money spent. The greater the debt ratio to cash on hand, the greater the proportion of total assets allocated to the balance sheet.

The simple truth is that reducing your inventory will help you in this situation because higher turn rates are associated with a stronger position for the retailer.

The only way to generate profit is through the sale of inventory. Hence it is crucial to control and plan your inventory to prepare for that situation. 

2. Enhance cash flow

Inventory planning and control are two of the most effective methods for increasing cash flow and profitability. Although inventory generates cash flow, purchasing stock requires a monetary outlay, which affects the company’s cash position.

One of the benefits of inventory control is enhancing your cash flow. A rise in inventory stock will appear as a negative sum in the cash flow statement, indicating a financial outlay or that a company purchased more products than it could sell.

Also read: 4 Ways Inventory Systems Increase Sales in a Retail Business

3. Storage optimization

One of the most significant benefits of inventory control is the ability to positively impact the bottom line by utilizing well-designed storage facilities and constantly improving the layout and design.

How the inventory is used, whether in manufacturing, production, or delivery, impacts this layout. Additionally, planning things in high demand is critical to reducing travel time.

In this context, “high demand” refers more to a significant number of inquiries than to an abundance of goods.

Also read: Upscaling Your Retail Business Using Inventory Automation

4. Increase customer satisfaction

Your Business must consistently provide first-rate customer service and an unforgettable buying experience to customers before making any sales.

By developing policies and procedures that are more innovative, you can improve the accuracy of the inventory control process, which will result in shorter lead times, financial savings, increased customer satisfaction, and continued customer loyalty.

The Goals of Inventory Control and Planning

Aside from making money, the primary goal of any business is to satisfy its customers. If the customer is satisfied, they will likely be a loyal customer. Customer loyalty can impact profits because acquiring new customers is more expensive than retaining existing customers. You can achieve more goals by controlling and planning your inventory, such as;

Forecasting

Also known as inventory estimation, it is a process that uses a marketing plan to predict future sales and, as a result, future inventory requirements. Forecasting’s partner is inventory control, which counts and keeps track of inventory items to learn how they are used and keep the right amount of stock on hand. Forecasting and inventory control go hand in hand.

2. Cost Control 

Inventory costs, also known as holding and storage costs, can account for 20-30% of your total business costs. Controlling costs can include buying the items, taxes, labor to receive and put away inventory, insurance, security, and even stock obsolescence, which is stock that is no longer needed, is old, or is in excess. The goal of planning inventory is to cut all of these costs.

3. Optimal utilization of space

You can positively impact the bottom line with well-designed storage facilities and by iterating the layout and design over time. The ultimate use of inventory in manufacturing, production, or fulfillment will influence the layout.

One reason you should group high-demand items is to reduce travel time. In this case, high demand refers to frequently requested items rather than a large number of items.

Benefits of Inventory Control and Planning

1. improving cash flow.

Inventory planning and control can assist businesses in managing cash flow, especially for small businesses that do not have large capital reserves to purchase large quantities. Policies and procedures are put in place by business owners to limit the amount of money spent on inventory.

Buying the lowest-cost stock available in the business environment also improves cash flow. Aside from the low-cost stock can save the company money, it also can help the company gain a cost advantage in the economic market.

Also read: Choosing Inventory Tracking System? Here are some tips for you! 

2. Gaining more profits

The right inventory planning and control can help business owners increase their profits. Buying the right inventory to meet consumer demand often leads to higher business profits.

Not only that, inventory planning and control procedures can also help reduce obsolete inventory in the company. Keep in mind that obsolete inventory must be disposed of and written off by the company. 

3. Prevents abuse

Inventory policies and procedures keep employees from misusing or abusing inventory. Employees may steal inventory items for personal use or reasons in the workplace, making the company suffer a financial loss due to stolen inventory. Note that employee behavior is essential in inventory cash flow and profitability.

How to Make an Excellent Inventory Plan?

1. look at the volume of the product.

When creating an inventory plan, business forecasting comes in handy. It will be much easier to devise a methodology to plan and maintain your inventory levels once you understand the market demand for your product.

2. Watch inventory factors

Well-planned advertising, your competition’s price cuts, and offerings, the income and context of your target market, seasonal demand, trends, and customer preferences are all factors that influence demand.

3. Maintain warehouse productivity

Managing a well-organized storage space for your goods is critical to maintaining an optimal inventory level. It is not easy to do it if you still use manual procedures while doing so.

However an Inventory Management System will help you quickly identify, track, and place orders for new deliverables and keep track of when the product is running low.

This inventory management system lets you balance your demand and supply and reduces the cost of transporting goods.

4. Automation during inventory processes 

Automating various business processes will be highly beneficial when developing an inventory plan, as there will be fewer errors and greater accuracy in reports.

The help of the Automation Inventory System simplifies all the inventory planning and controlling, making it possible for you to develop an excellent inventory plan and generate more profits. 

Also read: Advantages of Inventory Management Software for Construction 

Challenges of Inventory Control and Planning

Inventory planning involves many variables and elements. Even for companies with one sales channel, planning inventories takes time and effort. The following are a few challenges that you may encounter while planning your inventory:

1. Inconsistent data

An adequate controlling and planning inventory requires information from many sources. Combining all the data from various sources is a complex task. As an inventory planner, you must gather retail reports and historical data from legacy systems.

But the challenge lies here; this takes a lot of work and, if done incorrectly, can lead to inaccurate demand forecasting, overstocking, understocking, or missed opportunities.

An Inventory Management System will enable you to generate your inventory data and reports quickly.

2. Inaccurate guesswork

Making accurate forecasts now requires more effort. The inability to accurately predict how market conditions will evolve is another factor that can make forecasting more difficult.

3. Too many branches and locations

It can be challenging to distribute goods that are kept in different areas. However, knowing where to allocate your inventory can be easier with a solid inventory tracking system .

Furthermore, storing goods in the wrong place may result in higher transportation costs and longer wait times for customers’ orders to be fulfilled. On the other hand, poor picking practices will also increase travel times and reduce output throughout the supply chain.

4. Human errors

Managing your inventory, especially with several branches, can be prone to human errors. But your company can achieve its full potential with the inventory software . Such software will help you manage, control, and track inventory automatically without hiccups. 

Also read: Why Should You Choose Inventory Software to Optimize Business?

Following the explanation of inventory control and planning, you now understand the definition, benefits, and potential challenges that may arise during the process.

Based on the information presented in this article, it is clear that maintaining inventory control and planning is an important task that you should undertake.

HashMicro’s Inventory Management System is the ideal solution for effectively planning and controlling your inventory procedures more efficiently and accurately.

It has features and tools such as stock aging analysis, stock request management, inventory valuation, 3D warehouse, and many more.

HashMicro’s Inventory Management System will automate operational inventory activities such as tracking item location, stock taking, reporting, and restocking requests to suppliers.

That is why the company must have an online inventory management system. To maximize your company’s potential, it will be better to integrate it with Sales Order Processing and Purchase Order Processing System to update stock balances and statistics as orders are processed automatically.

Find more about the software by downloading the pricing scheme or try the free demo today!  

Interest in getting savvy tips for improving your business efficiency?

RELATED ARTICLES

17 best non-profit organization management software, deskera erp review 2024: features, weakness, & alternative solution, 10 reasons why migrating from spreadsheets to erp software is important, looking for software system to improve your business efficiency.

HashMicro is Singapore's ERP solution provider with the most complete software suite for various industries, customizable to unique needs of any business.

ERP SOLUTION

• Construction
• Engineering
• Manufacturing

Get HashMicro’s Software with 50% Off EDG !

Contact us via WhatsApp for a faster response!

© BusinessTech by Hashmicro

Alex Typically replies within an hour

See how HashMicro can improve your business

Growing and expanding the business is what every company is trying to achieve. However, this can add stress to the management due to increasing complexity. For that reason, we continuously develop products that can streamline business processes in all industrial sectors, no matter how big.

Dipercaya oleh

• Customer Stories
• Request Demo

The only Food ERP you need

Take a look at additional functionality layered on top of our core software offering.

Core Product:

• inecta Food Cloud ERP Software

Powered by:

• Dynamics 365 Business Central

Additional Functionality:

• Processing Floor

Warehouse Management Software

• Transportation Management
• Direct Store Delivery

inecta Workspaces

• Integrations

Broaden your ERP knowledge in more ways than one.

• Tutorial Videos

Get better acquainted with your solution with interactive tutorials

Your ERP education starts and ends here

Thought leadership pieces on all things ERP

Browse our help topics

Industries Served

We know food and we have your industry covered.

• Food Distributor
• Food Trader
• Food Manufacturer
• Wine & Spirits
• Foodservice & Catering
• Slaughterhouse
• Meat Processor
• Egg Producer

• Aquaculture

• Produce Grower
• Produce Packer / Shipper
• Vertical Farming
• Core Product
• Additional Functionality

Inventory Planning: A Comprehensive Guide to Optimizing Stock Levels and Improving Supply Chain Efficiency

By Michael Dautner , August 8, 2023

Inventory planning is a critical process for businesses that involves determining the optimal quantity and timing of stock to align with sales and production capacity. It plays a significant role in managing cash flow, maximizing profits, and ensuring an efficient supply chain. In this comprehensive guide, we will explore the key concepts, benefits, and strategies of inventory planning. We will also delve into various inventory planning methods and provide expert tips to develop an effective inventory plan.

Understanding Inventory Planning

What is inventory planning.

Inventory planning is the process of strategically determining the right amount of inventory to have on hand and the appropriate timing for replenishment. It involves analyzing demand, forecasting future needs, and implementing systems to ensure optimal stock levels. By aligning inventory with sales and production capacity, businesses can minimize costs, prevent stockouts, and enhance customer satisfaction.

The Importance of Inventory Planning

Effective inventory planning offers several benefits to businesses:

Increased Sales: By stocking up on products that resonate with customers, businesses can drive sales and revenue.

Improved Cash Flow: Proper planning prevents capital from being tied up in excess inventory, allowing businesses to allocate resources more effectively.

Maximized Storage: Efficient inventory planning ensures that warehouses or storage locations have sufficient space for revenue-generating merchandise.

Enhanced Customer Satisfaction: Having the right products available at the right time promotes customer loyalty and satisfaction.

Minimized Overstocks and Stockouts: Inventory planning helps businesses avoid the costs associated with stocking too much or too little inventory, leading to better cost management and customer service.

Developing an Inventory Plan

Estimating demand.

Estimating demand is a crucial step in inventory planning. By analyzing historical sales data, trends, and market conditions, businesses can make informed decisions about the quantity of inventory needed. It is essential to consider factors such as scarcity, competition, and customer preferences to accurately forecast demand.

Creating a Replenishment Plan

A replenishment plan ensures a smooth flow of production and restocking. Determining the reorder point and reorder quantity is crucial for maintaining optimal inventory levels. By considering lead times, supplier capabilities, and demand patterns, businesses can establish a replenishment strategy that minimizes stockouts and excess inventory.

Tracking Inventory

Efficient tracking mechanisms are vital for effective inventory management. Implementing a point-of-sale (POS) system or inventory management software enables businesses to monitor stock levels, track sales, and automate reordering. Barcode scanners and real-time data integration enhance accuracy and efficiency in tracking inventory.

Monitoring and Adapting Stock

Continuous monitoring of inventory is essential for adapting to changing demand patterns and optimizing stock levels. By analyzing sales data, identifying slow-moving items, and conducting regular audits, businesses can make data-driven decisions to improve inventory turnover and prevent obsolescence.

Inventory Management Methods

Economic order quantity (eoq).

The Economic Order Quantity (EOQ) method helps determine the optimal inventory quantity to minimize costs. By considering factors such as demand, order costs, and holding costs, businesses can calculate the ideal quantity to order. The EOQ formula guides businesses in making cost-effective replenishment decisions.

ABC Analysis

ABC Analysis categorizes inventory items based on their consumption value. A-items have the highest consumption value, while C-items have the lowest. By classifying inventory items, businesses can allocate resources, prioritize stock management efforts, and optimize inventory levels based on their value and importance.

Just-in-Time (JIT) Inventory

Just-in-Time (JIT) inventory management focuses on minimizing inventory holding costs by ordering stock only when needed. It requires accurate demand forecasting, reliable suppliers, and streamlined production processes. JIT inventory management helps businesses reduce waste, improve efficiency, and maintain optimal stock levels.

Best Practices for Effective Inventory Planning

Conducting regular demand forecasting.

Regularly forecasting demand is crucial for effective inventory planning. By analyzing sales data, market trends, and customer feedback, businesses can anticipate future demand and adjust inventory levels accordingly. Utilizing forecasting tools and leveraging historical data can enhance the accuracy of demand forecasts.

Implementing Robust Inventory Control Measures

Establishing robust inventory control measures is vital for maintaining accurate stock levels. Regular stock counts, cycle counting, and implementing barcode scanning systems help minimize discrepancies and improve inventory accuracy. Utilizing inventory planning software can automate manual processes and provide real-time visibility into stock levels.

Embracing Technology

Leveraging technology is essential for efficient inventory planning. Inventory planning software, point-of-sale systems, and data analytics tools enable businesses to automate processes, track inventory in real time, and make data-driven decisions. Implementing the right technology solutions can streamline inventory management and improve overall efficiency.

Effective inventory planning is critical for businesses to optimize stock levels, improve supply chain efficiency, and enhance profitability. By understanding the importance of inventory planning, adopting appropriate methods, and implementing best practices, businesses can minimize costs, prevent stockouts, and provide exceptional customer service. Developing a well-defined inventory plan and leveraging technology solutions can help businesses stay competitive in today's dynamic market. Embracing continuous improvement and adapting to changing demand patterns are key to long-term success in inventory planning.

Do Food Businesses Use Inventory Planning?

Food businesses often utilize inventory planning to effectively manage their supply chain, optimize operations, and ensure that they have the right amount of stock on hand to meet customer demand. Inventory planning involves the strategic management of inventory levels, ordering, and replenishment processes to achieve business goals and maintain efficient operations. Here's how and why food businesses use inventory planning:

Demand Forecasting:

Inventory planning starts with forecasting customer demand. By analyzing historical sales data, seasonal trends, market trends, and other relevant factors, food businesses can estimate the number of products they are likely to sell in the future. This helps them plan their inventory levels accordingly.

Minimize Stockouts and Overstocking:

Effective inventory planning aims to strike a balance between avoiding stockouts (running out of products) and overstocking (holding excess inventory). Stockouts can lead to lost sales and dissatisfied customers while overstocking ties up capital and storage space.

Efficient Resource Allocation:

Inventory planning allows businesses to allocate their resources, such as storage space and working capital, more efficiently. By optimizing inventory levels, they can reduce carrying costs and ensure that resources are used effectively.

Supplier Management:

Food businesses often work with multiple suppliers. Inventory planning helps maintain a smooth relationship with suppliers by providing accurate order quantities and schedules, which can lead to better pricing negotiations and improved delivery reliability.

Production and Manufacturing:

For businesses involved in food production, inventory planning ensures that raw materials and ingredients are available in the right quantities to meet production schedules. This helps prevent production delays and ensures the availability of finished products.

Seasonal and Promotional Planning:

Many food businesses experience seasonal fluctuations in demand, and some also run promotional campaigns. Inventory planning helps them anticipate and manage these variations by adjusting inventory levels and production schedules accordingly.

Cost Control:

Efficient inventory planning helps control costs associated with carrying excess inventory, such as storage, insurance, and potential spoilage. By maintaining optimal inventory levels, businesses can reduce these costs and improve their overall profitability.

Customer Satisfaction:

Adequate inventory levels lead to consistent product availability, which enhances customer satisfaction. Customers are more likely to be loyal to a business that reliably provides the products they want when they want them.

Data-Driven Decision Making:

Inventory planning relies on data analysis and forecasting techniques, enabling businesses to make informed decisions based on actual trends and patterns rather than relying solely on intuition.

Waste Reduction:

In the food industry, inventory planning can help reduce waste by minimizing the chances of products reaching their expiration dates before being sold.

Inventory planning is a critical aspect of running a successful food business. It helps businesses optimize their supply chain, minimize costs, meet customer demand, and ultimately improve overall operational efficiency and profitability.

How Can Food Companies Acquire Inventory Planning?

Food companies can acquire inventory planning tools through several methods, depending on their specific needs, budget, and preferences. Here are some ways food companies can acquire inventory planning tools:

Purchase Commercial Software:

Many software vendors offer specialized inventory planning and management tools designed for the food industry. These software solutions often come with features tailored to the unique requirements of food businesses, such as tracking perishable items, managing batch numbers, and handling expiration dates. Companies can purchase licenses or subscriptions to these software products. Examples of commercial inventory planning software include Blue Yonder (formerly JDA Software), Oracle NetSuite, and SAP Integrated Business Planning.

Software-as-a-Service (SaaS) Platforms:

SaaS platforms offer cloud-based inventory planning tools that allow companies to access software over the Internet without the need for complex on-premises installations. These platforms typically offer subscription-based pricing models, making them more flexible and cost-effective for smaller businesses. Examples of SaaS inventory planning platforms include TradeGecko, QuickBooks Commerce, and Cin7.

Enterprise Resource Planning (ERP) Systems:

Many food companies already use ERP systems to manage various aspects of their business, including inventory. ERP systems often include inventory planning modules that can be customized to fit the company's needs. Businesses can integrate these modules into their existing ERP systems or opt for ERP solutions that are specifically designed for the food industry, such as Aptean Food & Beverage ERP.

Custom Software Development:

Larger food companies with specific requirements may choose to develop custom inventory planning software tailored to their unique processes and workflows. This option provides a high degree of customization but typically requires higher upfront investment and ongoing maintenance.

Open-Source Software:

Some open-source inventory planning software is available for free or at a lower cost. Companies can modify and customize these tools to suit their needs. Open-source options may require more technical expertise to implement and maintain. Examples of open-source inventory management tools include ERPNext and Odoo.

Consultancy Services:

Food companies can engage with consulting firms that specialize in supply chain management and inventory planning. These consultants can provide guidance on selecting and implementing the right tools based on the company's specific needs and industry requirements.

Industry Associations and Networks:

Some industry associations and networks may offer access to inventory planning tools as part of their membership benefits. These tools might be developed in collaboration with industry experts and cater to the specific needs of the food sector.

Before acquiring any inventory planning tool, it's essential for food companies to conduct thorough research, assess their requirements, and consider factors such as scalability, integration capabilities, user-friendliness, and customer support. It's also advisable to seek recommendations from industry peers, attend trade shows, and consult with experts to make informed decisions about the most suitable inventory planning solution for their business.

What Is the Cost of Implementing Inventory Planning?

The costs associated with inventory planning can vary depending on the size of the business, the complexity of its operations, the chosen inventory planning methods and tools, and the specific industry. Here are some common costs to consider when implementing inventory planning:

Software Costs:

Commercial Software: Purchasing licenses or subscriptions for commercial inventory planning software can incur upfront costs as well as ongoing subscription fees.

SaaS Platforms: Subscription fees for cloud-based inventory planning platforms are typically charged on a monthly or annual basis.

Custom Software: Developing custom inventory planning software involves upfront development costs, which can vary based on the complexity of the software and the expertise of the development team.

Implementation and Integration:

Implementing and integrating inventory planning software with existing systems (such as ERP, accounting, and e-commerce platforms) can involve costs related to data migration, configuration, and testing.

Training and Support:

Training employees to effectively use inventory planning tools and software may require investing in training programs, documentation, and user support.

Some software vendors provide customer support services, which may involve additional costs depending on the level of support required.

Hardware and Infrastructure:

For on-premises solutions, businesses may need to invest in hardware, servers, and networking infrastructure to support inventory planning software.

Consulting and Professional Services:

Engaging consultants or experts to assist with the selection, implementation, and optimization of inventory planning strategies and tools can incur consulting fees.

Data Analysis and Forecasting:

Businesses may need to invest in data analysis tools and expertise to collect, analyze, and interpret historical sales data, demand patterns, and market trends.

Inventory Carrying Costs:

Maintaining inventory incurs carrying costs, including storage costs, insurance, interest on capital tied up in inventory, and potential costs related to spoilage or obsolescence.

Opportunity Costs:

Holding excess inventory ties up capital that could be used elsewhere in the business, potentially leading to missed investment opportunities.

Software Updates and Maintenance:

Regular software updates and maintenance may require ongoing costs to ensure the inventory planning tools remain up to date and function effectively.

Employee Time and Resources:

The time and resources spent on inventory planning processes, data entry, monitoring, and decision-making contribute to overall costs.

Process Changes and Training:

Implementing new inventory planning methods and tools may require process changes within the organization, which can involve training and change management costs.

It's important for businesses to carefully evaluate the potential benefits of inventory planning against the associated costs. While there are upfront and ongoing expenses, effective inventory planning can lead to significant savings through reduced stockouts, optimized stock levels, improved resource allocation, and enhanced operational efficiency. Conducting a thorough cost-benefit analysis can help businesses make informed decisions about their inventory planning strategies and investments.

What Are the Risks of Not Leveraging Inventory Planning?

Food companies that do not use proper inventory planning can face a range of risks that can negatively impact their operations, financial health, and customer satisfaction. Some of the key risks include:

Stockouts and Lost Sales:

Without proper inventory planning, food companies may experience stockouts, where popular products are unavailable to customers. This can lead to lost sales, dissatisfied customers, and potential damage to the company's reputation.

Overstocking and Excess Inventory:

On the other hand, inadequate inventory planning can result in overstocking, leading to higher carrying costs, increased risk of spoilage, and tied-up working capital. Excess inventory ties up financial resources that could be used for other business needs.

Increased Holding Costs:

Inefficient inventory management can lead to higher storage costs, insurance expenses, and other holding costs associated with excess inventory.

Reduced Profit Margins:

Overstocking and stockouts can both lead to reduced profit margins. Overstocked items may need to be sold at discounted prices to clear excess inventory, while stockouts can lead to missed sales opportunities.

Wasted Resources and Time:

Poor inventory planning can result in wasted resources, including time spent on unnecessary procurement, handling, and storage of excess inventory.

Increased Risk of Spoilage and Obsolescence:

Food products have limited shelf lives, and improper inventory planning can lead to higher chances of spoilage or obsolescence, resulting in financial losses and increased waste.

Inaccurate Demand Forecasting:

Without effective inventory planning, inaccurate demand forecasting can lead to incorrect ordering decisions, resulting in imbalanced inventory levels.

Inefficient Supply Chain Management:

Improper inventory planning can disrupt the entire supply chain, affecting suppliers, manufacturers, distributors, and retailers. This can lead to production delays, increased lead times, and higher costs.

Inconsistent Product Availability:

Without accurate inventory planning, food companies may struggle to maintain consistent product availability, leading to customer frustration and decreased loyalty.

Customer Dissatisfaction and Lost Reputation:

Inadequate inventory planning can lead to inconsistent product availability, delayed deliveries, and unmet customer expectations. This can damage the company's reputation and lead to customer dissatisfaction.

Ineffective Promotions and Marketing:

Without accurate inventory planning, companies may struggle to effectively plan and execute promotional campaigns, potentially leading to poor sales performance during peak periods.

Financial Strain:

Inefficient inventory management can strain the company's financial resources due to increased carrying costs, decreased cash flow, and potential losses from spoilage or obsolescence.

Missed Growth Opportunities:

Poor inventory planning can hinder a company's ability to scale and expand, as it may not be able to effectively meet increased demand or respond to market trends.

Improper inventory planning in the food industry can lead to a wide range of risks that can have significant negative consequences on the company's financial stability, customer satisfaction, and overall business performance. It's essential for food companies to invest in effective inventory planning strategies and tools to mitigate these risks and ensure smooth operations.

When Were Inventory Planning Tools Established?

Inventory planning tools have been used in various forms in the food industry for several decades, with their adoption and sophistication increasing over time. The exact timeline can vary depending on the specific tools and technologies being considered. Here's a general overview:

Pre-Computer Era: Before the widespread use of computers and software, inventory planning in the food industry relied on manual methods, such as paper-based records, spreadsheets, and basic calculations. These methods were labor-intensive and often lacked the precision and efficiency offered by modern inventory planning tools.

1980s - 1990s: With the advent of more advanced computing technology, basic inventory management software began to emerge. Early systems focused on automating manual tasks like order processing, stock tracking, and reordering. However, these tools were relatively basic and lacked the advanced forecasting and optimization capabilities found in modern inventory planning tools.

2000s: In the early 2000s, more sophisticated inventory planning software started to gain traction in the food industry. These tools incorporated advanced algorithms for demand forecasting, optimization, and replenishment. They aimed to help food companies better manage their inventory levels, reduce stockouts, and improve overall supply chain efficiency.

2010s - Present: Over the past decade, advancements in technology, data analytics, and cloud computing have led to significant improvements in inventory planning tools for the food industry. These tools now offer more robust features, such as real-time demand forecasting, integrated supply chain management, advanced analytics, and the ability to handle perishable and seasonal items. Additionally, the rise of e-commerce and online grocery shopping has further accelerated the adoption of sophisticated inventory planning solutions to meet the demands of omnichannel retailing.

Today, food companies have access to a wide range of inventory planning software, ranging from standalone solutions to integrated modules within larger enterprise resource planning (ERP) systems. These tools continue to evolve, incorporating artificial intelligence (AI), machine learning, and data-driven insights to provide more accurate demand forecasts and optimize inventory management processes.

While the use of inventory planning tools in the food industry has a relatively long history, it's important to note that the specific tools, technologies, and adoption rates can vary widely based on factors such as company size, industry segment, technological advancements, and market trends.

Is Inventory Planning Difficult to Use?

The ease or difficulty of using inventory planning tools can vary based on several factors, including the complexity of the tool, the user's familiarity with inventory management concepts, the software's user interface, and the level of support provided by the vendor. Here's a detailed explanation of the factors that contribute to the ease or difficulty of using inventory planning tools:

User Interface and Design:

Ease: Inventory planning tools with intuitive and user-friendly interfaces make it easier for users to navigate and perform tasks. Clear layouts, well-organized menus, and visually appealing design contribute to a positive user experience.

Difficulty: Tools with cluttered or unintuitive interfaces can be challenging to use, leading to confusion, errors, and longer learning curves.

Onboarding and Training:

Ease: Tools that offer comprehensive onboarding materials, tutorials, and user guides can help new users quickly get up to speed and start using the software effectively.

Difficulty: Lack of proper training materials or inadequate onboarding can make it more difficult for users to understand how to use the tool.

Data Input and Integration:

Ease: Inventory planning tools that allow for easy data import, integration with existing systems (such as ERP or accounting software), and support for data synchronization streamline the process of inputting and managing inventory-related information.

Difficulty: Tools that require manual data entry, complex data formatting, or limited integration capabilities can be time-consuming and error-prone.

Customization and Configuration:

Ease: Tools that offer customizable settings, workflows, and parameters allow users to tailor the software to their specific business needs and processes.

Difficulty: Lack of customization options or overly complex configuration settings can make it challenging to adapt the tool to the company's requirements.

Demand Forecasting and Analysis:

Ease: Inventory planning tools that provide clear and actionable demand forecasting insights, supported by visualizations and analytics, can help users make informed decisions about inventory levels and reorder points.

Difficulty: Tools that present complex or unclear demand forecasts and lack analytical capabilities may lead to uncertainty in inventory planning.

Replenishment and Order Management:

Ease: Tools that automate replenishment processes, suggest optimal order quantities, and provide reorder alerts simplify the process of maintaining appropriate inventory levels.

Difficulty: Tools that lack automated replenishment features or generate inaccurate order recommendations can complicate inventory management.

Technical Support and Customer Service:

Ease: Responsive customer support that provides timely assistance, troubleshooting, and guidance can significantly ease the user's experience with the tool.

Difficulty: Poor or limited customer support can result in frustration and challenges when using the inventory planning tool.

Technical Expertise:

Ease: Some inventory planning tools are designed to be user-friendly and accessible to individuals with varying levels of technical expertise, requiring minimal training to operate effectively.

Difficulty: Tools that demand a high level of technical knowledge or coding skills may be more challenging for users who lack that expertise.

Scalability and Complexity:

Ease: Tools that scale well as the business grows and offer a gradual learning curve for more advanced features make it easier to manage inventory as the company evolves.

Difficulty: Tools that become more complex or less user-friendly as the business expands can create challenges for long-term usability.

The ease or difficulty of using inventory planning tools is influenced by factors such as user interface design, onboarding, data integration, customization options, demand forecasting capabilities, technical support, and the user's familiarity with inventory management concepts. Businesses should consider these factors when evaluating and selecting inventory planning tools to ensure they choose a solution that aligns with their needs and resources.

Looking to Add Inventory Planning Capabilities?

inecta offers a comprehensive suite of advanced inventory planning solutions designed to empower your business with efficient and precise inventory management. With inecta's user-friendly interface and intuitive design, you can easily navigate through intricate inventory processes, ensuring streamlined operations and optimal stock levels. Our cutting-edge technology incorporates sophisticated demand forecasting and data analytics, enabling you to make well-informed decisions and anticipate market trends with confidence. Whether you're a small-scale food enterprise or a large distribution network, inecta's customizable tools cater to your specific needs, helping you minimize stockouts, reduce excess inventory, and enhance overall supply chain efficiency. With inecta as your partner, you can take control of your inventory planning, unlock cost savings, and deliver exceptional customer satisfaction in today's dynamic business landscape.

Free Valuable Resource!

3 simple steps to find your food erp.

• The secret to finding the best solution that fits your specific food business’ needs.
• Save valuable time looking at too many ERP solutions.
• Tools to help you streamline your ERP evaluation process.

*We will never sell your information. Keeping your data and privacy secure is our highest concern.

Latest Posts

Topics/tags.

• ERP Software
• food manufacturers
• iNECTA Food
• Food Manufacturing
• Food Traceability
• food supply chain

Related Posts

1.800.632.0573

Inecta Locations:

Global head office:.

225 Broadway #660, New York, NY 10007

© 2024 inecta LLC. All Rights Reserved.

Save up to 50% on self storage

• Self Storage

Optimizing Your Inventory Storage: Tips & Strategies for Small Businesses

Has your small business been growing to the point where your office is bursting at the seams with inventory? If so, it might be time to find a new inventory storage solution. 

But how do you choose the right inventory storage solution ? In this blog post, we’ll break down the types of inventory storage available, tips for increasing efficiency, and how to use regular audits and inventory management software to streamline your business operations. 

Understanding Inventory Storage

Inventory storage systems are the backbone of any retail, wholesale, or e-commerce business, encompassing item management, organization, tracking, and storage. 

A well-organized inventory storage system can increase cost-effectiveness, allowing warehouse personnel to move a considerable volume of inventory while reducing the likelihood of errors.

Inventory Storage Solutions for Small Businesses

Optimizing inventory storage can be particularly challenging for small businesses due to limited resources and space.

There are three primary options for business owners looking to store their products. Your choice will depend on how much inventory you have or plan to have. 

How Neighbor is changing storage

Transparent monthly savings.

Renters save 30-50% on self storage, on average. No rate hikes.

Keep your items nearby

Hosts in your neighborhood means that your things are always close by.

Storage made simple

Don't settle for stone age tech and long contracts. Neighbor makes it easy.

Home-Based Storage Options

Many entrepreneurs or small business owners use home-based storage for their goods, purely because it’s the affordable option.

Spare rooms, closets, and garages can be economical solutions for small businesses looking to store inventory. Home storage is flexible, cost-efficient, and easy to access. Plus, in some cases, setting up a single shelving unit in your office or garage might be all you need to run your business effectively.

However, if you have a larger stock of inventory, home storage might not be the best option for your business for a few reasons:

• You might have difficulties distinguishing between your inventory and personal items. (For example, if you’re storing personal boxes and boxes of inventory in the same section of your basement, you may struggle to keep these boxes separate)
• You might lack cool, dry storage space in your home that maintains consistent temperatures. ( Note: If the only available storage space in your home is an unfinished business, temperatures will fluctuate too drastically ).

When storing inventory at home, you’ll also need to ensure your home or renter’s insurance will cover the cost of your stored inventory if it becomes damaged. If you run your small business from home, lines may be blurry in the eyes of your insurance provider.

Storage Units or Self-Storage

Storage units are the step between home storage and warehouse storage. They are more affordable than renting a warehouse, but will lend more room for inventory storage than your garage or spare bedroom can provide. 

Storage units vary in both size and price point, starting with 5’x5’ lockers on the low end and stretching to 10’x25’ units on the high end.

Typically, most retail or e-commerce businesses can get away with storing inventory in a 10’x10’ storage unit . 

Before you get a self-storage unit, consider the following:

• Storage units involve monthly or yearly payments
• Storage units may not be as secure as a privately owned warehouse
• You’ll need to install additional shelving to maximize storage unit space 
• Facilities might impose time restrictions for when you can access your inventory

Despite these pitfalls, renting a storage unit is often a great option for anyone looking to maximize efficiency and take their operation to the next level.

Need More Space? Learn How to Turn a 10’x25’ Storage Unit Into an Organized Warehouse.

Warehouse Storage

The other storage option is renting, leasing, or purchasing a warehouse . Warehouses are an integral part of a large inventory operation. 

If you’re running a retail operation, a warehouse can also store extra shelving or product displays that clutter up your storefront. Plus, if you receive shipments from suppliers, you can easily direct them to the warehouse in lieu of a storefront. 

However, warehouse storage comes with a few added stressors, which can include:

• Securing the funds to cover rent or mortgage payments (depending on whether you choose to buy or rent a warehouse)
• Preventing security breaches and setting up a security system
• Covering the costs of shelving, equipment, and an inventory system
• Transporting goods from the warehouse to other locations

Warehouses and other storage facilities help define a clear line between home and work, as your goods aren’t stored in the attic or garage of a residential property. While this bleak separation between work and play may tame stress, you’ll need to weigh the pros and cons of home-based storage, self-storage, and warehouse storage to find what’s right for your business. 

How to Utilize Vertical Space in Your Storage Solution of Choice

If your inventory storage location doesn’t have a lot of square footage, it’s important to make the most out of your vertical space. To maximize the storage space in the small warehouse or self-storage unit, leverage vertical shelving, hanging racks, and step ladders .

Larger operations might require specialized equipment, like picking machines or forklifts. 

Items stored above eye level should be properly labeled or stored in clear containers, so you can quickly locate units of inventory, even if they’re stored on 12-ft shelves.

To improve visibility and streamline workflows, you’ll need to map out an optimized layout of your warehouse, designating walkways and order-picking access points.

Strategies for Reducing Inventory Costs

Paying for your inventory storage can get expensive, especially if storing excess inventory.  With the right strategies in place, you can reduce your overall costs by keeping a maximum of 4-6 months worth of inventory and auditing regularly.

Just-In-Time Inventory Management

The Just-in-Time Inventory Management System (JIT) allows businesses to cut storage costs, predict demand, and downsize by only ordering what is needed to meet short-term demand . Forewarning, JIT systems run on very tight schedules.

You’ll also need to be aware of the potential risks associated with just-in-time inventory management , such as inventory shortages if suppliers can’t meet the demand. 

To ensure successful Just-in-Time Inventory Management, businesses should have reliable suppliers and plan ahead for seasonal demand. By implementing this strategy, businesses can save on storage costs and space while still maintaining a competitive edge.

Minimizing Excess Stock

Reducing surplus stock can decrease the risk of inventory obsolescence and free up much-needed space .

When downsizing, you’ll need to frontload products that sell quickly and order less popular products in much smaller quantities. Failure to minimize excess stock could clutter your valuable floor space and make it harder for you and your staff to complete routine inventory tasks. 

To prevent excess stock from accumulating, businesses can:

• Invest in inventory management systems that provide accurate forecasts of demand
• T rack inventory levels in real-time
• Maintain a lean and efficient inventory that minimizes costs and maximizes profitability.

Conducting Regular Audits and Cycle Counts

Employing regular audits and cycle counts helps verify the accuracy of records and identifies opportunities for improvement in inventory management processes. 

This is where an inventory management software program like Cin7 Orderhive or inFlow can be useful. With the ability to track trends, you can make informed decisions about your inventory, aka, what you plan to store in the long-term and short-term.

Conducting regular audits can also help businesses refine their JIT system to better stand up against supply chain issues. 

Find Inventory Storage Solutions That Work for You

As your business grows, you’ll become more pressed for space. You might not have the funds to purchase a warehouse nor the space at home to store inventory.

Thankfully, peer-to-peer storage marketplaces like Neighbor make finding affordable inventory storage easier. Thanks to Neighbor’s extensive host vetting system, you can rest easy knowing that the cornerstones of your small business (aka your product) will remain safe and secure. 

Related Posts

7 warehouse storage systems: their differences and advantages.

• Business Operators

7 Inventory Control Techniques For Your Business 

Renting a warehouse cost and other considerations, ecommerce storage 101: the smart strategies you should adopt, the ins and outs of mini storage, self service storage vs. full service storage.

Justin earns $650/mo on Neighbor. Find out how you can too!

Stay in the loop ↓

Discover shipping with Veeqo

Buying Labels

Buy and print labels in seconds

Immediate access to pre-negotiated rates

Veeqo Credits

Earn up to 5% back on shipments

Manage Your Orders

Order management made simple

Scan & Pack

Improve picking accuracy

Shipping Integrations

All our carrier integrations

Discover Inventory Management

Automatically update inventory levels

Transfer, track, receive & reconcile

Reporting & Forecasting

Data driven reports & forecasting

Inventory Integrations

All our Inventory integrations

Learn more about Veeqo, an Amazon Company

Amazon Multi-Channel Fulfillment

Amazon Shipping

Delivery made easy with Amazon Shipping

Amazon Accelerate

Our latest announcement from Amazon's largest seller event

Integrations

From UPS to Shopify, we have over 50+ integrations to choose from

Inventory Storage

Inventory storage is critical to long term retail success. Fail to look after your stock properly, and you run the risk of it getting lost, stolen or damaged - wasting cash that could be used on other important business expenditures.

So this chapter is all about how to most efficiently store, organize, maintain and generally preserve the life of your inventory.

Broad inventory storage options

The first thing to assess is exactly where you’ll be storing inventory. To do this, you typically have a few options.

1) Dropshipping

Dropshipping is a way of purchasing inventory where the retailer doesn’t keep any of the products it sells in stock. Instead, items are purchased from a third-party supplier as and when each customer order comes in, with the supplier shipping products directly to the customer.

It therefore entirely negates the need for inventory storage or keeping stock on-hand.

Inventory storage is entirely taken care of by the supplier.

Supplier is liable for any inventory shrinkage.

Lower overall costs of not needing a warehouse, 3PL or fulfillment team.

Less risk when starting out.

Little to no control over product quality or branding.

Puts someone else in control of how well products are stored.

Shipping speeds can be incredibly slow.

Highly competitive with razor thin margins.

Best for : Startup retail brands that want to test the waters before investing in bulk inventory.

2) Third-party logistics (3PL) service

A third-party logistics (3PL) service allows retailers to effectively rent space in another warehouse. You can then send inventory units directly to the 3PL location for them to store and ship on your brand’s behalf.

This usually incurs housing and shipping fees, but again eliminates the need to worry about having to store inventory.

Inventory management is entirely taken care of by the 3PL service.

Can take advantage of bulk inventory discounts without the need for a self-fulfillment warehouse.

Usually involves significantly faster shipping times and more control over product quality compared to dropshipping .

Monthly storage fees can eat into profits for slow moving stock.

Trusting someone else to ship products on your brand’s behalf.

Usually requires investing in bulk stock quantities.

Best for : Growing retail brands that have proven, consistent sales and want to buy stock in bulk without a dedicated warehouse.

3) Self-fulfillment warehouse

A self-fulfillment warehouse is a location set up by a retailer in order to specifically store its own inventory and ship orders.

This usually comes with significant up-front investment of both capital and time - like signing a lease and hiring a team. But if the sales are there and numbers make sense, then the result is more control and lower operational costs in the long run.

Complete control of the fulfillment experience delivered to customers.

Initial investment can result in long term savings compared to a 3PL.

Usually involves signing a long term lease, which can be risky.

Will need to hire and train a team, and possibly invest in WMS software .

May require moving to new locations several times as the business grows.

Best for: Established retail brands planning for long term growth.

Setting up your warehouse

The main goals of setting up your warehouse for optimal inventory storage are:

Safety . Any inventory should be stored safely to prevent both injury to staff members and damage to the inventory itself.

Security . Warehouses with large amounts of valuable stock will be a target for thieves, so this should be prevented as best as possible.

Accessibility . Inventory will need to be stored in a way that’s easy to receive and put away when new, then pick, pack and ship out to customers later on.

In order to do this, there are several things to think about:

1) Warehouse layout

Your warehouse will need to balance having enough storage space for inventory, while providing enough working space for staff to move around and complete tasks.

Exact requirements will depend on each individual business, but the following areas tend to be needed in a warehouse layout:

Delivery/receiving area.

Unpacking and book-in area.

Warehouse office.

Main storage area.

Area for excess, obsolete or dead stock.

Packing table(s).

Shipping station(s).

This can be tricky – especially when dealing with a limited space. So it’s best to sketch out your warehouse layout to scale before setting it up or changing what you already have:

Space and manoeuvrability is a key thing to remember.

Pickers need to be able to walk up and down aisles without getting in each other’s way. And should also have enough room to actually pick items.

2) Warehouse labelling

Specific locations and clear labelling are essentials for effective inventory storage. Your team should be able to look at your inventory system and see exactly where any product is located.

Practicality is king here.

Stick with simple alphanumeric combinations labelling specific rows, shelves and then exact bin locations:

So you always know, for example, that all your blue t-shirts sized medium will be in Row A – Shelf B – Bin 1. And the pattern can be continued like this.

Larger warehouses can extrapolate forward as much as needed with the same concept:

The bigger your facility, the more in-depth you’ll need to go with your location labelling to achieve optimal inventory storage.

3) Arranging inventory

Another key part of inventory storage is determining the exact location each product should be stored within your warehouse.

Ideally, sales volume should be taken into account for this.

Veeqo research found that 60% of a company’s sales tend to come from just 20% of their products. Meaning you can severely reduce picker walking time by:

Identifying that 20% of products from past sales data in your business;

and then storing these as close to the packing desk as possible.

ABC Analysis is an inventory management technique that can become very useful here. This divides all on-hand inventory into three groups – A, B and C:

A Items : Are of high value and bring in most of profits.

B Items : Are sold often, but less valuable/profitable than A items.

C Items : The rest of your inventory that doesn't sell much and generates the least revenue.

You can then decide that ‘A items’ will be placed closest to the packing desk, while ‘C items’ will be farthest away. Like this:

Some small and lightweight items may even be sold frequently enough to warrant being stored on shelves above the packing desks themselves.

You can take this concept another layer deep by also identifying which products are most commonly sold together.

So faster selling products are stored closer to the packing desk and products commonly purchased together are stored close or next to each other. Meaning you’re doubling down on reducing walking time for each picker.

Inventory storage equipment

Storing inventory in the safest and most practical way is almost impossible without investing in some form of equipment.

This can differ heavily depending on the goods in question. Retailers selling refrigerators, for example, may require large locations, forklifts and heavy-duty shelving racks. While selling t-shirts or jewelry can usually be done with simple shelves in a smaller space.

With that being said, here’s a look at some of the general equipment to consider:

Shelving units

Some warehouses can work with simple block stacking of products on top of each other, but most will need some kind of shelving to place products on. The most common ones have metal frames with wooden shelves, are easy to build, yet robust. Access to both sides can also be very useful - one side for putting in, one for taking out.

Warehouse bins are where your individual product variants go into, particularly for smaller items. Each bin will be labelled and assigned to a specific variant to make it easy to locate in the warehouse.

Inventory is a business asset, and should be protected as such. Make sure to get a good Closed Circuit Television (CCTV) system set up with signage to indicate it’s in use in order to deter thieves as much as possible.

Barcode scanner

A quality barcode scanner will help with booking-in, picking, packing, conducting inventory counts and generally keeping your inventory accurate and aligned with what’s recorded in your inventory management software .

Picking cart

Pickers will need a cart on which to carry all the items that are being picked before returning to the packing station. This is particularly useful if you commonly sell multiple items per order, or when using a batch picking system .

These will sit on the picking cart and carry items for individual orders during a batch picking route. Totes are usually simple plastic containers and will only ever hold items for one order at a time.

Packing desk

A professional packing desk is very solid, larger than a normal office desk and has rolls so that you can get easy access to your packaging materials. It’s worth having at least two, so someone else can jump in during busy periods.

Packaging materials

This will involve your different sized shipping boxes - we recommend around 3-5 options to strike a balance between speed and shipping costs. Plus, tape and all the protective inner packaging - like bubble wrap, shredded paper or air pillows (determined by how fragile your items are in transit).

You’ll need a good quality A4 lazer printer for invoices, and a typical 6x4” shipping label printer ( Dymo is great for this). For your A4 printer, think about speed of printing the first page, speed of printing multiple pages and cost per page.

Shipping computer

This is a dedicated computer solely for shipping out orders - printing out labels, marking orders as shipped, sending out tracking details and/or using shipping software. It’s best to opt for a touchscreen to remove the need for keyboard and mouse in this fast-paced environment.

Shipping scales

These weigh all packed shipments and send details to your shipping computer via a direct connection. Dymo are, again, a great option for scales.

Of course, retailers need to consider this equipment from the point-of-view of their own business. Selling certain foods may require a refrigerated unit or cold store, while very high value jewelry may need extra security measures.

The key is to use this guide as a blueprint to build upon and mould to your own business.

We’ve now covered how to plan, replenish and store inventory as a retailer. Next, we’ll move on to inventory analysis in order to use the best and most useful metrics for keeping on top of your stock management going forward.

Start shipping with Veeqo today

• Warehouse management
• Reporting & analytics
• Marketplace
• API & developers
• Help center
• Shipping integrations
• Ecommerce integrations
• Marketplace integrations
• All integrations
• Success stories

Social navigation

• Follow us on Twitter
• Follow us on Facebook
• Follow us on LinkedIn
• Follow us on Instagram
• Follow us on YouTube

Legal navigation

• Terms of Service
• Privacy Notice

© 2024 Veeqo Ltd, P.O. Box 81226, Seattle, WA 98108-1226

• Book a demo

What is Store Inventory Control?

Resources / What is Store Inventory Control?

Table of contents +

• Inventory Management: Process, Examples, Tips & Techniques -->
• Accounting for Inventory: Periodic Inventory Management vs Perpetual Inventory Management -->
• Effective Inventory Management in Retail -->
• Multichannel Inventory Management -->
• Inventory Forecasting Best Practices -->
• What is Inventory Tracking? Top Tips for Tracking Inventory -->
• What is Inventory Planning? Challenges & Best Practices -->
• What is lead time and how do you shorten it? -->
• Pipeline Inventory -->
• What is Inventory Control? -->
• Dead Stock: Causes and How to Get Rid of it -->
• Perpetual Inventory System -->
• Inventory management in warehouses -->
• What is Store Inventory Control? -->
• Automated Inventory Management -->
• What is Inventory Turnover? -->

Inventory management can be a challenge, especially when you’ve got store inventory control to consider, with several warehouses and retail stores to maintain. It often involves a stock-take day, when you count each item of stock in your warehouse and record the results.

Although store management and inventory control can sometimes be tedious, it’s vitally important for a business to stay on-track with its inventory levels.

Holding onto too much stock can disrupt your cash flow, which is bad for business. But not having enough to meet customer demand is equally damaging. 

That’s why effective inventory management is vital for a growing business. Luckily, nowadays, there is plenty of  useful inventory management software available that can help with stock control, making the process smoother and easier than ever.

So, read on to learn more about t he meaning of store inventory control and how it can impact your business.

Store inventory control is the process of keeping track of stock levels across your retail stores. This can relate to both physical and ecommerce online stores. It encompasses everything from purchasing right until the point it reaches the retail store.

That means monitoring incoming and outcoming stock, as well as the stock being held in the warehouse. Inventory control gives you a complete overview of your company’s inventory, including what the products are and where they can be found in the warehouse.

The goal is to minimize the costs that can be incurred through holding onto stock. You’ll also have a better idea of when to replenish stock, sell old stock, and buy new products. Good inventory control techniques will free up space in your warehouse as well as money in your cash flow, and ensure you’re not keeping hold of old or unsellable stock.

According to Shopify , mismanaging inventory has cost businesses nearly $2 trillion. These are mostly hidden costs associated with overstocks, out-of-stocks, and preventable returns.

Why Store Inventory Control is Important

Inventory control  gives a business owner a better understanding of their stock levels. It ensures that dead stock is taken care of (or avoided entirely), and that the warehouse is running at optimum efficiency. Here are some other reasons as to why inventory control is important for your business:

• Helps with quality control –  Inventory control allows you to keep an eye on your products, wherever they are. That means that every now and again when you conduct inventory counts, you’re also able to monitor quality control at the same time. If you do find stock that falls below your company standards, there is then the opportunity to act. Especially in the event of a product recall.
• Keeps count of stock –  Part of the inventory control process is conducting regular stock takes. This involves counting every single item of stock you have. It allows you to monitor stock levels and organize your warehouse. This is important because it means you know where each unit is located, and the quality and condition of each product. You’re also able to see where you may be falling short on some products and bring in additional stock where necessary.
• Helps with inventory accounting –   Inventory accounting is a key part of inventory control. It measures the value of physical inventory and costs of goods sold over time. This means you control dead stock that no longer has value, which reduces waste and makes it easier to calculate your inventory value. This also means you can help your bottom line by only holding the products you need.
• Ensures you don’t oversell –  Once you know how many products you have, you can be sure that you don’t accidentally oversell an item to your customers or sell out of your most popular product. You can also list your stock levels in real-time on your website, and keep your POS (point of sale) system  updated with in-store stock availability. When items are sold out, customers can grow impatient and look elsewhere to find the same product. Similarly, when a customer buys an item only to find out it’s been oversold and they’ve been refunded, this can also leave them frustrated with your quality of service. Overall, it can decrease customer satisfaction ratings for your store. Given that customer experience goes hand-in-hand with loyalty, it’s important that you deliver the best service possible.

Sell everywhere, see it in one place

Brightpearl seamlessly syncs inventory, orders, and customer information between your online and offline sales channels to avoid overselling

The 4 Types of Inventory

There are four main types of inventory. Let’s take a look at what they are and how they impact businesses.

Raw materials

These are the materials used to manufacture product components or finished products. In some cases, these materials are kept by the supplier and then shipped directly to you. However, sometimes the materials may be produced by you for easy, quick access. This means they may be part of your warehouse inventory. For example, if your business sells notebooks, the raw materials you need to make them include the paper, ring binders, and covers.

Unfinished products

This type of inventory includes products that are eventually going to be for sale, but are unfinished or not yet ready to hit the shelves. This may include products that are still being made or are waiting for packaging to complete the item. These will be stored in a separate part of the warehouse to ensure everything is categorized and an unfinished product never makes it into a store.

In-transit inventory

This refers to the inventory that has been shipped from the supplier but has not yet reached the warehouse. It’s also referred to as pipeline inventory . This transaction is still included in inventory management, even though it’s not reached the retailer yet. It’s also where the transfer of ownership takes place. When goods arrive with the purchaser, they now own those goods.

Cycle inventory

Cycle inventory is when a business sells a portion of its stock. This stock is then swiftly replenished. Safety stock is used to cover surges and dips in demand, while cycle stock is used to cover the majority of purchases. This means that some small businesses only use cycle stock because they don’t have the capacity for safety stock.

For larger businesses that have safety stock, they may still avoid dipping into it unless it is needed to meet increasing customer demands. Keeping cycle stock as low as possible saves money on shipping and storage, which can be useful for smaller businesses.

Challenges of Store Inventory Control

Inventory management can be challenging for retail businesses for several reasons. The biggest challenges are:

Issues with supply chain

The  supply chain  goes from the manufacturing stage right through to the warehouse, and the products on the shelves. Below are some typical  supply chain  issues.

When there is an issue at any of these stages, it can affect the whole chain. One of the challenges of inventory management is to be prepared when a problem arises. You must act quickly to fix it.

For instance, you should re-order your best-selling product frequently so that you can keep large quantities in your warehouse. So, if there’s ever an issue with sourcing raw materials or delivery of the products, you’ll have enough stock in the warehouse to prevent stockouts until new stock arrives.

Managing warehouse space

Inventory control techniques aim to minimize the stock levels in your warehouse. Sometimes, this is out of your control – like when there are issues in the supply chain, for example. Your warehouse may only have enough space left for your incoming products, but a problem with the  supply chain  may mean some products are delayed.

Therefore, they could all arrive at the same time. It’s important to ensure you’ve got excess space for eventualities such as this.

Planning and designing efficient, effective warehouse spaces isn’t easy, but you can better control the timing of new stock deliveries when you organize your warehouse spacing.

Customer demand

It may also be the case that you bulk buy products because of demand, but then trends change and they fall out of fashion. You’re then left with thousands of products in your warehouse taking up space that could potentially house new, more successful ones.

On the other hand, you may buy small quantities of a certain product but then find out that it’s growing in popularity. If you haven’t got enough stock in your warehouse, then this may cause delays in getting products to the customer. Let your supplier know when you’re generating a lot of purchase orders so they can ramp up production. Ensure you’re using a fast and reliable supplier that can do this for you.

Forecasting trends can be difficult, so it’s important that you use  demand forecasting . This is when you analyze data to predict how many products are going to sell within a certain time-frame. You can ensure you have enough for peak times like the holiday season.

Poor communication

Retail managers should be highly-skilled communicators. If communication between suppliers or manufacturers breaks down, it can cause issues for inventory levels. Good communication is particularly necessary if your business operates on a large scale and has both physical and online stores.

Managers need to be able to implement the company’s inventory management techniques, as well as  train other employees in the warehouse . It’s important to document lead-times and supplier information. To ensure this is available across multiple warehouses, the information needs to be digitized. Sometimes a warehouse management  software system can be the easiest solution.

Poor communication can affect your bottom line, too. Here’s why:

Increasing competition

Increasing competition can present a couple of problems. One being that you need to keep your product in stock at all times, because if repeated stockouts affect the loyalty of your customers, they won’t be afraid to shop elsewhere for the same thing.

Another issue is that the demand for raw materials or for your products from suppliers may increase in line with supply and demand. You can compete for high-demand materials, but this will come at a cost.

Changes to packaging

As consumer tastes change, so do products and their packaging. If ingredients change or there’s a limited edition product, you can expect the packaging to change with it. This can be tricky for inventory management, as you’ll have a lot of products that are suddenly out-of-date.

This may mean some of your products have a shorter shelf-life than you were expecting, and you may make a loss if you aren’t able to sell them on. Of course, the product inside may be exactly the same as it always has been—but the customer will want the shiny new packaging design!

Want to find out more about how Brightpearl can benefit your business?

Get a customized, free demo now!

8 Inventory Management Techniques and Examples

If you’re wondering how to control inventory in retail stores and warehouses, keep reading!

Depending on the business, there are various types of inventory control techniques. Here are eight examples of inventory management systems in business:

1. First in first out (FIFO)

As the name suggests, this technique means that your oldest stock gets sold first. It’s a good way to keep track of the re-order point for stock, and avoid the issue of dead stock. For food and beverage retailers like Starbucks, this is a particularly important technique needed in order to keep products fresh. Even if you’re not selling perishable products, it can still be a good idea to use the  FIFO  method. If for no other reason than to ensure packaging is always in good, up-to-date condition.

A FIFO system only really works well with an organized warehouse. One where you know the location of each product in order to keep replenishing stock.  Warehouse management software  like Brightpearl can be useful for this. It enhances warehouse visibility so you can stay on top of your inventory. It also eliminates costly warehouse human errors thanks to its barcode scanner and automation options.

2. Last in first out (LIFO)

This technique means that the inventory you’ve most recently received will be sold first. The reason for using this method is all about pricing. If prices rise, this means the inventory you most recently bought will be the highest cost. When you sell these items, you’ll generate lower profits and therefore, have a lower taxable income.

One of the downsides of this technique is that you’re more likely to generate dead stock. If it’s left for too long, it may be unsellable.

3. Economic order quantity (EOQ)

Economic order quantity is a formula used to calculate the ideal order quantity a company needs. It includes total costs of production and consumer demand. This technique is used by businesses to see the minimal amount of inventory they can buy, while keeping the business ticking over. It helps to free up cash when it’s needed most.

The formula is:

EOQ = √(2DK / H), or the square root of (2 x D x K / H)

D = Order costs (per order)

K = Demand rate (per year)

H = Holding or carrying costs (per unit, per year)

The graph below demonstrates the EOQ equation:

Image: Medium.com

4. abc analysis.

This inventory management technique splits products into three categories to help better organize your stock, and identify those items that cost the most to store. It also helps you manage the profitability of the items based on their category.

• A  – The most valuable products that you generate the most profit from.
• B  – Products that aren’t the most valuable, but also not the least valuable. They fall somewhere in-between.
• C  – The least valuable products that help to generate a small, steady profit.

5. Minimum order quantity (MOQ)

The minimum order quantity technique is the smallest amount of stock that the supplier is willing to sell. For example, if you’re trialing a new product, you may not want to invest in large quantities until you know how much demand there is from the consumer.

Higher-priced items usually have a smaller MOQ because they are typically more complex to make. Smaller, cheaper items usually have a high MOQ because they’re cheap to make.

6. Just in time (JIT)

The JIT method is all about minimizing the amount of space your inventory takes up in the warehouse. One of the downsides is that it is risky, because if the product doesn’t arrive on time, you’ll be left with some unhappy, frustrated customers.

The car giant  Toyota experienced this first-hand . They first adopted a JIT inventory control model in the 1970s, but in 1997 the manufacturer of their brake valves was hit by a fire that destroyed all their stock. This meant Toyota had to find an alternative supplier quickly. They were forced to shut down for two days which cost them $15 billion and 70,000 cars.

If you can find a balance between waiting until the last minute to replenish products and avoiding a stockout situations , then JIT can be effective. However it may not be possible for certain products with a long lead time .

7. Radio frequency identification (RFID)

RFID allows a business to track products as they make their way through the supply chain. Using radio waves, products can be located via a tag and a reading device. The tag is a small microchip, so it’s easy to install and lightweight.

The tags are then fixed to the pallet or truck as it makes its way from manufacturing to the retailer. The tag can then emit radio signals that the reader collects. The reader is kept at the warehouse for management teams to keep an eye on incoming inventory.

When asked ‘What challenges do you face helping your retailer customers with cross-border ecommerce?’,  29% of supply chain managers  who deliver goods across borders felt that tracking deliveries was challenging. RFID helps with this, which is why it can be such a vital part of inventory control.

8. Bulk shipments

Bulk shipments can be preferable for large businesses that typically have a high turnover of stock. It’s often cheaper to buy in bulk, and you also need to buy less often because you have everything you need in the warehouse until stocks run low.

However, one of the downsides can be that it costs more to keep stock in the warehouse as it takes up more space. If the product is selling fast, though, it may not stay in the warehouse for long.

How Will You Manage Store Inventory Control?

Inventory control is vital for keeping your business running smoothly. When there are issues with your warehouse or inventory levels this can cause delays, which is bad news for your customers.

By investing in smart software like Brightpearl, you’re able to  optimize your workforce and manage inventory right through from purchase to sale. It also includes automated multi-location inventory tracking so you know when to expect your next shipment. So, if you’re implementing any new store inventory control procedures in your business, be sure to use the best software to support you and your employees.

A Quick Guide to Inventory Planning for Ecommerce

By Kristina Lopienski Last updated on January 17, 2024

Need Help With Order Fulfillment? ShipBob Can Help.

Subscribe for more.

Enjoying this article? Join the tens of thousands who get the latest from ShipBob’s blog emailed every other week.

Table of Contents

What is inventory planning?

Why is inventory planning important for ecommerce, what are the benefits of inventory planning, what are the challenges of inventory planning, inventory planning methods to implement, inventory management planning with shipbob (in 3 steps), inventory planning faqs.

“By failing to prepare, you are preparing to fail.” 

The same notion holds true when it comes to running an online store.

Behind every successful ecommerce business, there is a lot of strategic supply chain planning involved — especially when it comes to inventory.

In ecommerce, inventory is your biggest asset. Without proper inventory planning, it can result in some serious business repercussions, ranging from increased logistics costs to major stockouts, to delays in shipping orders. 

When done right, inventory planning helps online stores reduce costs, save time, and streamline their ecommerce supply chain . That way, customer expectations are consistently met and businesses can stay profitable.  

Learn the ins and outs of inventory planning, including common inventory management challenges and how the right tools, technology, and data can help make planning much easier. 

Inventory planning is the process of optimizing inventory levels to meet demand and optimize internal costs.

An important part of supply chain management , inventory planning ensures your supply chain runs smoothly. It involves several processes and tasks, including inventory forecasting, storage optimization , inventory tracking, and more. 

When you first start your business, you might be able to fulfill orders from home and manage ecommerce inventory without putting much time or thought into inventory planning.

But as your business grows, the more inventory you will have to order, manage, replenish, store, and prepare to sell. 

Since inventory levels change constantly throughout the supply chain, it can be a challenge to maintain an optimal amount of inventory to meet demand, especially since demand continuously fluctuates. 

But taking the time to plan, you can make better judgment calls on how much inventory on hand you should have, when to reorder more inventory, and how long inventory takes to receive and prepare for fulfillment. 

Lastly, inventory planning not only minimizes overall costs, but it ensures you can deliver a great customer experience. It can help to avoid out-of-stock issues and delays in fulfillment, so items ordered can be picked, packed, and shipped as soon as possible.

There are many benefits to  inventory planning, but at the crux of it all, it’s about attaining stock control and making the right inventory decisions to meet demand and remain profitable. Below are the top benefits of inventory planning. 

1. Provides better cash flow

Your total inventory costs, which includes money spent on holding and storing inventory, is a huge expense for retail businesses. It can collectively amount to about 20% to 30% of your total inventory expenses. 

Inventory planning enables you to use inventory financing more judiciously. For example, when you order just enough stock to meet future demand, you avoid overstocking, so too much capital isn’t tied up in inventory.

Inventory planning also ensures that inventory accounting will go smoother during tax season , and it definitely makes pulling accurate inventory reports much easier. Ultimately, inventory planning enables you to make better decisions, so you can grow your business faster. 

“We utilize ShipBob’s Inventory API, which allows us to programmatically retrieve real-time data on how many units of each product are currently stored at ShipBob’s warehouses. We currently use this API to generate custom reports to tie this inventory data into our accounting platforms.” Waveform Lighting Team

2. Improves demand forecasting

Demand forecasting helps make better-informed supply decisions that estimate the total sales and revenue for a future period of time.

It not only helps you meet customer demand, but it also helps you make better financial decisions that impact profit margins, cash flow, inventory allocation , warehousing, staffing, and overall logistics spend.

3. Better storage system

Storing your inventory takes not only well-thought out planning but constant improvement.

If you have clear-cut, goal-driven plans for your inventory, you will be able to choose an inventory storage system that works best for your team, depending on how much space you have, the size of your products, the number of SKUs you have, the total units you carry, and more.

You can also plan the layout and design of the warehouse space, so that warehousing becomes a lot more efficient. Known as warehouse slotting , taking the time to organize your warehouse can help maximize your space and speed up fulfillment without compromising order accuracy . 

If you think your warehouse is full, slotting can help identify ways to increase storage complicity.

On the other hand, you can set your warehouse picking team up for success by storing products in a way that make the most sense to them, such as by type, size, or weight, or by productivity (i.e., storing your best-sellers or most common order combinations together). This enables your team to focus on efficiency rather than spending too much time locating the right item.

“It’s a pain to pick, pack, and print the labels, and manage inventory storage. It would be a huge stress for us to do it ourselves, but the fact that ShipBob takes care of it all, both the savings in costs and time, is invaluable to our business.” Nikolai Paloni, Co-Founder of Ombraz Sunglasses

While the benefits of strong inventory planning are undeniable, retailers also tend to face quite a few roadblocks when it comes to adopting planning best practices for their business.

Here are some of the challenges that many online brands face when it comes to inventory control .

1. Unreliable data

For a smooth and lean supply chain process, you need access to real-time data. But many times, the data is not tracked diligently, especially if it’s tracked manually.

Even when kept tabs on, it is dispersed across many disparate systems. This makes it difficult for retailers to piece all the data together to gain a complete picture of the inventory. 

In the absence of a cohesive view of historic and/or current inventory levels and any other important sales information, you will find yourself floundering in the dark when it comes to making inventory-led decisions. This is why implementing a centralized, real-time inventory tracking system is non-negotiable. 

Implementing a way to track inventory in real time ensures you have accurate data, even as you expand into new sales channels and grow your distribution network. There are several inventory apps to choose from that make it easy for online brands to better track inventory.

But instead of investing in your own inventory tracking software, you can save time and money by partnering with third-party logistics (3PL) provider like ShipBob.

ShipBob not only stores your inventory in the domestic and/or international fulfillment locations of your choice, but you also get access to inventory data from a single dashboard.

That way, you can save time and effort on updating several spreadsheets and reduce human error (and even take time-consuming inventory tasks off your team’s plate completely).

“I used to have to pull inventory numbers from three places everyday and move all the disparate data into a spreadsheet. ShipBob has an analytics tab in their dashboard with all of this information, which is great for end-of-month reconciliations. It’s really nice to not have to operate three 3PLs.” Wes Brown, Head of Operations at Black Claw LLC

2. Lack of automation

Customers have high expectations on how quickly orders are fulfilled and shipped. But being in the weeds of planning and managing inventory can impact supply chain efficiency .

It’s not uncommon for online brands to implement inventory automation to automate inventory-related tasks that are often time-consuming and prone to human error, such as mispicks and inventory shrinkage,  when inventory is managed manually. 

No wonder more and more modern retailers are using automated software to enable an efficient inventory management process. Automation can remove time-consuming manual work while improving inventory accuracy .  

3. Lack of internal training

Without proper staff training, your warehouse processes will likely fail or slow down. 

For your employees to really add value to inventory planning, you need to empower them with knowledge of the latest processes, data and analytics, distribution metrics, and technologies involved in supply chain management . 

But investing in training and implementing technology can be costly, not to mention time-consuming. Though many online brands have team members that look over logistics planning , it’s not uncommon for online brands at all different stages of growth to partner with a 3PL that provides the technology, data, and expertise needed to plan and manage inventory effectively.   

There is no one-size-fits-all method for inventory planning, but there are several methods to choose from, which all have their advantages and disadvantages.

Here are the top inventory planning methods used by fast-growing online brands. 

1. Economic order quantity (EOQ) model

If you believe in running a lean warehouse , the economic order quantity (EOQ) model works well.

It involves a calculation that finds the optimal order quantity to minimize logistics costs and optimize storage space.

To calculate EOQ economic order quantity (EOQ) formula, you will need access to three variables: holding costs (i.e., total cost of holding inventory), annual demand, and order cost. From there, you can use the following calculation:

EOQ = square root of: [2(order costs)(demand rate)] / holding costs

2. Minimum order quantity (MOQ) model

Minimum order quantity (MOQ) represents the least number of units that a buyer needs to purchase in every order.

Many suppliers set an MOQ to make inventory orders worthwhile to fulfill. Cheaper inventory items tend to have higher MOQ, and vice versa. If your business needs less stock than the supplier’s MOQ, then you might need to look for an alternate supplier. 

Though this method is typically used by manufactures and suppliers (including some packaging vendors), online brands have reasons to use it as well. For instance, online brand might have MOQ if they fulfill B2B orders. Having an MOQ in place for B2B customer can incentive a higher order spend. 

It can also be used to determine a minimum spend threshold for all customers that will offset the costs of offering free shipping . That way, customers are incentivized to spend more.

3. FIFO & LIFO model

The first in, first out (FIFO) model is a type of inventory valuation method that has one simple rule: goods from the batch that came into the warehouse first are what will be sold first. This framework is especially useful when you are selling perishable inventory items such as products with expiration dates.

Even if your goods are shelf-stable, FIFO is still a useful model. It’s important to change out inventory so you don’t end up carrying inventory that becomes unsellable or obsolete (known as deadstock ) like if you change your logo or packaging.

Additionally, it delivers a higher net income in an inflationary market and a better measure of ending inventory value. 

“We also have easy ways to manage subscription orders as well as expiration dates and lot numbers, so inventory goes in First In, First Out (FIFO).” Leonie Lynch, Founder & CEO of Juspy

On the other hand, with the last in, last out (LIFO) model, goods from the batch that comes in last are shipped out first. When prices of goods are rising, this accounting method offers some tax advantages.

4. Reorder point formula

Are you always struggling to figure out when, how frequently, and which inventory to reorder? SKU management is challenging, especially if your product catalog is on the large size.

To ensure you restock inventory on time to meet demand, the reorder point formula is a great tool. Reorder points ensure that you don’t fall behind on your next batch of inventory.

With an accurate reorder point for each  SKU , you’ll always have enough stock on hand to satisfy customer demand. Since every SKU will perform differently, it can help you decide how frequently to restock certain items based on past sales trends.

To calculate reorder points for each SKU, you will need to know:

• How long it takes to receive inventory from your supplier
• Warehouse receiving time
• How much safety stock makes sense to have on hand

With this information, you can use the following formula to calculate your reorder point:

Reorder point (ROP) = demand during lead time + safety stock

Knowing when to reorder inventory is the best way to keep stockout costs and backorders at a minimum.

Inventory planning is critical to keeping up with your business’s financial wellbeing, as well as ensuring you meet customer expectations.

But it’s also a time-consuming process, and as a business owner, your time is better spent on other initiatives. Even if you have a team to support you, there are other tasks that might be more worthwhile such as improving customer service, managing distribution growth, or even product development.

By partnering with ShipBob, you can spend less time on logistics operations , including inventory planning and management. 

ShipBob not only offers a robust robust international fulfillment service network but also best-in-class technology and full visibility into your supply chain.

With ShipBob, you can put inventory optimization on autopilot. Here’s how it works. 

Step 1: Integrate your ecommerce platform with our native inventory management system

Working with a 3PL like ShipBob means that you can integrate your ecommerce platform(s) with our technology, which includes built-in inventory management software .

By connecting your store with ShipBob’s 3PL software , you can track inventory in real time across multiple distribution centers and sales channels.

Whether you store inventory in one ShipBob location or multiple, you can view inventory levels all from the ShipBob dashboard.

“With ShipBob, we have access to live inventory management, knowing exactly how many units we have in each fulfillment center. This not only helps with our overall process in managing and making sure our inventory levels are balanced but also for tax purposes at the end of the year.” Matt Dryfhout, Founder & CEO of  BAKblade

Step 2: Start shipping and gain access to your own data dashboard

For better inventory planning, you need 100% inventory visibility . ShipBob’s easy-to-use dashboard of real-time data offers just that.

You can use the ShipBob dashboard to automatically track your inventory at all stages of the supply chain, including which inventory items are waiting to be received and how much you’ve sold in a given period of time.

ShipBob’s powerful data and analytics reporting tool provides a deep dive into inventory insights, from product allocation to storage costs, to inventory turnover rate , days sales in inventory , and SKU velocity.

Additionally, you can set automatic reorder point notifications , identify inventory trends, plan future promotions, and much more. 

“ShipBob’s analytics tool is really cool. It helps us a lot with planning inventory reorders, seeing when SKUs are going to run out, and we can even set up email notifications so that we’re alerted when a SKU has less than a certain quantity left. There is a lot of value in their technology.” Oded Harth, CEO & Co-Founder of MDacne

Step 3: Forecast inventory demand and optimize fulfillment

Inventory forecasting is made much easier with the right data at your fingertips. ShipBob allows you to expand your supply chain and aggregate historical inventory data all in one place.

With ShipBob, you’re given access to inventory data and trends, so you can plan how much to reorder of each SKU, when, and where to store it. Get answers to questions like: 

• What were my historical stock levels at any point in time in any location?
• How many days do I have left until a  SKU  will be out of stock?
• How often is each product sold across channels?
• If I run a  flash sale  on my site, how will this affect my available inventory levels?
• How are my sales affected by different seasons and months?
• What are my best-selling items?

A retail business that executes intelligent inventory decisions, much in advance, is surely on the path to success. The only issue is it involves managing a lot of moving pieces while keeping a close eye on the data and past inventory trends. 

To help you spend less on inventory planning,  ShipBob can help. From inventory forecasting to tracking inventory in real time, ShipBob provides the tools, expertise, and support needed to help you make better business decisions, so you can grow your business faster. 

Thanks to our best-in-class proprietary technology, you can outsource fulfillment to ShipBob and still maintain control and visibility over your supply chain.

“So many 3PLs have either bad or no front-facing software, making it impossible to keep track of what’s leaving or entering the warehouse. On the supply chain side, I just throw in what we placed at the factory into a WRO in the ShipBob dashboard, and I can see how many units we have on-hand, what’s incoming, what’s at docks, and so on. I can see all of those numbers in a few seconds, and it makes life so much easier.” Harley Abrams, Operations Manager of  SuperSpeed Golf, LLC

Start a conversation with ShipBob today to learn more about our premium fulfillment solutions.

Here are the top questions about inventory planning.  

What are the different methods of inventory planning?

There are several different methods, and the type of method you choose depends on how much inventory you store, what you sell, and how you want to track inventory. Here are a few common methods in ecommerce: economic order quantity; minimum order quantity; first in, first out; and last in, last out.

How does inventory planning work with a 3PL?

Inventory planning requires tools and technology that provide full visibility into inventory levels, trends, and historical data. Without access to data, it can be hard to make strategic business decisions to forecast demand, plan future promotions, and optimize inventory based on how much demand there is and where. Many online brands implement inventory management software to help track inventory in real time and aggregate data. If you partner with a tech-enabled 3PL, they should provide the data and analytics you need for inventory planning so they don’t run out of your inventory to fulfill orders through use of built-in tools like reorder point notifications and other analytics. 

Why is inventory planning important?

Since inventory levels change with every order places and there are other variables of impact throughout the supply chain, it can be a challenge to maintain an optimal amount of inventory to meet demand, especially since demand continuously fluctuates. But taking the time to plan inventory to meet demand and optimize cost, you can make better judgment calls on how much inventory on hand you should have, when to reorder more, and how long inventory takes to receive and prepare for fulfillment. Overall, inventory planning not only minimizes overall costs, but it ensures you can deliver a great customer experience.

What is the EOQ model?

The economic order quantity (EOQ) model is a calculation designed to find the optimal order quantity for businesses to minimize logistics costs, optimize storage space, and avoid stockout. Te formula is: EOQ = square root of: [2(setup costs)(demand rate)] / holding costs.

Written By:

Kristina Lopienski

Kristina is the Sr. Director of Marketing Communications at ShipBob, where she writes various articles, case studies, and other resources to help ecommerce brands grow their business.

Read all posts written by Kristina Lopienski

Subscribe to our blog

Join tens of thousands of ecommerce brands to get more articles like this and our latest resources delivered to your inbox.

Just for you

Latest tips to improve ecommerce logistics.

SKU Management Best Practices for Ecommerce Inventory Management

Logistics Management Guide: Definition, Stages, and Best Practices

Guide to Creating Shipping Experiences That Boost Customer Satisfaction

Shipbob offers outsourced fulfillment and a wms if you have your own warehouse. request a quote by filling out the form..

A fulfillment expert will get back to you shortly.

Loading Job...

Job description:.

Retail | Buyer's Guide

Best Inventory Management Software for SMBs in 2024

Published January 16, 2024

Published Jan 16, 2024

WRITTEN BY: Meaghan Brophy

This article is part of a larger series on POS Systems .

• 1 Inventory Management Software Compared
• 2 Zoho: Best Overall
• 3 Lightspeed: Best for Retailers
• 4 Square: Best Free Inventory Software
• 5 Katana: Best for Manufacturing
• 6 Cin7: Best Multichannel Software
• 7 Odoo: Best Free Open-source
• 8 QuickBooks: Best Simple Tracking
• 9 Sortly: Best Free Inventory App
• 10 How We Evaluated
• 11 Inventory Management Software FAQs
• 12 Bottom Line

Inventory management software should help businesses easily track items or parts throughout the supply chain, track on-hand quantities in real time, give performance insights, simplify the purchase ordering process, and have industry-specific features.

Some inventory software are part of point-of-sale (POS) systems, ecommerce software, or accounting systems, while others are standalone software that integrate with other solutions.

Based on my evaluation of over 20 systems, the best inventory management software for small businesses are:

• Zoho : Best overall
• Lightspeed : Best for retail
• Square : Best free option for storefronts
• Katana : Best for manufacturing
• Cin7 : Best full-featured inventory software for multichannel businesses
• Odoo : Best free open source inventory software
• QuickBooks : Best simple inventory system for seamless accounting
• Sortly : Best free standalone inventory app

All of the options on our list have kitting, purchase order management, and DIY onboarding options.

Inventory Management Software Compared

*Less expensive plans are available, but they do not include any inventory features. QuickBooks Online Plus at $90/month is the cheapest plan with inventory tools.

Looking for Something More Specific?

We’ve also evaluated inventory software for more specific use cases:

• Best Restaurant Inventory Software
• Best Warehouse Inventory Software
• Best Jewelry Inventory Software
• Best Grocery POS and Inventory
• Best POS Inventory Systems
• Best Inventory Software that Integrates with QuickBooks

Why You Can Trust Us

I applied my 5+ years of experience evaluating inventory software with my over 10 years of independent retail and manufacturing experience to these recommendations, prioritizing ease of use, affordability, and functionality.

For this editorially-independent evaluation , my recommendations build on those of Karina Fabian and Brigitte Korte, who have previously authored this guide.

• 5+ years evaluating inventory software
• 10+ years of industry experience
• Evaluated 22 options across 25 data points
• Regularly update and fact-check

Zoho: Best Overall

• Handles multiple channels, warehouses, and currencies
• Highly rated mobile app
• Can monitor expiration dates on batch orders
• Bundling, composite, and kitting tools
• Lacks return management
• Lacks rental function
• Limited POS integrations

Works for: Manufacturing, retail, ecommerce, multi-channel, B2B, medical, marketplace sales, parts-tracking, perishables, and more

Zoho’s products for small businesses often make our best-of lists because they provide great value for the price. Here, Zoho Inventory is our top pick for its overall excellence, free plan (though limited), and ability to set and track expiration dates for perishable products.

It can handle multiple warehouses, ecommerce, and purchase orders all from one inventory management platform. Additionally, it is customizable for different use cases and has an intuitive interface. Its features for managing perishable items include expiration monitoring and alerts and advanced inventory aging reports, making it good for small grocery stores.

• Free: 50 monthly online orders, 1 warehouse, 1 user, and integrate 1 Shopify store, customer portal, other ecommerce integrations
• Standard ($39/month): Free plus 500 online orders, 2 users, customer portal, dropshipping, and composite items
• Professional ($99/month): Standard plus 3,000 online orders, 2 warehouses, 2 Shopify stores, serial and batch tracking, plus a vendor portal
• Premium ($159/month): Professional plus 7,500 online orders, 3 warehouses, up to 5 Shopify stores, multi-currency handling, automations, barcode generation
• Enterprise ($299/month): Premium plus 15,000 orders, 7 warehouses, 7 users, and advanced analytics including custom dashboards
• Can add on users, warehouses, orders, and auto-scans as reduced rates
• Can also create custom plans based on the number of users, orders, warehouses, and auto-scans you need
• 20% discount for annual payment

Standout Features

• Vendor portals
• Customer portals
• Advanced reporting and analytics
• Highly-rated mobile app for iPhone (4.7 based on 410 reviews) and Android (4.5 based on 2,100+ reviews)
• Composite functions for kitting
• Batch tracking
• Real-time shopping rates
• In-transit and sub-status details

User Reviews

Overall, Zoho is a popular product and generally has very positive reviews from both users and critics alike. Reviews typically average around 4.5 out of 5. Here’s a summary of the reviews across several sites:

• The software is incredibly easy to use, support is responsive and helpful, it’s affordable, and overall the software and uptime are reliable. Users also like the ability to link to other Zoho products.
• Users don’t like that you can’t merge products or reconcile inventory if there are duplicate products, lack of customization options, and sometimes glitchy integrations.

Lightspeed: Best Inventory Software for Retailers

• Built-in purchase ordering
• Unlimited inventory entries on all plans
• Barcode scanning app
• Built-in POS
• No free plan; higher price point
• Does not have functions for managing perishable goods
• Limited integration options

Works for: Retailers and multichannel retail businesses selling non-perishable goods

Lightspeed Retail is a popular retail point-of-sale (POS) system known for its inventory management features. Not only can you conduct sales both online and in-store with Lightspeed, but the platform tracks all your inventory levels in real time across multiple locations and channels, allows you to run advanced reports, and integrates seamlessly with ecommerce stores.

Lightspeed also has a B2B product directory with millions of products and thousands of suppliers across a range of verticals. Create, submit, track, and receive product orders right from the Lightspeed dashboard.

The only biggest drawback to Lightspeed is its price point. For a cheaper POS + inventory system, check Square, which is next up on our list. It has low stock alerts but does not use Economic Order Quantity or forecasting for this.

• Lean ($89/month): Inventory with POS, 24/7 support, free training resources
• Standard ($149/month): Adds ecommerce and accounting integrations
• Advanced ($269/month): Adds loyalty program and advanced reporting tools, plus one-on-one onboarding
• Enterprise : Custom pricing and features for large companies
• Discounts for annual plans
• Card-present transaction fee (for POS sales): 2.6% + 10 cents
• POS hardware available
• Inventory, POS, ecommerce, loyalty, and payments all on one platform
• Hold stock in reserve
• Track partial orders
• Create custom fields for products
• Manage work and special orders
• Create, send, and receive purchase orders
• Built-in wholesale product directory
• Connected wholesale buying platform with visual assortment planning, pre-book, and in-season ordering
• Track shrinkage
• Create serial numbers and barcodes
• Create and manage price books
• Barcode scanning app for easy inventory counts and shipment receiving
• Advanced and customizable real-time analytics

Lightspeed Retail has positive reviews overall, averaging about a 4 out of 5 rating from experts and users alike. Here are the main trends I noticed:

• Customers like the seamless integration between inventory, POS, and ecommerce; that the purchase ordering tools save time; and how easy the system makes tracking products.
• Some of the biggest complaints about Lightspeed are that the user interface is not intuitive or easy to use (note, these reviews may be referring to an older version of the software), expensive hardware, Bluetooth card readers disconnecting, and slow-to-respond customer support.

Square: Best Free Inventory Software for Storefronts

• Forever-free plan for basic inventory & POS
• Special plans for restaurants and retail
• Unlimited products, including variations
• Syncs across online, in-store, and mobile sales
• No custom reporting
• Only integrates with Square POS and Square Payments
• Limited functionality
• Limited support hours

Works for: Retail, food and beverage, professional services, microbusinesses, solopreneurs

Square is rated highly in my evaluation because of its affordability and ease of use. The free plan is excellent if you have a small inventory or very basic needs. You get live inventory tracking of on-premise and online sales.

Like Lightspeed, Square is a POS system first, with inventory second. Its tools are not as strong as Lightspeed’s but they are good enough for most small businesses and work in a variety of situations.

Point-of-sale app with inventory:

• Free: Basic inventory with variations and low-stock alerts, POS, free ecommerce site
• Square for Retail ($89 per month, per location): Advanced inventory including kitting, automated purchase orders, COGS tracking, smart stock forecasts
• Square for Restaurants ($60 per month): Auto 86ing and item counts, item-level inventory.
• Online ordering and ecommerce: Free, with upgrades ranging from $12–$72 per month

All plans include Square Payments as the payment processor. Square has fixed rates ranging from 2.6% + 10 cents per transaction to 3.5% + 15 cents per transaction.

Square also offers other software tools that the rest of the services on our list do not, including team and employee management, payroll, email and SMS marketing, banking, invoicing, and more.

A variety of mobile, handheld, and countertop POS hardware is available.

• Incredibly easy to use
• Strong POS tools
• Kitting and bundling
• Stock transfers between locations
• Unit conversions
• Hundreds of integrations
• COGS reporting
• Access from any computer or mobile device
• Built-in counting tool
• Barcoding and labeling

Note: While Basic Square is available on iOS, Android, and Square devices, Square for Retail, and its corresponding advanced inventory management features, is not currently available on Android.

Since Square is an all-in-one system, reviews for its inventory features are bundled in with reviews for its POS and payment processing tools. However, the overall sentiment is very positive.

• Businesses love how easy Square is to use and say that it is very convenient.
• Lack of live support is a common complaint. Square is also not customizable, and offers very basic inventory features, especially around reporting and item details.

Katana: Best for Manufacturing

• Complete shop floor control, including supply management
• Track items by expiration date
• Manage product variants and materials
• Adjust manufacturing plans based on material stock levels
• Support via email only
• Only one user; must pay for more
• No mobile app

Works for: Manufacturers and production planning, wholesale, ecommerce, and retail. Supported industries include apparel, automotive, electronics, food and beverage, health and beauty, machinery and equipment, jewelry, pet supplies, toys, and more.

Katana stands out from the others on our list because it’s specifically designed for manufacturers—it’s actually an enterprise resource planning (ERP) software.

In addition to the bundling and kitting tools nearly all the others have, it can track products and supplies, including volumes and expiration dates at all levels of the manufacturing process. Plus, it has automatic workflows, so you can concentrate on making the best products quickly.

• Add users for $29/month/user
• Add full-access users at $39/month and shop floor operators at $9/month
• Add full-access users at $79/month and shop floor operators at $19/month
• Enterprise: Custom pricing; advanced tools and onboarding support
• Discount for annual plans
• Partial manufacturing orders
• Manage product deadlines
• Automate customer processes
• Track raw materials and finished products
• See on-hand, committed, and expected stock levels
• Auto-generate batch and internal barcodes
• Job costing
• Production planning
• Automated workflows

Katana has excellent user reviews, to the tune of 4.8 out of 5 on average. Here are some of the main takeaways:

• Users give high praise to customer support, price, and ease of use. They also like the reliable, native QuickBooks and Shopify integrations.
• Users don’t like that you can’t add images to inventory, that it can be difficult to revert mistakes, and that uploads can be slow. Also, there is no mobile app.

Cin7: Best Multichannel Inventory Software

• Centralized inventory across multiple channels
• WMS app with picking & packing, stock lookup, and more
• Workflow automation
• Poor support

Works for: Ecommerce, warehouse, B2B, and dropshipping

I found Cin7 Orderhive the best solution for managing inventory for pure ecommerce and dropshipping. Powering over 5,500 ecommerce businesses, it not only handles inventory but also automates ecommerce tasks, works with 200+ shipping carriers, and has manufacturing management tools.

You can automate purchase orders based on stock thresholds and manage inventory across multiple stores and warehouses. Plus, it has batch, serial number coordination, stock transfers, kitting, and more.

• Cin7 Core Standard ($349/month): up to 6,000 sales orders, 3 users, and 2 integrations
• Cin7 Core Pro ($599/month): 12,000 sales orders, 6 users, and 4 integrations
• Cin7 Core Advanced ($999/month): 120,000 orders, 10 users, and 6 integrations
• Cin7 Omni (Custom): Unlimited orders, 8 users, and 5 integrations

Extras & add-ons:

• 14-day free trial
• Automations
• WMS mobile app
• Picking, packing & restock workflows
• Time tracking
• FIFO & FEFO picking
• Kitting & assembly
• Batch & serial tracking
• Point-of-sale
• Shopify, Amazon, Etsy, eBay, QuickBooks, and more integrations

Cin7 has recently changed and rebranded product offerings, so many existing reviews refer to past versions or products. However, there are some reviews for Cin7 Core—here are the main takeaways:

• Users like the warehouse management tools and easy integrations with ecommerce solutions like Shopify. Users also like the automation options and the clean interface. Previous versions of the software had lots of glitches and downtime, but that seems to have been resolved since the move from Orderhive to Core.
• Overall, reviews around support are mixed. Reviewers also note that there aren’t advanced fulfillment features, and this software is not a full ERP, so if that is what you need, you may want to look elsewhere or be prepared to have multiple software.

Odoo: Best Free Open-source Inventory Software

• Unlimited products, users, and locations
• Inventory forecasting in its free plan
• Automated purchase orders in the free plan
• Free plan includes custom reporting, alerts, and automations
• Limited customer support, no live support
• External API only with highest paid plan
• Ecommerce and POS cost extra
• No native integrations

Works for: Retail, ecommerce, wholesale, manufacturing, dropshipping, warehouse management

Odoo is open-source software that users say takes some time to learn but is overall easy to use. If you need a straight inventory system, then Odoo is an excellent choice, with granular inventory management, automated purchase ordering at given stock levels, inventory forecasting, and even warranty tracking. And, it’s completely free.

If you need more features, however, like sales and CRM, then Odoo has an entire set of apps that you can get for one low, competitive monthly price. In this way, it’s similar to Square, but cheaper.

Odoo’s plans run differently from any on this list. You get the Inventory software (or any single Odoo app) free—complete, no strings attached. If you want to add other Odoo apps, like POS, Manufacturing, CRM, and the like, then you have to pay for a plan.

• One App (Free): Unlimited users, all features for that application
• Get it for $31.10 per user monthly for the first year
• Get it for $46.80 per user monthly for the first year
• Discounts for annual payment
• Automated vendor reminders
• Automated proposed or triggered purchase orders
• Made-to-order
• ABC analysis
• Double-entry inventory system
• Picking optimization (single, cluster, wave, and batch)
• Integrated shipping partners
• Optimized routing
• FIFO, LIFO, Average price and Standard price inventory valuation (perpetual or periodical)
• Create and manage putaway rules
• Set and track specific locations within your warehouse, including shelves, aisles, cold storage, pallets, and more

Odoo reviews are overall positive, averaging around 4.2. There are several positive reviews; however, there are also many very negative reviews all with similar complaints, so make sure to do thorough research before deciding whether Odoo is right for you.

• Users like how easy to use the software is (once implemented), and say that the interface is very easy to navigate and find the information you need.
• Reviewers say the support is very slow to respond and is dependent on a ticketing system. Particularly, those requiring customizations and professional implementation have difficulty getting issues resolved. Also, since Odoo has no integrations with other software like QuickBooks, all software is connected via developer apps, which can be expensive and clunky.

QuickBooks Online: Best Simple Inventory Tracking for Seamless Accounting

• Connects to QuickBooks accounting seamlessly
• Plenty of integrations (Shopify, Amazon, and more)
• Automated notification
• Basic features
• No fulfillment functionality

Works for: Small businesses with simple tracking needs

To be clear, QuickBooks isn’t a full-blown inventory management software like the others on this list. However, it does have simple tracking tools. And, if you need accounting, invoicing, and vendor management, and only need to track items by quantity levels or purchase order, QuickBooks might be a good option for you.

If you’re not sure whether QuickBooks has what you need, consider reading:

• What Is QuickBooks & What Does It Do?
• How To Set Up the Products and Services List in QuickBooks Online

QuickBooks Online plans with inventory management features:

• Plus ($90/month): Includes inventory and profitability calculations
• Advanced ($200/month): Includes Plus plan features and data sync, custom access controls, workflow automations, data restoration, and 24/7 support
• 30-day free trial
• There are often sales and promos to get a discount on your first few months
• Real-time tracking and inventory valuation
• Add images, categories, and prices to your items
• FIFO costing
• Create and send POs
• Manage vendors
• Sync with Amazon, Shopify, Etsy
• Track products, services, and bundles

QuickBooks Online in general has excellent user reviews—averaging around a 4.5 out of 5. After all, it is one of the most popular software for small businesses of every kind. However, reviews specifically on inventory features are more mixed:

• Users like that the inventory features work seamlessly with QuickBooks accounting software.
• Users and critics alike are unanimous in that QuickBooks doesn’t have the most advanced inventory features. And, unless you’re using all of the other features in the Plus or Advanced plans, it is expensive.

Sortly: Best Free Standalone Inventory App

• Forever-free plan
• User-friendly mobile app
• Easily scan & create QR codes & barcodes
• No purchase ordering
• No vendor management
• Minimal integrations

Works for: Automotive, construction, aviation, education, events, HVAC, nonprofit, retail, warehouse, and more

Sortly is a starter inventory software, offering basic user-friendly tools. Create folders and then add items to each folder, with options to set variants, low stock alerts, pricing, pictures, and more. Set up automated reports and alerts to go to different team members. Team members can also check in and check out items, and owners or managers can view activity log reports, so you always know where items are.

These features make Sortly a good option not just for businesses tracking goods or parts for sale, but also for tracking items for internal use.

All plans include item imports, custom folders and tags, barcode scanning, real-time updates, in-app alerts, and basic reporting.

• Free: Up to 100 items, 1 user license, 1 custom field
• Advanced ($49/month): 2,000 items, 2 user licenses, up to 10 custom fields
• Ultra ($149/month): 10,000 items, 5 user licenses, up to 25 custom fields
• Enterprise (Custom pricing): Unlimited items, 10+ user licenses, unlimited custom fields

The above pricing is based on monthly billing. You can save up to 60% with annual billing.

• Highly-rated mobile app
• Barcode scanning, creation, and printing
• Activity logs
• Check-in and check-out
• Asset tracking
• Automated, recurring reports
• Customizable fields
• Deleted data saved for 90 days (easy data recovery)
• Group items by location, condition, customer, or employee

Sortly has high user reviews for both its software and mobile app. It currently has a 4.7 out of 5 on the App Store , based on over 7,900 reviews. On Google Play , Sortly has a 4.2 out of 5 based on over 780 reviews. Here are some of the common points across both app and software reviews:

• Overall, users like Sortly’s price point, barcode scanner, and how easy it is to use.
• Some users say that Sortly doesn’t offer good value for what it provides, and some users said that their pricing plans changed unexpectedly after the first year.

How We Evaluated Inventory Management Software

I looked primarily for inventory-first programs as opposed to POS programs with inventory (although two POS systems made our list). I then narrowed our list of over two dozen software systems to those that are easy to use and have pricing plans suited for SMBs.

After that, I evaluated inventory tracking features, reports, low stock alerts, and more. I also gave points for handling multiple warehouses or sales channels, integrations, and customer support.

This version of the article builds on the evaluations and expertise of my colleagues, including Karina Fabian and Brigitte Korte .

Click through the tabs below for our full evaluation criteria:

• Inventory Features
• Ease of Use
• Expert Score

20% of Overall Score

We prioritized software that includes a free plan or free trial and offer a plan option under $100. We also awarded points to systems that allow unlimited users and inventory items in their base plans. Square alone had 5 out of 5.

50% of Overall Score

We looked for real-time tracking (includes barcoding, batch, serial, and RFID tracking), low-stock and reorder alerts, multilocation and warehouse tracking, mobile inventory counts, and granular inventory management (kitting and assembly, variants, etc.) We also considered whether the tools provide purchase ordering, vendor, and centralized multichannel management. Finally, we examined whether each system has CRM functionality or integrates with popular CRM software. Lightspeed had the top score with 4.81 out of 5.

15% of Overall Score

We gave full points to platforms that offer 24/7 customer support and provide online training, forum, or help documentation. We also considered its integrations with popular accounting, ecommerce, marketplace, and POS software. Lightspeed earned 4.81, far ahead of the others, because of its 24/7 customer support.

We reviewed the overall quality of each system’s features—and if there are any stand-out qualities—and whether or not it offers a good value for its price point. Finally, we accounted for our personal experience using each system and interacting with its customer service representatives, its reviews, and the personal experience of other small business owners. EZRentOut, MarketMan, and Katana came in first with 4.75 out of 5.

Frequently Asked Questions (FAQs)

These are some of the most commonly asked questions I encounter around inventory management software.

What does inventory management software do?

Inventory management, at its most basic, tracks how many items you have. However, most software also include low stock alerts, vendor and reorder information, and reorder and sale pricing. Inventory management also includes reports not only to keep track of inventory use but also to forecast trends to help you make better buying decisions.

What is the difference between inventory management and warehouse inventory management?

Rather than just tracking the number or depletion of an inventory item, warehouse inventory management tools also track location in and around the warehouse. Warehouse management Systems (WMS) can track by compartment and bins rather than just the general (ex: store) location. For example, if you use inventory management software for a kit, it would track the parts and the completed kits, whereas a warehouse inventory management system will let you know where each part is in relation to the kit-building process.

What should I expect when implementing inventory management software?

When installing inventory management systems, whether as part of your POS or as separate software, you can expect to take time setting up the information and parameters of the software (like low-stock alerts), adding inventory including bundles or kits, loading vendors, and more. If you have legacy data, it may need reformatting. Some services offer assistance with this part, either for a price or with higher plans. You also need to train your people to use the software.

How do I make an inventory list for small businesses?

This can depend on how complex your inventory is. It can be as simple as recording product names, counts, and cost; or it can include SKUs, bundles, ingredient tracking, and low stock levels. You can use free inventory templates or software available online or use a paid inventory management software.

Is there a free app that keeps track of inventory?

There are, although they can be more limited than paid plans. Some limit the number of items, while others limit features or locations. Our recommended best free inventory management systems are Odoo, Square, Zoho Inventory, ABC Inventory, SalesBinder, and Sortly.

Can inventory management software help prevent inventory shrinkage?

Inventory shrinkage is caused by shoplifting, employee theft, or inventory control issues like receiving errors, unrecorded damages, cashier mistakes, and misplaced items. Inventory management software can help with the third reason because it’s easier to track inventory movement between sales and stock. In addition, some inventory management programs also let you track expiry dates and losses due to waste.

Bottom Line

The best small business inventory software can save you time, headaches, and money. Many are tied to point-of-sale systems, but some work alone or with accounting software and are designed for specific industries, from warehouses to rentals and repair shops.

For 2024, our top choice for inventory management is Zoho. It strikes a great balance between affordability and functionality. Plus, it is easy to use, which is always key for busy small businesses. Visit Zoho to try it for free and see for yourself.

About the Author

Find Meaghan On LinkedIn Twitter

Meaghan Brophy

Meaghan Brophy is a Retail Expert at Fit Small Business focusing on small business retail and ecommerce content. Meaghan’s 10+ years of retail experience includes working at local book and dance supply stores, handcrafting gifts at an eco-friendly manufacturer, developing private label brands, and managing a team of more than 40 sales and service professionals at a local spa.

By downloading, you’ll automatically subscribe to our weekly newsletter.

Join Fit Small Business

Sign up to receive more well-researched small business articles and topics in your inbox, personalized for you. Select the newsletters you’re interested in below.