Inventory management software for SMEs: when off-the-shelf is enough and when to go custom

At many companies, stock starts to really hurt at the worst possible moment: the order confirmation has already gone to the customer, and only then does it turn out that the shelf holds less than the spreadsheet says. That is usually when someone says the company needs inventory management software. There are plenty of options: off-the-shelf and cloud products, stock features built into invoicing software, and custom-built systems. This article covers what good software should do, when a ready-made product is enough, and when it pays to have one built for you.

Inventory management software or warehouse management software: what is the difference?

People often use the two terms interchangeably, but they focus on different things.

• Inventory management software tells you how much of each item you have, what it is worth, how much is already reserved for orders, and when to reorder. The main question is how much.
• Warehouse management software also tracks where the goods are: which warehouse, which aisle and shelf, who took them out and where they went. The main question is where.

A trading company with a single warehouse often only needs good inventory management. If you have several sites, many items, or picking the items for an order takes a lot of time, tracking locations starts to matter too.

Stock is connected to the rest of the business: orders, purchasing, production and invoicing. If you want all of that in one shared system, you are looking at an ERP system, which we cover in a separate guide. For many companies, though, getting stock under control is the right first step, and it does not require replacing everything at once.

What should good inventory management software do?

The exact list differs from company to company, but these basics are needed almost everywhere:

• One shared item list: every product appears once, with a clear name, item number and unit of measure. If you buy something by the roll but issue it by the metre, the software has to convert between the two.
• Goods in and goods out: every movement is recorded with a date and a name, so you can always see what happened.
• Reservations for orders: you can see how much is free and how much is already set aside for a customer or a production job.
• Low stock alerts: the software warns you when an item drops below the level you set, before it runs out.
• Stocktaking: comparing what the system says with what is actually on the shelf, with the reason for every difference.
• Multiple warehouses and sites: transfers between warehouses and one view that shows all of them together.
• Expiry dates and batch tracking: for food, chemicals or components you can trace which delivery went to which customer and what is about to expire.
• Permissions: warehouse staff record movements, purchasing sees orders, and purchase prices and stock value are visible only to those who need them.
• Management reports: stock value, slow-moving items and shortages, built from live data rather than manual summaries.
• Connection to your other software: invoicing, webshop or accounting, so nothing has to be entered twice.

Barcode inventory system: when is it worth it?

Typing errors and missed entries are a common cause of stock differences: someone enters the wrong item number or forgets to record an issue. A barcode inventory system helps here. Staff scan the code on the product or the shelf, and the software knows exactly what it is.

You no longer necessarily need expensive warehouse hardware for this. An ordinary smartphone camera can read a barcode or QR code, and the software can run in a browser or a simple phone app. For high volumes or dusty or cold environments, a rugged handheld scanner is still worth buying.

Barcodes pay off when many items move every day, when you have many similar products (for example variants that differ in size or colour), or when several people record movements. If you only have a few movements a month, barcodes are convenient, but they will not solve your real problems.

Cloud inventory management software: what it means and what to check

Cloud or online inventory management software runs in a browser, and the data is stored on a remote server rather than an office PC. The advantage is that the office, the warehouse and people on the road all see the same data, and nothing has to be installed on every computer.

Before you decide, ask these questions:

• Where is your data, and who can access it? Ask which country the servers are in and how backups are made.
• What happens when the internet connection drops? Warehouses and production halls often have weak signal, so check how the software behaves then.
• Who owns the data if you switch? Can you export the full item list and every movement in a format another program can read?
• How does the price grow? Many cloud products charge more per user or per warehouse. Work out what you would pay in two or three years if your company grows.

Custom software can be online too. We build systems that run in the browser and can be used on phones and tablets.

If you track stock in Excel today

Many companies start with Excel, and there is nothing wrong with that. Stock kept in a spreadsheet works as long as there are few items and few people editing it. Then the familiar symptoms appear:

• the spreadsheet says it is in stock, the shelf says otherwise;
• several copies of the file are going around, and nobody is sure which one is current;
• only one person knows how to keep it up to date, and when they are on holiday, the records stop;
• sales cannot see real stock levels, so they have to call the customer back before giving a delivery date;
• stocktaking takes days, and nobody can work out afterwards why the numbers differ.

Stock kept in a spreadsheet brings the same problems as quotes built in a spreadsheet. We cover those, and what an internal system does instead, in our article on replacing Excel.

When is off-the-shelf inventory software enough?

Honestly, for many companies it is. If the following apply to you, you probably do not need custom development:

• you mainly trade, and you sell products in the same form you buy them;
• you have one warehouse, and you count your products in pieces or another simple unit;
• there are no special rules around your stock, for example no expiry dates, batches or customer-owned material to track separately;
• the stock features of your invoicing software or webshop already cover most of what you need.

In that case a ready-made product can be up and running quickly, and on a monthly subscription the upfront cost is low. There is no point reinventing the wheel, and we will tell you so in the free initial consultation.

How to find the best inventory management software for you

Search for the best inventory management software and you will mostly find comparison lists, but a list does not know your company. These steps help more:

1. Write down how things work today. How goods arrive, where you store them, how they leave, and where things usually get stuck.
2. Collect three real cases that cause problems today, for example a partial delivery, a customer return or a stocktake difference.
3. Ask for a demo with your own data. See how the software handles those three cases, not just the smooth standard flow.
4. Ask your warehouse staff. They will use it every day and know what slows the work down.
5. Work out the total cost for several years, including setup, data migration and training.

When do you need custom warehouse management software?

Off-the-shelf software is designed for an average company. Problems start where your stock is not average, and for manufacturers and contract manufacturers that is almost always the case. Some typical situations:

• Production from a bill of materials: when a product is finished, the raw materials and components it used have to be deducted from stock based on its bill of materials, and work in progress has to be tracked too.
• Contract manufacturing: material supplied by the customer has to be kept separate from your own stock and accounted for.
• Cutting to size and offcuts: in metalworking, building materials or printing, sheets, bars, rolls and paper are not used up piece by piece. Offcuts can be used later, so they need to be tracked as well.
• Several units for one product: it arrives on pallets, is stored in bags and sold by the kilo.
• Expiry and traceability: in food production you need to know which raw material delivery went into which product, and older stock has to be issued first.
• Other companies' goods in your warehouse: in logistics you need to see stock per customer and invoice storage fees based on it.
• Your own rules: for example approval for high-value issues, a specific reservation order, or a report that someone has been putting together by hand for years.

At that point there are two routes. You can have off-the-shelf software reworked, which is often expensive and can cause trouble again with every update. Or you can have custom inventory software built that follows exactly how you work. Our guide to custom development covers how it works, how long it takes and what drives the cost.

You do not have to replace everything at once. A common setup keeps invoicing and accounting in your existing software, while the custom system handles stock and warehouse movements alongside it. And in general, when does custom-built software pay off compared with a ready-made package? In short: when the way you work differs from the norm, and an off-the-shelf product could only follow it with expensive rework.

From spreadsheet to working inventory software

This is how we build custom warehouse management software:

1. Free initial consultation

A one-hour online conversation. You show us how goods and materials move, where you keep your stock records today, and where the numbers usually go wrong. If it turns out that off-the-shelf software will do, we will tell you.

2. System design with a live prototype

Design typically takes 1 to 4 weeks, depending on the size of the system, and its fee is agreed in advance. We go through your spreadsheets and warehouse processes, then build a clickable prototype in the browser. Live prototype: before development starts, you already see your whole system working, and you can change it quickly, step by step, during this phase. If you continue with us after design, the system design fee is credited against the development price.

3. Fixed-price quote for development

Based on the approved prototype, we give you a fixed-price quote after discovery that covers everything we recorded during design. We set the schedule at the same time.

4. Development with weekly updates

Every project is led end to end by one lead developer, supported by a complete AI team. Automated tests are written for every part of the system, and they run before every new release, so after a later fix or extension you can check that everything that worked before still works. You get a weekly update during development, and along the way we load your existing item list and stock data.

5. Switchover with a stocktake

It is best to record opening stock with a stocktake so you start with clean numbers. Running the old and new records side by side for a few weeks and comparing them is useful. Once they match, the team switches over. The source code and documentation belong to you.

To see what other internal systems we build besides inventory, take a look at the services section on our homepage.

In short

If your stock is simple, choose a good off-the-shelf product, and test it with your own data before you sign. If you have your own rules around stock, and today you fill the gaps with spreadsheets and manual corrections, it is worth finding out what a system that follows the way you work would cost.