This article explains the key features to consider when looking for an inventory management system. It also covers the latest advancements in these systems and how to determine your requirements and provides a downloadable quick-reference checklist to use when researching solutions.

What Is an Inventory Management System?

An inventory management system helps organizations account for all incoming and outgoing stock to better meet customer demand and avoid the expense of overstock or loss of business with stock outs. The system impacts every essential business function including accounting, production, warehouse management, purchasing, sales and customer service.

What Are the Major Specifications of Inventory Management Systems?

The key inventory management system specifications involve providing a way to store, organize, manage and analyze inventory data. Systems requirements include:

  • An easy-to-use interface that doesn’t require advanced training, support or documentation.
  • Automation for eliminating manual processes of business functions related to inventory management.
  • A reliable, secure database that provides accurate, real-time data.
  • Performance that enables fast, actionable inventory monitoring and control.
  • The ability for administrators to easily add software modules with minimal configuration so that the system is scalable.
  • Software integrations and automated features that minimize manual inventory updates or inputs.

For more on must-have inventory management features, see “3 Key Features to Look for When Selecting Inventory Management Software.”

Top Inventory Management System Features by Category

Inventory management systems have features that help manage, control, track and plan inventory. Here’s what to expect from those features:

  • Inventory Control: Inventory control handles products that are already in stock at the warehouse and plays a key role in supply chain management. Inventory control tools can categorize products by type, location and SKU (or serial number), audit data, generate reports in real-time and search, filter and view products. For more on inventory control methods, including expert advice, see our “Essential Guide to Inventory Control.”
  • Inventory Management: Inventory management features govern the data from other parts of the system, like inventory control. That’s not all; inventory management also handles business processes that occur before the stock arrives at a warehouse and how the inventory reaches other destinations. These features include tools for multi-location warehouse management and integrations with other software or enterprise resource planning (ERP) platforms (for example, generating paperless invoices and purchase orders). Learn more about inventory management and how it differs from inventory control.
  • Inventory Tracking: To implement inventory controls, you need to track the status of products and materials in the supply chain. Perpetual inventory tracking features help automate manual tasks. For example, the system automatically generates a tracking number when it creates a receipt or invoice. Tracking integrations with third-party logistics (3PL) providers combined with an email solution lets businesses better manage customer relationships by sharing what’s in stock or shipping times.
  • Inventory Barcoding: Barcoding software helps eliminate data entry errors and automate business functions that require communication with other parts of the system. Collecting, storing and organizing digital inventory data makes inventory operations faster and more accurate. Barcoding software can integrate with digital documentation and reporting features (for example, touchscreen signatures and paperless invoicing). Mobile barcode scanning devices improve inventory accuracy, speed up back-office processes and stock replenishment and enable paperless documentation.
  • Inventory Optimization: Take inventory planning to a higher level with inventory optimization. Add sophistication to a basic inventory plan. Instead of standard ordering formulas and a basic ordering process, you can use tools that provide automated reports, inventory trends and a view of changes across the entire supply chain. This information enables a closer match in supply and demand so you can optimize the inventory on-hand. See the inventory forecasting guide to learn more.
  • Inventory Alerts: Various modules trigger inventory alerts that help reduce waste, optimize inventory financials and manage customer expectations. These features include automated email or SMS messages that alert you to low inventory levels and shipment and supply chain delays. Inventory alerts offer an added level of operational control for sales forecasting, materials planning, shipping logistics and supplier management.

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Inventory Management Features to Consider

Advancements in computing, applications, databases and IT operations created a market for modern inventory management systems. The shift to web services, application-based development and APIs enabled third-party application integrations that weren’t possible before. Now, inventory management systems can manage a host of essential, inventory-related business functions.

Consider the following modern inventory management system features, which you can tailor to your business needs and do more than control inventory:

  • Cloud Infrastructure: Cloud-based software is a scalable, cost-effective solution. Cloud computing means organizations don’t need to hire dedicated staff to manage and maintain those systems. Cloud infrastructure also enables automated backups, secure access and real-time collaboration across multiple locations.
  • Internet of Things (IoT) Integrations: The IoTmovement brought automated inventory controls and reporting, digital labeling, GPS tracking and Bluetooth- and RFID-enabled tracking. The technology has also been used to improve security against theft and loss.
  • Digital Labeling: The move to digital labeling created features like GPS-enabled RFID tags and digital barcoding. With digital inventory data, organizations can now network handheld devices with databases for real-time tracking and paperless documentation.
  • Mobile Systems: Mobile applications running on wireless devices communicate with back-office systems and central databases to speed up multi-location inventory processes. Using mobile devices (running iOS or Android) allows for real-time tracking and instant inventory alerts and notifications.
  • Machine Learning and AI: AI-empowered virtual agents (or chatbots) are changing how businesses share inventory availability to ecommerce customers. They use machine learning algorithms and web-based services to communicate out-of-stock inventory, make recommendations based on an active shopping cart or user history and automate backorder fulfillment. Machine learning can also report sales data trends that are critical to optimizing online customer engagement metrics. Other benefits of machine learning include the ability to improve internal inventory controls and prevent shortages. The technology can also improve forecasting with real-time data analysis and report on inventory trends that are difficult to track and predict manually.

To learn more about the latest must-have inventory management features, see “Three Must-Haves for Your Inventory Management Shopping List.”

What Are the Top Software Modules in Inventory Management Systems?

The modules that make up inventory management systems vary by provider and price. You can start with basic inventory management modules (order management and administration tools) and build systems that include advanced software features and integrations (such as accounting and ecommerce).

The most common inventory control and management modules include the following:

  • Ecommerce Modules: These modules are useful for selling goods online.
  • Accounting Modules: These modules automate financial and accounting activities like accounts payable and receivable, procurement and third-party payments, and they categorize revenue.
  • Data Administration Modules: These admin-like modules provide fast, simple tools for managing inventory system data like connecting users via passwords, updating inventory records and exporting data.
  • Warehouse Management Modules: Warehouse modules provide must-have inventory management functions like appointment scheduling, order receiving, returns handling, labeling and third-party carrier management.
  • Order Management Modules: These modules help manage purchase orders, parts requirements and order consolidation.

Key Inventory Management System Features by Industry

Inventory management systems have software features that target particular markets, customer bases and product types. In this section, you’ll find examples of the top inventory management system features to consider based on industry.


Inventory management systems for manufacturing have hybrid features for material-based inventory and warehouse management. These features incorporate advanced unit conversion capabilities to handle bulk material stock, incorporate lean manufacturing methodologies, material requirements planning and bill of material invoicing.

Top inventory management system features for manufacturing include:

  • Unit-of-Measure Conversion: Convert inventory quantities received to a higher or lower unit of measure.
  • Automated Ordering: Set stock limits and place orders when inventory drops below a given quantity.
  • Raw Materials Planning: Track direct or indirect raw materials by purchasing and production cycles, create a bill of materials and determine the return on investment (ROI) for a given raw material.
  • Purchase Order Management: Assign suppliers, track product lead times and manage purchase order lifecycles.
  • Serialized Inventory: Drill down to individual items instead of SKUs to trace a product lifecycle, identify defective inventory and track warranty information.

Wholesale Distribution

Wholesalers with online distribution channels need inventory management features that help control and trace bulk inventory, manage multiple suppliers and customers and automate processes.

Top features for wholesale distributors include:

  • Sales Order Fulfillment: Use a single dashboard to view sales orders, create packing slips and automate email confirmations to customers.
  • Multiple Warehouse Fulfillment: Track and fulfill orders with inventory stored across multiple warehouses.
  • Kitting: Control, transfer andconnect items normally tracked individually to a bundled sales order for offerings like a subscription box.
  • Lot Tracking: Track multiple quantities of perishable, time-sensitive items by manufacturer expiration date with traceable lot numbers.
  • Bin Management: Bin management allows for inventory to be received at the warehouse and put-away into preferred bins within the rack system of the warehouse for easy picking later during the order fulfillment process


Retailers depend on inventory management features that optimize the in-store customer experience. They need solutions that improve inventory tracking, demand forecasting and inventory alerts. Accurate, multi-location management features are essential for multi-channel operations (e.g. buy online, pickup in-store). Point-of-sale and accounting integration features are crucial for profitable brick-and-mortar retail operations. Read our guide on retail inventory management for tips and best practices.

Top features for retail include:

  • Partial Receiving: Control and track partially received inventory.
  • Backorder Management: Create new purchase orders with consolidated sales orders by supplier and track products by type, estimated arrival or season.
  • Demand Forecasting: Set preferred stock levels by seasonal demand, automate multi-location replenishment and generate reports to identify future demand trends.
  • Cycle Counting: Categorize inventory by volume, value or transactions and receive automated prompts for inventory counts to establish safety stock levels. Read our cycle counting guide to learn more about this process.


Ecommerce inventory systems need to support accurate inventory controls and automated processes that deliver products to customers without interruption. Accounting integrations that incorporate online payment processing, email invoicing and inventory tracking are popular ecommerce features.

Top inventory management system features for ecommerce include:

  • Returns Handling: Send customer email updates, assign warehouses to receive a returned item and generate reports on return trends.
  • Automatic Restocking: Generate automated purchase orders when stock goes below a pre-set level.
  • Multi-Carrier Shipping: Store contact information and data on preferred shipping carriers and manage multiple logistics providers.
  • Virtual Stock Control: Create virtual inventory and manage drop-ship logistics with supplier inventory stored elsewhere.
  • Display inventory availability on website: Accurately reflect the availability of stock on ecommerce platforms.

How to Decide Which Inventory Management System Features to Choose

When selecting an inventory management system, it’s crucial to ask the right questions and define your requirements first. Before evaluating specific features, ask the following questions:

Is It Time to Upgrade Your Inventory Management System?

Do you need to upgrade to a new, integrated system? Would integrating standalone inventory management applications using web services or an API to your existing systems be sufficient? For example, ask vendors about third-party integrations for your current accounting software before considering investing in a new platform that requires training and implementation across multiple business units.

Who Will Implement the New Inventory System Features?

Like any new software rollout, it’s important to consider the impact of change. Be sure to plan for the installation and training of staff on the new features. With this in mind, ask potential providers about outside vendor support contracts and training for your team. Do you have the existing IT infrastructure and expertise to handle an in-house rollout, or will you need to outsource it? Many of the popular inventory features automate tasks and business processes, but you’ll want to prepare for change management when removing manual inventory tasks. Designate someone to help with that.

What Is the Total Cost of Inventory Management System Ownership?

Be sure to ask about hidden fees you might not anticipate when comparing systems. Questions to ask include:

  • How many orders can you process in a billing period?
  • How many SKUs can you manage?
  • Do you need additional hardware specific to the inventory management system?
  • Will you host applications and data on-premises or in the cloud?
  • What is the cost per license for the number of users?
  • Will there be any future costs associated with software maintenance or upgrades?
  • What type of initial and ongoing training is included, and what costs extra?

Inventory Management System Features Cheat Sheet

Use this downloadable PDF checklist to review the requirements for your business. It’s designed as a single source of features, so you can ask the right questions before writing your request for proposal.

Download Inventory Management Systems Cheat Sheet PDF(opens in new tab)

NetSuite Provides Cloud-Based, Feature-Rich Inventory Management and Control Software

An inventory management system can automate processes, improve inventory practices and help keeps customers happy by always having the goods they want in stock. Decision-makers have a lot of options, and picking the right solution takes time, research and asking smart questions. NetSuite has answers and a variety of tools that can help make the process easier. NetSuite offers a suite of inventory management and control features including multi-location inventory management, warehouse and fulfillment management, automated stock replenishment, lot and serial tracking and cycle counting. Learn more about how you can use NetSuite to manage inventory automatically, reduce handling costs and increase cash flow.