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The Features of an Inventory Management System

By Kenneth Hamlett, eHow Contributor

Inventory management systems handle the movement and tracking of goods within a warehouse or distribution center. Today's inventory management systems are a far cry from the card systems used many years ago. Today's systems offer numerous data inputs and outputs, feature specialized functions for different industries and typically carry large price tags. Most inventory systems have basic features that allow users to see how much inventory sits in the system and where it resides. 1. Monitoring

Inventory management systems must monitor inventory levels across all locations, internal and external. One of the chief components of a good inventory management system is its ability to monitor inventory levels. Every transaction that moves inventory from one location to another, either internally or externally, affects the level of inventory in one or more locations. Besides monitoring inventory levels, a good inventory management system must track every movement of inventory---from receipts into the warehouse, goods issued out of the warehouse, movement between storage locations, picking and packing movements and any other movement from one location, physically or virtually, to another location.

2. Tracking

order fulfillment and transportation and logistics functions.3. amount in-transit in units and dollars. through and out of a warehouse or distribution center via tags and sensors placed throughout the facility. This information lets users scale the volume of future purchases up or down to optimize SKU level inventory. Optimization o 5. An inventory management system that does not handle RFID is antiquated. It also allows users to optimize warehouse receiving. Reporting o . slow-moving inventory. RFID identifies products flowing into. When products move from one location to another (internal or external) the inventory management system gets updated with these movements or transactions and moves the inventory within the system to the correct location. inventory reaching its expiration date and "dead" inventory. Automation o Inventory management systems should automate certain functions of a warehouse operation. amount on order in units and dollars. cycle counting. picking. aging. cost basis. FIFO/LIFO statistics. A large number of companies today require radio frequency identification (RFID) on products. 4. A good inventory management system gives users the data required to optimize inventory levels and warehouse space. amount on-hand in units and dollars. Various reports available from the system provide users with information on fast-moving inventory. amount in work-in-process in units and dollars and also various supplier-related data such as on-time shipment receipts. inventory valuation. turns. Some companies do not do business with suppliers unless the supplier uses RFID. Systems that automatically generate inventory management statistics such as life cycle information help inventory managers and other users make more informed purchasing and distribution decisions. Some inventory management systems automate routine functions such as physical inventory reconciliation. RFID o 6. packing and shipping by storing the faster moving items to locations closer to the point-of-use. A good inventory management system provides detailed reports of various inventory statistics such as usage. An inventory management system must provide reliable reports that are easy to generate and understand.