What is Inventory Management?

Johnny Marx
August 25, 2015

As a wholesaler interested in growing your business, you may be wondering, “what is inventory management?” Inventory management balances the need to ensure that stock is available when needed, against the need to ensure that neither too much nor too little stock is kept on hand. Inventory management software enables companies to manage their inventory with this balance in mind. There are a vast number of inventory management solutions available, some aimed at solving the needs of large companies, others whose focus is primarily on small or mid-market companies. In this article, we’ll cover a few of the most popular options.

What is Inventory Management?

As we consider “what is inventory management,” it’s important to look at the two main methods companies commonly use to manage their inventory. These are Just in Time (JIT), and materials requirement planning (MRP). With the JIT method, companies order stock just as items are needed rather than maintaining high levels of inventory. With MRP, stock deliveries are scheduled based on past history and sales forecasts. MRP requires a high level of analytical and reporting capability, and it is also important that inventory management be integrated with your main ERP system.

What Inventory Management Systems Are Available?

Choosing the right inventory management solution depends on having a good understanding of the various options, what their target market is, and the features they offer. At the higher end of the market are systems like SAP and Oracle/JDEdwards. These are highly capable enterprise systems with functionality aimed at large companies with highly complex supply chains. Historically, these applications were implemented on-premise, but more recently they have been moving towards a cloud implementation or Software as a Service (SaaS) model that may make them more attractive to small and mid-market wholesale businesses. Arguments against these systems for small to medium wholesale businesses usually include the difficulty of initial implementation and ongoing maintenance, along with high overall expense. Microsoft Dynamics is another big player to watch that has been historically targeted more toward the upper middle to small enterprise market through its two product lines: GP (formerly Great Plains) and NAV (formerly Navision). GP is able to handle more of the functionality required for materials requirement planning in a light manufacturing environment, whereas NAV is better able to support international businesses with heavy manufacturing needs. GP and NAV are both offered with an on-premise or cloud deployment model; GP’s inventory management capabilities include site-by-site inventory management for single and multisite warehouse operations. NAV, on the other hand, offers the ability to track inventory items with multiple characteristics in order to reduce the number of inventory items in the system. When choosing between these two offerings, companies should look closely at their own business model to determine which option is better suited to their needs.

Small and Mid-Market Inventory Management Options

For small and medium businesses looking for inventory management solutions, there is a wide array of options. Two of the best-known include NetSuite and Sage, which are add-on applications to these vendors’ popular ERP applications. Other vendors, such as Fishbowl and inFlow, are applications that are focused only on inventory management.


NetSuite is a SaaS-only provider of a full suite of applications for mid-sized wholesale and distribution companies. It offers an integrated ERP, inventory, and accounting system fit for companies that want a highly scalable solution without excessive IT complexity. Reporting and analytics functionality is said to be excellent, provided through dashboards that help users organize information and make demand, expense and sales decisions.

Sage Inventory Advisor

Sage Inventory Advisor is a cloud-based solution that provides visibility to forecasts, key performance indicators and financial information, including excess stock, and surplus orders, and stock holding. With the Inventory Forecasting and Inventory Monitoring modules, users can plan for upcoming orders and receive alerts to potential stock-outs. In addition, the Inventory Advisor includes ordering schedules, interactive reports, supplier performance metrics, and classification matrices. Sage Inventory Advisor is primarily targeted at small to mid-market companies that are using Sage’s ERP software.


Fishbowl Inventory is for small and medium wholesale companies that are choosing to stay on the Quickbooks platform for their accounting, but want the ability to incorporate inventory management into their business operations. Fishbowl can handle a wide array of inventory management functionality, including multi-site, multiple locations, part detail tracking, manufacturing processes, landed costs, consignment, EDI, shopping cart and merchant services. It also includes the ability to use wireless devices for bar code reading in the warehouse. A potential downside of Fishbowl would be that it is so closely tied to Quickbooks, making it not an ideal solution for companies that plan to expand rapidly.


inFlow inventory has more than 700,000 users in the wholesale, retail, manufacturing, eCommerce, and services industries. It’s a bit of a throwback – a download rather than a cloud-based application. inFlow tracks inventory, customer orders, and purchase orders, and can help with generating reports and reordering stock. As a stand-alone “tracking” type of inventory management system, it is weaker in the areas of analytics than most of the other competitors in this space. inFlow does not directly integrate with any other software, and no API is available to make your own connections; all integration must be done manually. inFlow is also a fairly expensive option since you pay per individual download. These are just a few of the options in the inventory management space. As with any software selection, the best place to start your inventory management selection process is by taking a close look at your current business requirements and future goals. These will help guide you to the best solution for your needs. Also make sure to thoroughly vet any software vendor you talk to. Ask for a demo, and ask a lot of questions. These key questions can help. Do you have other questions about what is inventory management? Tell us in the comments.