Introduction to inventory management software
*This article is based on our research and market feedback.
A balance between working capital, operating costs and optimal service level is what every successful business strives for. Along with this, it is vital for companies to spend their time and effort on the areas that bring the most value. This is why retail inventory management is a challenge that every retail business faces sooner or later.
Why exactly do you need software for automation and efficient inventory management?
- You are a retail chain with a large number of stores, warehouses, suppliers and a wide range of categories and SKUs that are important to service on time, make regular records, and, if there are “dead stocks”, carry out sales, write-offs or revision of the assortment.
- You are a small retail business with tiny stores and not a lot of storage space. And it is extremely important for you to utilize every meter of the shelf space you have for storing goods.
- Your product is characterized by a seasonal change in demand (within a year, days of the week) or, conversely, irregular fluctuations in demand, which are difficult to anticipate and can also be fraught with both lack of goods or surpluses.
- Your chain regularly conducts various promotional activities for different products, mechanics and suppliers, which need high-quality planning, execution and performance evaluation.
- You are developing an omnichannel sales model and want to have a clear understanding of the movement of goods and current balances for each channel.
- You want to reduce labour costs and increase the efficiency of your purchasing department.
- Your business is scaling, and it has become essential to move away from Excel spreadsheets and manual inventory management, and it is also important to collect and process large amounts of data in a timely manner for operational and strategic management.
If at least one of the above points applies to you, then modern software for inventory optimization based on ML and AI will greatly increase the profitability of your business.
The software gives you access to accurate data so you can make informed decisions and helps you balance the amount of inventory you need to have on hand to meet your company’s goals while allowing your managers to move away from routine tasks and devote more time to strategic business development.
A quality inventory optimization software solution will allow you to:
- Reduce labour costs.
- Improve the quality of inventory planning.
- Adapt to supply chain volatility.
- Improve customer service.
- Increase employee efficiency.
However, the biggest benefit of optimizing your inventory is the increase in working capital. You will have much more money to invest in other important aspects of your organization, saving money on surplus.
Here is a list of the TOP 5 most popular inventory management software for retail and suppliers in 2023.
LEAFIO AI Retail Platform
LEAFIO has been implementing cloud-based retail solutions for over a decade, accumulating in its solutions experience of implementation and use for more than 160 retailers, distributors, and wholesalers around the world.
Leafio Inventory Optimization software covers all the necessary components of the inventory management process, leaving no "blank spots" in retail business processes. The cloud SaaS solution is equipped with a demand forecasting module and takes into account atypical and seasonal fluctuations in demand. Using unique algorithms, the system successfully manages various categories of goods, including fresh and ultra-fresh, and also takes into account the specifics of the supply of goods for multi-echelon replenishment and stock optimization.
The software presents a set of extremely important and useful features:
- The automatic replenishment system is a modern AI-based inventory management autopilot that provides a complete ordering process for goods at all levels of the supply chain without manual interference.
- Operational and strategic dashboards are functional tools that are designed both to perform the daily tasks of a manager and to track strategic KPIs for long-term planning.
- Multi-scenario seasonality planning is the automatic calculation and application of seasonality coefficients for a permanent range. This allows you to effectively adapt stocks to both seasonal and situational (sporting events, weather changes, etc.) fluctuations in demand.
- Multi-echelon replenishment and inventory optimization (demand forecasting orders) - a functional block that takes into account the specifics of the supply of goods and makes a highly accurate forecast for inventory management at regional and central warehouses and distribution centres.
- Trade promotion management module - allows you to prepare for the planned promotion in time, automatically receive a calculated forecast, adapt the stock to real promotional sales and analyze its effectiveness.
- Module for assortment rotation - automatic removal of goods from the assortment and the addition of new ones (for new goods, a history of similar goods is pulled up, which allows you to predict demand for new items).
- The powerful BI-module provides more than 40 analytical reports that reflect the trends of recent weeks in the short and long term, as well as highlight the positions that led to the most lost sales and excess inventory over the past week.
The implementation period of the Leafio Inventory Optimization takes about 6 months. With a monthly subscription, the developers strive to make the product bring maximum economic benefit to the client. Many users note that the unique feature of LEAFIO is its policy of interaction with customers. The company demonstrates a flexible approach at all stages of cooperation, providing consulting even at the end of the implementation stage with quarterly follow-up meetings. The project team is primarily motivated to produce financial results for the client at the end of the product implementation.
Users who switched to this software have enthusiastically noted that the system interface is logical, convenient and highly intuitive compared to other similar solutions. The Leafio Inventory Optimization system is suitable for retail businesses of any size and allows an unlimited number of users.
The price of the product depends on the retailer’s number of warehouses, stores and the size of the range and offers good market value.
RELEX is a distributor of cloud solutions for retail, wholesale and manufacturing companies.
The Relex Inventory Optimization Platform is a predictive-based automatic replenishment and allocation software. The system is designed to optimize the routine tasks of replenishing and distributing stocks of a wide variety of categories – from fresh and seasonal to new and promotional products.
Solution’s key features:
- The extensive library includes data on sales, demand analysis, marketing activities, store performance and customers behavior across all sales channels.
- ML-based forecasting takes into account the impact of all demand factors, including weekdays, prices, promotions and cannibalization, holidays, local events and weather.
- The automatic replenishment system optimizes inventory levels for high shelf availability and inventory turnover while reducing operating costs.
- Seasonal management allows the adjustment of the pre-season order, initial distribution, automatic replenishment during the season, as well as target distribution at the end of the season and discounts.
- Assortment management - Initial distribution and forecasting of demand for new products, as well as a smooth withdrawal of low-turnover products.
In general, users are positive about RELEX Solutions, noting its flexibility and ability to integrate. They also note the ease of use of the interface and the ability to set up the necessary analytics (capterra.com). On the other hand, it is said that the interface of the program is not suitable for small monitors/screens, which is a significant inconvenience when used on some devices.RELEX provides accurate forecasts for products with a year or more of sales history, but users complain that forecasts for new products tend to be inaccurate. (trustradius.com) The system is designed for 2 to 1000+ users, which makes it suitable for both large and small companies. However, it is also noted that a rather high price, laborious learning process, and building a system for maintaining the level of knowledge required are more likely only to be affordable for larger corporations.
Slim4 by Slimstock
Established in 1993, Slimstock is a rather experienced retail inventory management provider in Europe. Slim4 is a complex solution for forecasting, demand planning and inventory management. The software operates on the basis of exception management, which is supported by clear analysis. Therefore, in supply chains, inventory will be delivered at the right time, to the right place and in the right quantity.
Modules that can be added to the basic Slim4:
- ABC analysis - this module will help the retailer to point out which products are most important to the company in order to invest in a range of products that provide the highest turnover and maximize customer satisfaction through availability.
- Order Generator - this module will provide purchase order recommendations. It combines purchase conditions and shipping costs to determine the correct EOQ, allowing the retailer to achieve higher purchase order discounts, lower shipping costs, and optimize inventory levels.
- Promotion module - A specially designed promotions module integrates promotions into daily work so that promotional materials can be collected and distributed in a timely manner. The additional expected demand for a promotion can be calculated per store and per item, or the additional demand can be predicted at a higher level and can be automatically allocated to different locations.
Although there are some positive reviews on capterra.com about the Slim4 from Slimstock, for example, about regular updates and a high level of staff service from the provider, some users still noted a number of shortcomings. These include complaints that the system is not flexible enough and has difficulty in adapting to the needs of a particular business. Users also talk about a rather complex learning process and the complexity of the system itself (it is not always intuitively clear what this or that element is for), which is also reflected in the 4 of 5 rating for ease of use. It is also noted that the price of the product and technical support is quite high, but this is partially offset by the quality of service and the attentive attitude of the provider's representatives.
Symphony RetailAI presents itself as a company that has been implementing innovative solutions based on artificial intelligence, machine learning and voice control technologies for more than 30 years to improve the efficiency of various operations in companies in the FMCG and CPG sectors. Symphony’s solutions provide retailers with prescriptive information and guidance. Pre-packaged AI solutions leverage the predictive intelligence of CINDE and the power of the Eureka platform.
This on-premise product also offers a number of features for inventory optimization:
- Fresh category management technology recognizes and tracks fresh items individually so that the retailer can be alerted to date sensitivity and account for real-time demand adjustments.
- The solution helps reduce inefficient inventory, reduce product waste, and provide better service throughout the supply chain.
- Tracking goods throughout the supply chain from every point of interaction: supplier, warehouse, store, and buyer. To comply with strict industry regulations, the solution tracks key product information in addition to its location.
- FMCG inventory management system - FMCG Inventory Management software for retail traces the origin and analyzes the components of food products, providing transparency of ingredients/freshness data.
- Waste prevention - It is important to be aware of expiration dates and plan not to exceed them. The system provides alerts indicating expiration date issues as well as remediation recommendations so users can respond quickly.
The company is an experienced player in the market for providing software for automating retail business processes. Some users note the rationality and clarity of the product’s architecture. However, it is important to note that the retail inventory management system from Symphony RetailAI is only an on-site solution, unlike the rest of the SaaS-based solutions on this list. Despite all the intuitiveness of the software architecture, this fact will certainly affect the flexibility and adaptability of the system for some retail businesses. Also, products like these have limited or even a complete absence of after-sales customer support, which is clearly not an advantage in a dynamically developing market.
Tools Group is a provider of supply chain planning software for companies experiencing demand volatility. The solution ToolsGroup Service Optimizer 99+ uses self-adapting demand and inventory models to automatically determine the optimal mix of inventory in a multi-echelon supply chain to improve service levels while minimizing inventory and reducing costs.
- Inventory modelling -technology that eliminates the gross approximations of traditional inventory management, creating reliable relationships between average inventory and service levels for each SKU and location.
- Service-driven optimization - unlike ABC inventory planning, which has an operational perspective, service-driven inventory optimization concentrates on sales, marketing, and customers. It uses categories called “service classes” that sales and marketing people can easily relate to. The result is an aggregated service class goal with the lowest possible stock investment.
- Multi-echelon inventory optimization (MEIO) - to truly serve the end customer, the entire network—from raw materials suppliers and factories to distribution centres and wholesalers—needs the right items in stock. The MEIO solution suggests optimal inventory levels at each stage of the supply chain, simultaneously balancing across multiple echelons, locations, and different Bill-of-Material (BOM) levels.
- Probabilistic forecasting provides the foundation for inventory planning and helps to manage the risk that comes from demand volatility by providing a range of possible values with their probability of occurrence.
According to users’ feedback on G2.com, Service Optimizer 99+ can provide reasonable forecast accuracy and retail inventory management if properly implemented and managed. They note that although the internal reporting tool is really good, the data in the database is somewhat scattered. This makes it difficult to view certain kinds of data together. For example, it is not possible to view inventory targets, supply targets, historical demand and forecasts in the same interface, or at least an additional configuration is required.
Users also note that despite the fact that the company tries to perform at least one update per year, the frequency of updates for cloud clients is below average, since it is mainly driven by the needs of individual customers.
Understanding how much inventory you need to meet customer demand and release frozen working capital is the first step in implementing an inventory optimization strategy. In this challenging task, it is extremely important for a retailer to find a partner who will be focused on the financial goals of the business and not just selling a ready-made solution. In a dynamic retail market, it is very important to receive timely updates and qualified expert advice. An inventory optimization system will benefit you in all areas: correctly evaluating current inventory, minimizing excess inventory, and freeing up funds for use in other vital areas of your business. An inventory optimization system will certainly save you a significant amount of money and help your company prosper.
What is inventory management software?
Retail inventory management software is a type of inventory management software that addresses the unique challenges of the retail environment. Unlike other kinds of enterprises, retailers face a wide range of products, multiple sales channels, and fluctuating customer demand. Retail inventory management software offers features and functionalities that cater specifically to the challenges faced by retailers. Some key features of retail inventory management software include:
Point of Sale (POS) integration: Integration with the POS system allows seamless synchronization of sales data, enabling real-time inventory updates and accurate tracking of product availability. Retail businesses frequently sell their goods through numerous channels, including physical stores, e-commerce websites, and online marketplaces, which requires multi-channel inventory management. Retail inventory management software helps businesses manage inventory across all channels, ensuring accurate stock levels and preventing overselling or stockouts.
Product categorization and variations: Retailers often have products with multiple variations, such as size, color, or style. The software enables efficient categorization and tracking of these variations to manage stock levels accurately. Promotions and discounts management: Retail inventory management software allows businesses to track and manage promotions, discounts, and sales campaigns, ensuring proper inventory allocation and monitoring.
Seasonal inventory management: Retail businesses often experience seasonal fluctuations in demand. The software helps in forecasting and planning for peak seasons, optimizing stock levels, and preventing excess inventory during off-peak periods.
Supplier management: Retail inventory management software assists in managing relationships with suppliers, including purchase orders, reordering, and supplier performance tracking.
Reporting and analytics: The software provides comprehensive reporting and analytics capabilities, allowing retailers to analyze sales trends, inventory turnover, and other key performance indicators to make informed business decisions.
Overall, retail inventory management software aims to help retailers efficiently manage their inventory, streamline operations, improve customer satisfaction, and optimize profitability.
What are the types of retail inventory management software?
There are various types of retail inventory management software available to meet the specific needs of retailers. Here are some common types:
Point of Sale (POS) Inventory Management Software: These systems integrate inventory management capabilities with the point of sale system. They allow real-time tracking of inventory levels as sales are made, ensuring accurate stock management and preventing stockouts. POS inventory management software is ideal for retailers with physical stores or those operating a combination of online and offline sales channels.
E-commerce Inventory Management Software: This type of software focuses on managing inventory for online retailers. It integrates with e-commerce platforms and marketplaces to provide centralized inventory control across multiple online sales channels. It enables efficient management of product listings, stock synchronization, order fulfillment, and inventory visibility for online retailers.
Multi-channel Inventory Management Software: Retailers often sell through various channels, such as physical stores, online platforms, marketplaces, and even wholesale channels. Multi-channel inventory management software allows businesses to manage inventory across all these channels from a single platform. It facilitates accurate stock tracking, order management, and inventory synchronization across multiple sales channels, ensuring seamless operations and preventing overselling or stockouts.
Seasonal Inventory Management Software: Retailers that experience seasonal fluctuations in demand can benefit from seasonal inventory management software. This type of software helps in forecasting and planning for peak seasons, managing inventory levels, and ensuring adequate stock during high-demand periods. It assists in optimizing stock levels to prevent excess inventory during off-peak seasons, reducing carrying costs.
Mobile inventory management software enables retailers to access inventory data and perform tasks such as stock tracking, order processing, and barcode scanning using mobile devices like smartphones or tablets. This on-the-go access provides retailers with the flexibility to manage inventory from anywhere at any time.This type of software is especially useful for retailers with mobile sales teams or those who need to manage inventory remotely.
Retailers can manage inventory from anywhere at any time using on-the-go access software. This is particularly useful for retailers with mobile sales teams or those who need to manage inventory remotely. Integrated retail management systems are comprehensive solutions that will span multiple areas of the business operation including inventory management, point of sale, customer relationship management (CRM), e-commerce, and more.
The choice of retail inventory management software depends on factors such as the size and nature of the retail business, sales channels, and specific requirements. It's important to evaluate different options and select a solution that aligns with your business needs and growth plans.
How much does inventory management software cost?
There are multiple factors software vendors usually take into account when setting the price for their products. Different pricing models are used by vendors, which include:
- Subscription-based pricing: users are charged a monthly or annual fee depending on the number of users or level of functionality required. The price range of inventory management software can seem usually wide: ranging from just a few dollars per user to thousands of dollars flat. This is caused by the equally wide range of the types of software offered.
- Tiered pricing: Some inventory management software providers offer tiered pricing plans based on the size of the business or the level of functionality required. They may have different pricing tiers with increasing features and capabilities. The tier chosen should depend on the budget and the needs of each particular business.
- Custom pricing: For larger enterprises or businesses with specific requirements, inventory management software providers may offer custom pricing. This usually involves contacting the software vendor directly to discuss your specific needs and negotiate a tailored pricing plan.
- One-time licensing fee: In some cases, inventory management software is available for purchase with a one-time licensing fee. This is more common for on-premises solutions where you buy the software outright and pay for any necessary updates or support separately. The size of the business and the system's complexity can affect the cost.
It's important to note that in addition to the software cost, there may be additional fees for implementation, training, data migration, and ongoing support.
How to implement an inventory management system?
Implementing a retail inventory management system involves several steps to ensure a successful and smooth transition. Here is a general guide on how to implement a retail inventory management system:
- Assess your inventory management needs: Start by assessing your current inventory management processes and identifying the pain points or areas that need improvement. Determine the specific requirements and goals you have for implementing a retail inventory management system.
- Research and select the right software: Conduct thorough research to identify inventory management software options that align with your requirements.
- Consider factors such as features, scalability, ease of use, integration capabilities, and customer support. Request demos or trials of the software to evaluate its suitability for your business.
- Plan the implementation process: Develop a detailed implementation plan that outlines the steps, timeline, and responsibilities. Assign a project team or a project manager to oversee the implementation process. Define the scope of the implementation and establish clear objectives and milestones.
- Data preparation and migration: Cleanse and organize your existing inventory data to ensure accuracy and consistency. If you are transitioning from manual or outdated systems, you may need to digitize and consolidate data from various sources. Prepare the data for migration into the new system, ensuring that it is properly formatted and compatible.
- Configuration and customization: Configure the inventory management system according to your business needs. Set up the system parameters, such as inventory categories, units of measurement, reorder points, and other relevant settings. Customize the software to match your specific workflows and processes.
- Training and onboarding: Provide comprehensive training to your team members who will be using the inventory management system. Ensure they understand how to use the software effectively, input data, generate reports, and perform day-to-day tasks. Offer ongoing support and resources to help them adapt to the new system.
- Integration with other systems: If necessary, integrate the retail inventory management system with other systems you use, such as your point of sale (POS) system, e-commerce platform, or accounting software. This integration ensures seamless data flow and eliminates manual data entry, improving efficiency and accuracy.
- Testing and validation: Conduct thorough testing of the inventory management system to ensure that it functions as expected and meets your requirements. Validate the accuracy of data migration, test different scenarios, and resolve any issues or bugs identified during the testing phase.
- Go-live and monitoring: Once testing is complete, set a date to go live with the new inventory management system. Communicate the change to your team and stakeholders. Monitor the system closely in the initial period to address any issues that may arise and provide additional training or support as needed.
- Continuous improvement: Regularly evaluate the performance of the retail inventory management system and seek feedback from users. Continuously optimize and refine your processes, workflows, and system configurations to improve efficiency and meet changing business needs.
The time and cost of the implementation will never be the same for the two businesses. It is essential to involve key stakeholders, communicate effectively, and allocate sufficient time and resources to ensure a successful implementation of the retail inventory management system.