Inventory Management Software, Merchandise Management Software

Software Tips

What is an inventory management system?

An inventory management system, also called merchandise management, is a software for tracking the inventory and all goods movements in a company. It includes all processes in purchasing and sales, warehousing and shipping. All goods that a company purchases or even produces are recorded in the inventory management system. The underlying data of an inventory management system thus consists of the master data for articles, suppliers and customers as well as the transaction data for offers, orders, delivery bills, notifications and invoices.

Interfaces can connect the inventory management system to cash register systems, online stores or invoicing programs. Since inventory management systems are usually modular, there are often additional modules for CRM, returns or device management, for example.

Differences between inventory management systems

The difference between inventory management and ERP

Since most inventory management systems are modular, the boundary to ERP is rather blurred. An ERP maps the entire value chain of a company. This also includes personnel, marketing and, for example, controlling. These modules or functions are not normally integrated in an inventory management system. However, this is the case the other way around, because inventory management systems are usually part of an ERP system.

An inventory management system is therefore either a stand-alone system with interfaces to other third-party systems or part of a comprehensive ERP system. Central systems, as the name suggests, are assigned to the company headquarters. Decentralized inventory management are the ones that are connected to the corporate headquarters. In connection with inventory management systems, we also often speak of closed, open or integrated inventory management systems.

Closed inventory management system

One speaks of a closed inventory management system when purchasing and sales, ordering, disposition and warehouse are mapped within one system. This can be data on the individual goods, the suppliers, quantity, value, date of receipt, etc.. Often the data acquisition at the receipt as well as at the storage and transfer as well as at the dispatch is done by barcode scanners and the use of EAN codes.

Open inventory management system

An open inventory management system is made up of individual modules, in which one module is taken over from a third-party system. The open enterprise resource planning system also includes goods receipt and goods issue. Depending on the provider, it can also map materials planning, purchasing, ordering and warehouse management. In an open inventory management system, however, the individual modules do not all have to come from the same system. In an open system, goods receipts and goods issues are recorded in the master software in any case.

Integrated inventory management system

Integrated inventory management systems usually include all the necessary modules that a closed system also has. They also offer interfaces to third-party systems so that store systems, marketplaces, suppliers or banks can be integrated, for example. Integration is differentiated between internal and external integration. An internal integration is, for example, the connection of the head office software with the inventory management of the individual stores. In external integration, the company's own inventory management system is linked to the merchandise management systems of various partners within the supply chain.

In which companies is an inventory management system used?

All companies that keep goods in a warehouse need an inventory management system. Inventory management systems are therefore used in particular in trading and logistics companies. Trading companies purchase goods and resell these goods. This applies to both retailers and wholesalers and is independent of whether trading is done exclusively online or also with a retail store. The vast majority of trading companies are not simultaneously the producers of the goods they handle. However, it is quite common to refine purchased goods, to put together bundles or kits.

Inventory management systems can be designed to be industry-neutral or geared to the requirements of specific industries such as food retailing or pharmaceutical retailing, for example. Many of the inventory management systems support online retailing or are able to map several sales channels at the same time (multichannel solutions).A central merchandise management system that is linked to a wide variety of channels such as eBay, Amazon, other online stores, etc. can efficiently output data to the various online sales platforms via interfaces.

Tips and question suggestions

• Before making a software decision, conduct a thorough market research of potentially suitable solutions. Our tip: Use our free research service without any obligation. Questions are worked out, large parts of the tender are taken over, potential solutions are presented in a structured way and the communication with the providers is documented!
• Ensure open data access, e.g. SQL databases or other standard formats, in order to perform special evaluations or edit data with other products.
• Check the item management for the following options:
  • Main and commodity groups, match codes.
  • Any number of price and quantity scales
  • Any number of warehouses (storage locations)
  • Multilingual article texts
  • Sales prices in national and foreign currencies
  • Purchase prices in national and foreign currencies
  • Quantity scales for sales and purchase prices
  • Any number of suppliers per article
  • Order suggestions or automated order suggestions
  • Single and collective orders
  • Article export / import, e.g. article import from different web store systems
  • Serial number management
  • Document management
• Review the financial and transaction management options for customers:
  • Quotations
  • Order confirmations
  • Delivery bills
  • Invoices
  • Credit notes
  • Cash register for cash receipts / issues
  • E-mail notification dispatch
  • Price calculation gross / net
  • Multilingual transaction output
  • Transactions in national or foreign currency
  • Open item list
  • Dunning system
  • Evaluations for turnover and article sales
  • Duplication of transactions
  • Recurring invoices
  • Rounding, rounding functions
• Check the financial and transaction management options for suppliers:
  • Invoice receipt in local or foreign currency
  • Evaluations
  • Open items list
• Clarify which functions are available for pricing.
• Functions for ordering, such as multilingual transaction output and transactions in national or foreign currency, may also be important.
• Furthermore, the options for service management or for comprehensive service management of repair orders from customers and complaints management for complaints or orders to suppliers, for example, should not be forgotten.
• Comprehensive options for correspondence such as letters/serial letters as print, PDF and e-mail. Email templates and corresponding text modules should also be available.
• Let us also explain the language management options for text output within forms.
• Also check whether integration options and interfaces are available
  • API (Application Programming Interface), interfaces for ERP systems
  • Online banking
  • E-mail integration for sending e-mails (e.g. MS Outlook)
  • Interfaces to database systems
  • PDF output
  • File Transfer and Access Management (FTAM)
• Possible options for address management:
  • Many additional fields to an address or contact person, e.g. mobile, blogs, email, internet
  • Multiple contact persons
  • Billing and delivery addresses
  • Notes
  • Overview of financial transactions and correspondence
  • Individual customer prices for articles
  • Credit limit management
  • Terms of payment
  • Distribution list for serial letters
  • Appointment management
  • Document management functions
• Determine whether an integrated purchasing system is in place and how it works. Does it make order suggestions based on sales statistics, for example, and can it execute these orders automatically if desired?
• What warehouse management functions are available for keeping track of inventory in the warehouse?
• Ask if after outbound scanning, the customer is notified by email that the goods are packed and leaving the warehouse.
• Are incoming payments automatically recognized and the corresponding orders forwarded?
• Determine how returns management is handled. Are returns better managed by assigning and organizing RMA numbers?