Chapter 1

The Complete Inventory Management System Guide

Resources / The Complete Inventory Management System Guide

What is an Inventory Management System?

Inventory changes constantly. Throughout each day, sales, returns, new receipts – even damage and theft – affect your inventory levels. While daunting, effective inventory management and inventory control are the most important jobs in a successful retail or wholesale business.

Effectively managing inventory gets harder as your business scales and the amount of inventory you’re handling increases. Taking advantage of technology can make things easier for yourself and your employees. This is why an inventory management system is invaluable to any retail business.

This guide will tell you all you need to know about inventory management systems. We’ll explain the types of systems you can choose from, and which may suit you best.  We’ll also describe the principal features that systems need to improve efficiency and overall customer satisfaction.

Before we get there, though, it’s worth spending some time on the fundamentals. Let’s get to grips with precisely what inventory management is and the benefits you’ll see from handling it efficiently.

What is inventory management?

If you’re in the process of just starting out in retail or wholesale, you may be asking yourself “What is inventory management?” or “What is inventory control?”

Effective inventory management and inventory control are one in the same – and the definition is pretty simple to understand.

Inventory management refers to the process by which you track the amount of product you have on your warehouse shelf, in store or sitting with other retailers and distributors. This enables you to succeed in having the right number of units in the right place, at the right time and for the right price.

When effectively tracking and controlling your physical inventory, you’ll know how many of each item you have, when you might be running low on products and whether you should replenish that item in order to keep selling it.

And as a busy business owner, you should be able to do all of this at a glance. This enables you to make good purchasing decisions quickly and easily. It’s where having the correct inventory management system comes in, too, as we’ll learn later.


11 Benefits of effective inventory management

Keeping track of your inventory is fundamental to your success in retail. At the most basic level, after all, your job is to supply the products to meet consumer demand. You can’t do that without effective inventory management.

Listed below are the top eleven benefits of effective inventory management. They all combine to explain the importance of accurate real-time tracking of stock, and can be easily achieved by using dedicated inventory management software.

1. Fewer missed sales

When you don’t keep an accurate inventory report, it’s easy to run out of products and miss out on sales. Instead of relying on your memory or a visit to the warehouse to decide what to reorder, use an up-to-date inventory report to:

  • Quickly see what products you’re running low on

  • Compare your inventory level with what’s been selling well

  • Place reorders with wholesalers before you run out

Depending on what inventory software you use, you also might be able to set minimum inventory levels for each item. Then you can view the list of products that are below that level and place and send new purchase orders quickly.


2. Better invested cash

To be successful in retail, you need to invest your cash wisely by buying the right quantity of each product – enough to keep sales going and prevent stock-outs, but not so many that some items just sit on the shelf and increase carrying costs.

Keeping accurate inventory reports helps. You can quickly identify slow-moving products so you can mark them down and clear them out to free up cash to invest in new products, marketing and more.

3. More accurate reports

Accurate product reports produce accurate inventory cost values, which are essential to the precision of several financial reports if you use cost of sale accounting.

This method associates a cost, which comes directly from the product’s asset value with each sale.

That makes correct cost values critical to your balance sheet, as well as your cost of sales and income statement, upon which many management decisions hinge.


4. Early problem detection

If you’re keeping an eagle eye on your inventory levels, you’ll spot problems right away – instead of months later during annual cycle counts when the discrepancies may have already cost you a lot of money.

Maybe a step in your warehouse process is being missed? Perhaps there’s an error in your reorder point formula? Or one of your salespeople is making mistakes on sales orders? You need to know now!

The best way? By constantly reconciling sales and purchases through a tightly maintained inventory management system.

5. Happier customers

Exact inventory reports also help you provide better customer service. When customers say they haven’t received one of the products they ordered within a given time, it’s not enough to check in with your supply chain management. If the product’s been lost, you need to be able to check your report and confirm that you have one extra in the warehouse. Likewise, if you regularly keep on top of inventory levels, you can identify incorrect shipments sooner.

And if your inventory system is up-to-date with purchase orders, you’ll be able to sell customers the products they want because you’ll know new inventory is on the way. This kind of communication encourages your customers to trust you, which in these competitive times, is a valuable asset.


6. Easy to reorder

Reordering will be much more efficient if your reports tell you what products are available. When you’re working with correct inventory numbers and a threshold limit is reached, you can use automation to trigger a new purchase order to replenish your goods and keep sales coming in.

This means you can work methodically through your product set, making informed buying decisions instead of physically checking individual SKUs on your warehouse shelves to write a purchase order.

If your reports come from advanced inventory management software, you also can see if you already have products on order with a supplier and if your supplier has long lead times or irregular deliveries on finished goods. This information is a must if you want to keep reordering under control.

7. Theft and loss reduction

From theft to loss to damage, products can be lost in many ways. But if you manage accurate inventory levels, you can identify issues quickly.

And while no one wants to think that their staff may steal from them, it pays to be vigilant. Showing your staff that you keep an accurate inventory is a great theft deterrent.

8. Trusted information systems

Running an efficient and profitable business is all about sharing and using accurate information. One way to do this is through an software system that integrates with everything from your point of sale devices to barcode scanners.

If your staff knows that the inventory levels in your system are always up-to-date, they’ll trust the software and use it more for all of their tasks. And you’ll end up with cleaner data as a result for better reporting, collaboration and efficiency across the team.

9. Reduced warehouse costs

When your inventory report tells you what you have in stock, the pick pack ship process runs more efficiently.

Your warehouse staff don’t need to run around looking for a missing inventory item because you know exactly when it sold and shipped.

This enables you to process more orders in the same amount of time with the same staff – or balance your resources differently. Accurate inventory levels can keep your business lean! Find out how to optimize your warehouse with Brightpearl here.

10. Cycle counts and end of year efficiency

When all your inventory levels are up-to-date all the time, periodic cycle counts are faster and more efficient because you’re just confirming data that’s already in your system instead of doing a lot of time-consuming data entry.

11. Peak season efficiency

In the event of high order volumes, such as those that arise during peak trading seasons, flash sale events, or when celebrities step out in your products, your inventory numbers will be able to keep up in order to keep your sales flowing profitably across all channels – but only if the numbers are accurate to begin with. Demand forecasting is key to reducing the total cost of managing a business.

For growing retailers, especially those adding locations or channels, inventory management can seem overwhelming. We hope these eleven benefits of inventory management illustrate that the efficiencies you’ll gain make it well worth your effort. A little focus on this foundational piece of your business can bring big rewards.


You should by now appreciate why efficient inventory management is essential. What, though, does effective tracking of your inventory entail? There are more strands and techniques involved than you may think.

12 inventory management techniques

Accurate inventory management and inventory control hinge on best practice and using effective inventory management techniques. To help, consider the following 12 inventory and warehouse management best practices and activities.

1. Cycle counts

The cycle count procedure involves dividing your inventory into smaller, more focused lists of products that need to be counted. You could divide your products up by product category, product vendor or even the warehouse location. This can usually be done easily and efficiently when using an inventory management system.

But there are two certain counts that are the best inventory control method: high risk and high value.

High risk counts are a list of products that have historically had the largest inventory discrepancies, are prone to theft or spoilage, or have had the most inventory corrections performed against them due to breakages or returns. This type of count ensures you’re analyzing the reasons for why there’s been so many write-offs, and thus, you’ll learn how to mitigate the causes.

High value counts, on the other hand, are a list of products that have the highest cost or potential sales value. As these items are your most cash-intensive, it’s important to understand and accurately track them at all times.


For inventory valuation, there are three common calculations:

  • LIFO (last-in, last-out)

  • FIFO (first-in, first-out)

  • AVCO (Average Cost or Weighted Cost).

Choosing the right inventory valuation method is a crucial step as it can have a significant impact on your reported profitability.

At Brightpearl, we use FIFO – just like many other inventory management systems – as we feel this is the method that is most realistic against what’s happening in your warehouse, while ensuring your balance sheet also reflects the actual costs you’ve paid to acquire inventory.

3. ABC analysis

The idea behind the ABC analysis is to effectively prioritize your attention and resources on inventory that need it most.

According to the Pareto Principle, 80% of overall inventory consumption comes from just 20% of your total items. ABC analysis comes in useful to help you identify how to make your inventory control as efficient as possible.

Using this method as a starting point, you can split your inventory into three categories based on value, cost and consumption. As an example:


Use these groups to help categorize your finished products and then you can ensure your inventory management practices revolve around counting those items in Group A first, followed by Group B and C respectively.

4. Just in Time (JIT)

Although Just in Time ordering, or JIT, is still considered to be a risky strategy for some, it can be a great way of offsetting the risks associated with inventory management to your manufacturer or supplier instead.

With JIT in place, you’ll receive goods just before they need to be shipped or sold. This is helpful to small businesses that perhaps don’t have as much cash flow, warehouse space, or monetary capital as larger ones. Instead of tying up cash in inventory, you can instead invest that money on attracting more sales in the first place.

For this inventory management technique to work, you’ll need to have a healthy and trustworthy relationship with your supplier, or you’ll risk disappointing customers if goods are slow to dispatch.

For more info about Just in Time ordering, check out this in-depth guide written by e-commerce fulfillment company, James and James.

5. Surplus inventory and dead stock

Surplus inventory, also referred to as excess inventory, can result in dead stock if you don’t have an effective inventory management strategy in place in order to adjust your order quantity and shift these products in order to prevent it from happening again.

Dead stock, or dead inventory, is used to describe products that were never sold or used by consumers before being removed from the sales process, perhaps because they’re outdated or don’t have the functionality customers want. Read on for some ideas on what you can do with both dead stock and excess inventory.


Cross-merchandising is a great strategy to help increase sales of your surplus inventory and slow-moving items, allowing you to shift these products quicker.

Likewise, adapting your multichannel strategy can be a great driver in shifting excess inventory. Perhaps it’s as simple as selling these goods on marketplaces like eBay and Amazon, or even using social media marketplaces on Facebook and Instagram to sell these items to those who may not yet be aware of your brand.

Another idea for managing surplus inventory is to donate it, which according to Global Trade Magazine, provides “generous tax benefits aimed at C Corporations that donate goods to charity. According to Section 170(e) (3) of the Internal Revenue Code, C Corporations that donate their inventory to qualified nonprofits can receive a tax deduction of up to twice the cost of the donated products.”

6. Par levels

Par levels are the minimum quantities you wish to have in stock for each product. If your inventory counts go below that level, you know that you need to reorder that product.

Setting your par levels (for both on-premise and in-transit stock) provides structure and a method of prioritization within your reordering process and is an excellent way of keeping up with demand.

7. Safety stock

Safety stock is the extra inventory you hold in your warehouse to reduce the risk of overselling due to peaks in supply and demand.

But you’ll need to calculate what the optimal level of safety stock is – enough that you don’t oversell on fast-moving inventory, but not so much that you’re tying up too much cash in your warehouse.

Safety Stock = 1.65 x Square Root of Lead Demand


Find out more details about the safety stock calculation

8. Contingency planning

Your e-commerce business relies on its customers and how great their experience is, which is why an element of contingency planning should always be a top priority. As retail trends are constantly changing, it’s important to keep a vigilant eye on your inventory and warehouse management system in order to be prepared for any scenario.

Particularly related to e-commerce inventory management, you’ll need to have plans in place for each of these example scenarios:


These are just some of the most common scenarios facing e-commerce businesses today. To avoid a potential loss in revenue or a hoard of angry customers, you’ll need to ensure you have a viable plan of action for each of these situations and any others you think your business might face in the future.

9. Consignment inventory

Selling on consignment is when you send products to other retailers for them to store and sell on your behalf; with each business taking an agreed share of the profits.

Any business can sell as a consignor or consignee but you’ll need to ensure you’re able to accurately track inventory – both financially and physically.

Consider these important points when selling goods on consignment:

  • How will inventory levels be communicated? By hand? Email? EDI?
  • Are you using multi-location inventory management to make this process easier?
  • Who pays for freight and shipping of consignment items?
  • What happens if items are damaged or defective?
  • Who is responsible for the insurance of the products?
  • Do customers return items to the retailer or directly to you?
  • Are you using an accounts package or team, which is familiar with consignment inventory and its financial implications?
  • How will you record and chase outstanding consignee debt?

10. Dropshipping

Imagine for a moment that dropshipping is the “anti” inventory management technique. That might sound a little strange, but just like with JIT ordering, it’s a way of offsetting the risk and costs of inventory management to another business.

Dropshipping involves forwarding sales orders and shipments as a request to your vendor or manufacturer. They will then be responsible for sending the items to your customers on your behalf, usually with your branding, so the customer is unaware you’ve even used a dropshipping company.

By adopting this approach, you’ll typically have lower overheads as you’re not physically storing products, maintaining a dispatch process and likely won’t have to pay for inventory upfront. There’s much less asset management involved – handling inventory levels is not your responsibility! This is the “anti” part we referred to earlier.

11. KPI analysis

There are multiple retail KPIs you can analyze to help improve the workflows you have around inventory planning. They’re also helpful for preventing discrepancies in the warehouse. Here’s what we recommend you keep an eye on:

  • Gross Margin influences your pricing and discounting strategies

  • Inventory Turnover Rate affects how much working capital you’ll have for operating expenses

Sell-Thru Rate enables you to see which products and product lines have spikes or dips in sales – and why – to help power your demand planning and restocking processes

Units Per Transaction helps with both your demand planning and upselling strategies

Rate of Return enables you to deep dive into which products have a higher rate of return than others, and why, ensuring you know how to improve your pick, pack, ship process or product packaging

Perfect Order Rate shows you whether your pick, pack, ship process needs improving

Lead Time is a key metric when it comes to demand planning, showing you how long it takes for your suppliers to deliver items to you once they’ve been ordered

We’ve written extensively on the topic of retail KPIs and inventory planning – check out some of our top resources below:

12. Returned inventory

With 89% of American shoppers claiming they would shop again from an online store if treated to a positive returns process, it’s important to establish a good way of managing this type of inventory within your inventory management strategies.

There are different ways to handle returned inventory. To start with, we’ll focus on two types: authorized returns and automatic/blind returns.

Authorized returns
Require customers to call or email in their return requests

Blind returns
A return slip and free shipping label contained with the original package, or allowing customers to print a returns slip directly from your website is required for this process.


If you require your customers to call or email in their return requests, we refer to these as ‘authorized returns’. Dealing with returns in this way offers your team the opportunity to speak with the customer to find out more about why they’re returning the product and if a different product can be offered in exchange for it. It also ensures you have a view of inventory you’re expecting back into the warehouse, but it does require more man power and time.

On the other hand, automatic or blind returns can make the returns process easier for both yourself and your customers. A return slip and free shipping label contained within the original package, or allowing customers to print a returns slip direct from your website is required for this process. Although you won’t have a view of incoming inventory in advance of it arriving at your warehouse, you will spend less time in the long-run, especially if you have reliable RFID or mobile devices on hand, enabling you to scan goods into the warehouse.


Plenty goes into effective inventory management, therefore. You may need to dropship, partially fulfill orders, process back orders, run your operations from one warehouse or several, or maybe even combine all those processes and more.

Utilizing technology in the shape of an inventory management system is often the only way to stay on top of everything. Precisely what, though, is such a system? What types are there, and what can the correct alternative bring to your business?

What is an Inventory Management System?

You’ve now got a robust understanding of the basics of inventory management and how they’re part and parcel of your day-to-day operations. It’s all about tracking stock, supplies, and sales. In short, everything that impacts the resources you have at hand.

Inventory management systems are your means of organizing all the elements that go into inventory management. It’s the process by which you track goods from one end to the other along your supply chain. Ensuring throughout that you know what you have, where it is, and how to manage it.

There are many types of solutions. No one option will suit every business. Each organization has its own needs and principals. In general, though, automated inventory systems fall into two categories:

  • Periodic Inventory Management Systems
  • Perpetual Inventory Management Systems

Periodic Inventory Management Systems

This is what is probably best termed as ‘old-fashioned’ inventory management. In fact, the name ‘stock-taking’ is perhaps a better descriptor. Companies count their stock at consistent but comparatively long intervals.

A typical periodic system might see a firm perform a stock take every three or six months. At that time, staff will check warehouses or storerooms, and count the units of inventory on hand. They will typically also calculate the financial value of the stock, as well as raw materials on-site.

At the point of each stocktake, an organisation can check that inventory levels make sense. Any decrease in inventory would need to match up with sales figures or wastage. This is the only way to spot any discrepancies that could be damaging to the bottom line.

Periodic inventory management is far from ideal. It’s generally only suitable for the smallest of retailers. It’s only firms that hold and sell minimal volumes of inventory that can get away with a periodic approach. For other firms, such an approach makes it far too easy for costly errors to arise regularly.

Failing to track stock continually, for instance, can allow either overstocking or understocking. Both of these occurrences are hugely damaging to a business. Overstocking means you have valuable inventory sitting idle. You’re also wasting critical warehousing space on that slow-moving stock.

Understocking is just as detrimental to operations. When you don’t have enough inventory, you must refuse orders, or worse, fail to fulfil all the orders you do accept. Having to take either of those avenues will hurt your reputation with customers.

There are also financial and reporting downsides to choosing periodic inventory management. This handy guide to inventory management and accounting can teach you all you need to know for both periodic and perpetual systems. Speaking of which.

accounting for inventory

Perpetual Inventory Management Systems

The other principal type of inventory tracking solutions are the perpetual variety. With perpetual systems, everything related to a firm’s inventory and supply chain gets tracked in real-time. Stock levels and associated reports get updated with every sale, delivery, or breakage.

Most retailers use a perpetual inventory management system of some kind. These systems have a raft of advantages over the periodic alternative. In general, perpetual systems allow a higher level of accuracy. That makes for better-informed future planning.


There are lots of different examples of perpetual automated inventory systems. Let’s take a look at some of the principal ones, along with their primary strengths and weaknesses.

Manual, Low-Tech Inventory Management

Many new or small retailers start with manual, low-tech solutions. In short, they keep track of inventory with a pen and paper. Each sale and delivery get recorded in a ledger as it happens, to keep records up to date.

The business owner then needs only to check the written record as and when required. For instance, they may wish to work out if and when to raise a purchase order with suppliers. The main strengths of this type of system are that it’s simple and inexpensive. Human error, on the other hand, is a significant weakness, as is the system’s time-consuming nature.


Inventory Management Via Spreadsheet

Many businesses have moved away from manual stock-taking. There are plenty, however, who haven’t yet embraced the dedicated software solution that is an inventory management system. The system which these individuals use involves tracking stock and more via spreadsheet.

A program like Excel can be excellent for managing inventory at a basic level. A professional with a good affinity with spreadsheets can create a decent system. Stock, value, sales figures, and more can all get tracked on one straightforward document. Modern file-sharing tools, too, can form a part of these systems. They mean that anyone in an organisation that needs to can access the relevant document.

The issue of human error is still a significant downside of spreadsheet-based systems. Enter incorrect figures at any stage, and the mistake can snowball. What’s more, spreadsheets can’t account for the complexity of many businesses. Plenty of firms have multiple sales channels or warehouses. In those cases, an Excel document will swiftly get complex and unwieldy.

Dedicated Inventory Management Software

Inventory management is fundamental to many modern firms. For that reason, there’s lots of inventory management systems and software on the market. They exist specifically to help retailers organize their supply chain. The solutions allow firms to implement more complex, nuanced inventory tracking solutions.

Dedicated inventory management solutions come in all shapes and sizes. Many are now cloud-based, which makes them simple to implement and scale when required. The best examples also provide a superb range of features for businesses. Some of the most notable include:

  • Real-time updating of stock levels
  • Automated low stock notifications
  • Asset tracking via barcodes or lot number
  • Creation of accurate records

The principal benefits of such a software-defined inventory management system are apparent. Many previously time-consuming inventory management processes get automated. That saves staff hours and frees workers for other tasks. What’s more, human error gets taken far more out of the equation. These systems, then, achieve a higher level of accuracy.

There is one downside to a dedicated inventory management system, though. That is that you have to integrate it with your other systems. That can take time and effort, and depending on the systems; it may not even be possible. That’s where more comprehensive and integrated systems come in.

Integrated Retail Operations Solutions

Inventory management is merely one part of your broader business operations. The best inventory management system, therefore, should work seamlessly with your other processes. That’s what you get if you leverage an integrated retail operations platform.

Such solutions unify all of a merchant’s vital operations, including inventory management. That means information about – and access to – all parts of your business are always at your fingertips. Through one interface, you can manage inventory, handle accounts, track orders, and more.

The benefits of these all-encompassing systems are numerous. You get accurate cross-organisational data and control. All departments can communicate automatically. What’s more, critical business processes will run smoothly with little interference. Such systems, however, are more expensive than simpler alternatives. They’re best leveraged by firms that grow beyond those less comprehensive options.

retail operations platform

Why You Need an Inventory Management System

Which type of inventory management system you need will depend on your business. What’s a constant across all retailers, is that you do need one. Taking a systematic approach to inventory management is the best way to ensure accuracy. Approach things in an ad hoc manner, and you invite difficulties of many varieties.

Automated inventory systems let you keep up-to-date records of stock or components. Failing to have such records can lead to issues of overstocking or understocking in no time. Not to mention the knock-on effects that either circumstance can have.



Without an inventory management system, you may lose track of how many units of a product you have. That can lead to you placing a new order when you didn’t need to. You’ll then have far more inventory than customer demand realistically requires. This is the problem known as overstocking.

Overstocking is something all retailers must avoid. It produces two significant and damaging problems. At best, carrying too much stock means you’re wasting your warehousing space. Capacity that could get used for higher-demand items is lost on slow-moving inventory instead. At worst, overstocking can create the retail nightmare of dead stock.

Dead stock is inventory that – for whatever reason – you have no chance of selling. It may be that consumer trends change to mean there’s no longer any demand. In the case of perishables, the stock could go off before you’re able to sell it. Dead stock always hurts your bottom line. You’ve wasted the money spent on buying it and often have to pay more to dispose of it.


Failing to carry enough stock is often as detrimental as having too much to make life more difficult. When a business understocks, it can create two distinct issues. The first requirement is to turn down orders or mark items as out of stock on your website.

Refusing orders is something no brand should ever do if they can avoid it. It’s the very definition of turning down revenue. There’s no guarantee, either, that a customer who can’t buy one item from you won’t take all of their business elsewhere.

The second problem that understocking can create is even more severe. It’s the issue of overselling and is particularly hurtful to e-commerce businesses. Overselling means to take orders for stock you don’t actually have. It plagues many retailers that don’t use an inventory management system.

That’s as their records don’t accurately reflect the real-life situation in the warehouse. Websites and order systems can’t keep track of the actual inventory on hand. They allow customers to place orders for out of stock items. The company will then, more than likely, fail to fulfil those orders. Few things frustrate customers more. Not to mention causing firms to provide refunds or other means of compensation.

Knock-On Effects

It’s a lack of transparency or accuracy in tracking your supply chain that leads to the above issues. Such inaccuracy is a direct result of a failure to use an inventory management system. There is also a range of knock-on impacts of spotty, inexact inventory management—the kind employed by retailers with no definite system.

Failures born out of poor inventory management can swiftly erode your brand reputation. Modern consumers abandon companies far more quickly than ever before. The vast majority will leave following only one poor experience. Many, too, don’t stay quiet about those bad experiences. Negative customer reviews are hugely off-putting to potential new customers—especially those that all reflect similar complaints.

importance of reviews

Streamlining Multi-Channel Inventory Management

Merchants that sell via multiple channels must take a systematic approach to inventory management. As well as facing the same issues outlined above, the complexity of their operations is such that no other approach is viable.


If you sell through your site, via Amazon, and using other third-party channels, keeping track of inventory is a significant challenge. Building and maintaining a spreadsheet for the purpose simply isn’t possible. Updating stock levels and tracking orders would take a vast number of staff hours. You need an automated inventory system so that your team can focus on their other crucial roles.

Features Your Inventory Management System Must Have

It should by now, be apparent how critical the right inventory tracking solution is to your firm. What, though, defines which option is right for you? That will depend on your industry, target audience, and many more factors besides.

There are some essential features to look out if you’re looking for a software solution. The following is a brief rundown of some of the most useful:

1. Barcode Scanning

Knowing your stock levels and where items are is fundamental to inventory management. The top software solutions integrate seamlessly with barcode scanners in your warehouse. That way, the real situation on the ground is also what your system reflects.

2. Real-Time Inventory Updating

Changes to stock levels and movement of inventory gets updated in real-time. As soon as an order gets placed or delivery arrives, your system tracks the changes. That’s even when products get sold in bundles or if units form part of a larger package.


3. Advanced Reporting

Inventory management can also help companies learn more about their wider business. Intelligent reporting of sales data, reorder levels and more provides invaluable insight. Such reports help companies to optimize order times and track their most popular products.

4. Support for Multichannel Sales

Few modern businesses are one-dimensional. Most e-commerce companies, for instance, sell via a range of varied channels. They may include third party sites such as Amazon or eBay, for example. Your inventory management system must integrate with such channels to ensure accuracy.

brightpearl multichannel support

5. Multi-Warehouse Inventory Control

If you have more than one warehouse or storage site, inventory management can be trickier. The best inventory management system will traverse more than one site and give insights into stock location as well as volume. It will also make transferring stock from one place to another intuitive. Not to mention recording all movements in real-time.

6. Inventory Demand Planning & Forecasting

Superior inventory management is about the future as well as the present. The best inventory management systems account for this with built-in demand planning and forecasting features. Data on seasonality, consumer trends, and more gets leveraged to develop accurate forecasts of future customer demand. That ensures you can invest in the correct inventory at the right time.


7. Accurate Accounting

The value of your inventory and how it changes is critical to business operations. An inventory management system must include integrated accounting. That’s how you get accurate, real-time tracking of your financials.

8. Raw Material & Assembly Process Tracking

Inventory management isn’t only for pure B2C retailers or online stores. It’s also critical to manufacturers who take their products to market. Inventory tracking solutions suited to these firms must have additional elements. They include the ability to track raw materials in the supply chain as well as handling assembly processes.

9. Cross-Organisational Integration

As crucial as inventory management is, it’s not a commercial island. It’s merely one part of your broader business operations. An ideal inventory management system integrates seamlessly with all other departments. That way, your whole company will forever pull in the same direction.

10. POS

For retailers with physical stores as well as e-commerce channels, integrated POS software is another must. Such software syncs all purchase and stock details from in-store transactions with the retailer’s broader automated inventory system. That way, inventory gets instantly updated across both online and offline channels.

Integrating an Inventory Management System with Your Retail Tech Stack

We’ve touched upon the importance of integration a couple of times already. Standalone systems – for any business process or area – are not the way forward. At least not for the majority of businesses. Having disparate solutions leads to data silos. They put up barriers to your firm working as efficiently as possible.

There is a raft of options when it comes to software and tech tools to support your business. This retail tech stack report should give you some insight. When choosing any addition to your retail tech stack, ease of integration should be a key concern.


Fortunately, it’s straightforward to unify inventory management systems with your other solutions. The best systems and tools now get built with integration in mind. They boast high-performance integrations with many third-party apps and services. They include examples such as Amazon, Shopify, and more.

The highest-end solutions, too, are comprehensive retail platforms. They don’t only provide dedicated inventory management; they offer that function and more. They can streamline warehousing, back office, accounting, and plenty of other vital processes.

Wrapping Up; How an Inventory Management System Could Be Vital to Your Success

When you boil it down, retail is about having the correct goods to sell at the right time. There are few things more fundamental to the sector, therefore, than inventory management. That’s why you need to get that aspect of your business spot on.

Taking a systematic approach is the only way to ensure accuracy and efficiency in inventory management. You must employ an inventory management system to stay in charge of your supply chain. By doing so, you’ll avoid the damaging twin threats of overstocking and understocking.

There are a few avenues to explore when it comes to inventory tracking solutions. You might choose to rely on manual processes or simple spreadsheets. For better results, though, you’ll want to look to a modern software solution.

Such solutions offer a raft of features to automate and improve inventory management. From barcode scanning to real-time accounting, an inventory management system can revolutionise your business. They’re the kind of automated inventory solution that could prove vital to your success.

Back to Top