Order Management Software vs. Inventory Management Software
Across a seemingly endless stream of ERP systems, CRMs, accounting software, inventory management systems, and sales order management applications, the wholesale technology landscape can be crowded and confusing. To make matters worse, many software products overlap in function, as they try to pack in dozens of different features and functionalities. Not only are these jack-of-all-trades applications often clunky and difficult to use, their lack of focus can mean half-baked features and more inefficiency than you started with. In this post, we set out to clear up some confusion by breaking down the differences between two types of software often conflated with one another: sales order management and inventory management. Armed with this information, you’ll be better prepared to decide what will meet the needs of your wholesale business.
What Is Inventory Management Software?
Inventory management software is a backend system dedicated to tracking the inventory in your warehouse(s). Used as a way of avoiding unnecessary product overstock and backorders, this software is used in the distribution arm of a wholesale business. Boiled down, it’s a database that keeps an exhaustive, detailed ledger of what stock came in and out, and where it was located. Inventory management can allow you to:
- Use barcode scanners to organize outbound/inbound inventory
- Track inventory across multiple warehouses
- Assign sublocations to pinpoint the position of a product within a warehouse
- Compile stock-on-hand reports
Your personnel can track products by their barcode, serial number, or other criteria without having to manually keep track of inventory numbers and deal with outdated data. It also allows for more strategic planning, so that companies can balance stock availability without unnecessary holding costs.
What Is Order Management Software?
While inventory management software tracks actions that have already taken place (i.e. the past), sales order management software is a front-end system designed to set up the future--new orders and new business. Sales order management software powers your sales and customer service teams, improves the efficiency of the wholesale sales process, and optimizes for sales conversations in progress. Borrowing from the definition used in our Sales Order Management FAQ post, sales order management software is “a comprehensive order management solution that includes mobile order writing, web order management, B2B eCommerce, and the ability to integrate with your back office systems (typically, your ERP).” With the mobile order writing solution, sales reps have access to a detailed digital product catalog, customer lists, contact information, pricing, etc. stored on a mobile device and are able to write and submit orders at a store visit or trade show with just a few taps and swipes. Web order management then allows your back office team to keep track of orders coming in from sales reps in the field, so the picking and packing can commence. With web order management, they also have the ability to make any necessary information updates, like pricing changes, product additions, etc. Sales order management software can also allow you to:
- Send out interactive drafts of orders that retail buyers can then modify and/or confirm
- Strategically leverage customer order history to upsell and introduce new products
- Quickly process routine reorders
- View and share reports on sales and individual rep performance
All this information is synced across mobile and web, eliminating any need for paper order forms and data entry, and purchase orders can be sent to the distributor within minutes of being written. Sales reps work faster and provide their buyers with a much more efficient, modern customer experience. Some sales order management platforms also offer a B2B eCommerce portal, which allows retail buyers to place orders online.
So why is it so confusing?
The main confusion between these two types of software arises from the fact that many inventory management systems offer “order management features,” while sales order management systems may also have “inventory tracking.” Let’s clarify why this is the case. In the case of inventory management software, some vendors boast secondary order management features, like drafting sales quotes, storing customer information, or sending order invoices via email. The problem here is that if you’re looking for a seamless experience fully optimized for your sales reps on the front lines, a software vendor whose focus is on backend inventory management may fall short of the bar. To make matters even more complicated, it’s often the case that among inventory software vendors, “order management” is a blanket term that encompasses the management of orders going in and out of a warehouse. In this particular context, “order management” can refer to how the system tracks when more inventory needs to be ordered from the manufacturer to replenish a warehouse. It’s “order management” that occurs a step backwards in the supply chain, and it doesn’t have as much to do with the actual sales process between reps and buyers. On the flip side, some sales order management software will offer inventory tracking features that allow reps to see inventory information directly in their mobile app. The goal is to empower reps to sell more strategically, let customers know ahead of time that an item is out of stock, and prevent backorders. The way this is usually accomplished is by uploading the data from another source, or by integrating with another system, whether it’s dedicated inventory management software or an ERP that includes an inventory management system.
The Bottom Line
You can look at the essential differences between inventory management and sales order management software through two lenses:
BACK-END VS. FRONT-END:
Inventory management software is backend technology used by your back office and warehouse staff to manage product. Sales order management software is a front-end solution optimized for the sales and ordering process, whether it’s an in-person meeting at a store visit or trade show, or an online purchase order placed by the retailer through a B2B eCommerce platform.
PAST VS. FUTURE:
Inventory management software holds an authoritative record of inventory movements and transactions that have already happened. Sales order management software enables conversations and drives future sales. It focuses on the ongoing, evolving interaction points among your brand, sales teams, and retailers. We hope that clears up any confusion you may have had about these two very different types of software. If you have any other questions on the topic, let us know in the comments below.