Inventory is a precious asset. The goods you sell are what generate your operation's revenue, so managing inventory is vital to your business' survival. But manually tracking these products can be labor-intensive and time-consuming.

Incorporating an inventory management system can simplify this tedious task while supplying your business with valuable data to help it grow.

An inventory management system consists of software that enables you to track goods throughout each step of the process, from the time you order an item from the manufacturer until you deliver it to your customer. The system monitors how much inventory you have in stock, as well as orders, sales, shipments, deliveries and returns.

Among the many advantages of inventory management software is that businesses can more accurately track goods, gain better product insights, develop a stronger customer understanding and avoid having too much or too little stock.

Key features of inventory management software

A system that can maintain stock levels and generate reports may sufficiently meet your business' needs. Or, your business may call for a more sophisticated system that offers sales trend analysis and advanced ordering capabilities. Inventory management software for manufacturing industry, for example, might require the ability to track raw material and finished goods.

Different types of inventory management software offer different features, so it helps to know which ones will be the most useful to your organization.

Here are some of the top inventory management software features:

• Inventory tracking and control: This is the most basic function of inventory management system software, automating the process of monitoring stock and filling and shipping orders. System capabilities vary, so it's a good idea to choose a system based on the specific tracking features you use. Barcodes, electronic chips, serial numbers and lot numbers are just a few of the inventory management software features that allow you to track merchandise, so you'll want to make sure your system supports your tracking methods of choice.
• Inventory reporting and trend analysis: Reporting ranks high on an inventory management system features list and can help streamline operations and analyze sales trends. A system can generate reports on order history, inventory totals and transactions, to name a few. These reports may also offer inventory analysis features that can be tailored to your inventory management methods.
• Ability to scale and configure: As your business grows, you'll want your inventory management system to evolve along with it. It helps to have software that can scale with your expanding needs, as well as one with enough capacity to handle more products, customers and sales data. You might also want software that you can configure to track inventory for multiple businesses within one system.
• Integrations: Software that can integrate easily with other systems is useful in case your business eventually relies on multiple systems to operate. You might need your inventory management system to talk to your e-commerce, accounting and customer management software, for example.
• Cloud-based options: Depending on your company's needs, cloud-based inventory management software may offer a more affordable and easier-to-implement alternative to on-premise software systems.
• Security: Software with strong security features can help you protect your inventory by guarding data from hackers and backing up information in case of a system crash.

Importance of inventory management software

Managing your inventory may be challenging, but it's critical to growing your business. Here are some of the benefits of inventory management software:

• A simpler process: If you're manually managing inventory, the clipboard could be creating stress, sucking up time and putting you at greater risk for errors. Automating inventory management can make it easier to track stock and manage customer orders, saving you money in the process.
• Accurate tracking of what's in stock: Regularly running out of products can hurt your revenue, not to mention your reputation. But keeping too much merchandise in stock can max out your warehouse space while piling on inventory costs. An inventory management system can make it easier to find the sweet spot.
• Greater visibility: By collecting all of your inventory data into a single system, inventory management software can offer you a dashboard with all of your metrics in one place, and in real time. This kind of visibility can provide you with a big-picture overview of your inventory trends.
• Better-informed business decisions: Having clearer insights into your inventory trends can guide your decision-making toward more profitable results and help you negotiate more effectively with vendors.
• More satisfied customers: When you've managed your stock efficiently, it takes less time to fulfill orders and manage returns. All of that translates into happier customers.
• Cost savings: The less time products spend sitting on shelves, the more money you'll save on inventory costs. That means more revenue gains for your business and savings you can ultimately pass along to customers.

When you use an inventory management system in conjunction with a business card like American Express^®, you can maximize your savings and efficiencies even more. One of the challenges of inventory management is the potential funding gap that will allow you to pay for it while you're collecting revenue from your own customer base.

Using your American Express^® card enables you to take advantage of American Express' interest-free period for up to 55 days*, which may help you obtain your inventory on a timely basis while having extra time to pay your card's balance. Then, after you've used Amex's category and vendor reports to negotiate volume discounts, you can reduce your costs further by applying your Membership Rewards® points against the cost of your purchases.

Things to consider when choosing inventory management software

Businesses that have identified a need inventory management software may find it helpful to seek out a system that's uniquely suited to their organization's specifications. Here are some key considerations:

• Preferred features: Determine which features you want your inventory management system to include. For example, do you need a system that primarily tracks inventory, or does your business require more advanced features, such as the ability to manage back orders?
• Cost: The features of an inventory management system will dictate its cost, so consider the complexity of the system, and compare that with your budget. Also factor in the market rate of the software when determining whether it's a worthwhile investment.
• How it will fit into your business: Consider whether you will need to customize your software to meet your business' specific needs. Also think about whether the software will integrate with your existing systems.
• User-friendliness: The right inventory management system should make your life easier, not harder. When perusing the various types of inventory management software, look for a system that's easy for you and your staff to learn and use. And make sure the vendor offers adequate tech support in case you need help troubleshooting.

Taking the time to find a system that meets your needs will help you reap the benefits of inventory management software, resulting in greater efficiencies and profits for your business, and a more enjoyable buying experience for the customers you serve.

® Used by Amex Bank of Canada under license from American Express. 

* As a charge card, the balance must always be paid in full each month in which no interest charges will apply. The interest free grace period is 28, 29, 30 or 31 days from the closing date of the current statement to the closing date of the next statement depending on the number of days in the calendar month in which the closing date occurs. The number of interest-free days varies based on a variety of factors, including when charges are posted to your account, whether your account is in good standing, and the closing date of your statement.

This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.