The Inventory Management System
When a business stocks materials and goods they sell, they are procedures that are put in place to handle how goods are received, stored and delivered, with this process been known as “inventory management”.
Inventory is a physical resource that a business holds in their stock with the intention of selling it or transforming it into a more valuable state. The inventory could range from raw materials, finished goods, works in process or maintenance, repair and operation (MRO). The main concept of inventory control is focusing on the process of movements and accountability of inventory. This concept strictly bases on the principle of physical and cycle counting, physical and systematic movement of materials and, good accounting practices.
In business management, inventory consists of a list of goods and materials held available in stock. Inventory management is the process of specifying the placement and size of the stocked goods within a business whereby the inventory is to be managed at different locations or levels within a facility or within multiple different locations of a supply network to safe guard production against overstocking or running out of goods.
Inventory management could as be defined as managing inventory with the primary objective been determining and controlling stock levels within the facility to balance the need for product availability against the need for minimizing stock holding and handling costs.
2.3 Management System
A management system is an information system that is used by a business to ensure they can manage and fulfill their tasks through a framework of procedures and processes. Typical management systems are used to maintain data within an organization as well as ensuring data is shared accurately, or for the management of services or products offered. A management system could also be defined as the integration of traditional management methods with a computer system to create a tool for strategic and automated information management.
2.4 Inventory Management System
An inventory management system is usually used to automate a sales order fulfilment process. These types of system are designed containing a structure whereby it contains lists of orders to be fulfilled then prompts the sales employees to select the desired items and mark them packaging and shipping information. Modern inventory management system serve the purpose of keeping tracks of inventory objects whereby the system relies on barcodes or RFID tags to uniquely identify the object. When recording a transaction, the system automatically identifies the inventory object by scanning the barcode or RFID tag, and then additional transaction information is collected from the operator via work terminal which could be a workstation or mobile computer.
The features of an inventory management system such as physical inventory counting and cycle counting can enhance an organization. With the availability of various kinds of inventory systems, in the current environment the size of a business is not a concern because there are various kinds of systems to suit any business.
Figure 1: Basic Structure of an Inventory Management System
2.5 Management System Classification
2.5.1 Network Inventory Management System
Real time inventory management system: use wireless, mobile terminals to record inventory transactions, the moment the transaction is processed. Transaction information is transmitted via wireless LAN to a central database.
2.5.2 Stand Alone Inventory Management System
Stand alone inventory systems are usually employed by small size or medium sized businesses. These kind of systems work offline and are not connected to other systems. Stand alone systems are usually used to store Customer data and inventory, usually all stored on one local database. For example for small businesses like convenience stores and shoe stores, it could be an expensive business option to purchase and use an expensive electronic inventory management system hence a standalone application could be the nearest option to the manual system since it automates the basic functions of inventory management. It would not make sense a small business located in one location implementing a web based or network based inventory system when they only sale inventory locally. These kinds of systems are not suitable for large sized business in manufacturing or production with a study in 1996 by the International Mass Retail Association (IMRA), for example, concluding that stand alone management system packages acquired to perform individual functions will soon become obsolete because they do not integrate well with other systems.
2.5.3 Web Based Inventory Management System
Web based systems are web applications that can be accessed from any computer with a web browser but without any physical application installed on the local computer. In inventory management systems, a web based application can be a smart move for businesses because it offers the benefits of secure storage, sharing files and accessibility which make managing your data with other hosted applications a smart strategy. A web application is an application delivered to users from a web server over a network such as the internet or an intranet. A reason for the popularity of web based applications is due to the functionality of the web browser as a client, sometimes called a “thin client”.
When choosing inventory management applications, the ability of a web based application to update and maintain web applications without distributing and installing software on potentially a numerous number of clients is another reason why these kinds of system are becoming much favored by users. A key strategy that is been capitalized on by software companies is to provide web access to applications that are been distributed as local applications whereby these programs allow the user to pay a monthly or yearly fee for use of the application without having to install it on a local hard drive. Software companies that are following this strategy are known as an application service provider (ASP), and ASPs are currently receiving much attention in the software industry.
The main concepts behind web based application is to centralize information hence by using databases to store data like consumer information, salespeople can update a client’s address and the update will instantaneously be available to all users throughout the organization. Too many small and medium-sized businesses suffer from de-centralized information because they implement stand alone applications which are not a logical way of centralizing information.
2.6 Current Based Inventory Management System
2.6.1 Silver Inventory System
Silver Inventory System is very popular software throughout the world, particularly with small to medium sized businesses requiring a mid-range, inexpensive standalone inventory software with a good range of features. Silver Inventory System is a complete inexpensive system for management of sales, purchases and payments. This system will help you in creation invoices, sale orders, purchase orders, receiving lists, payment receipts, product labels with bar codes and any kinds of the reports for monitoring your business. Inventory System allows the control of customer balances and vendor balances.
Figure 2: Screenshot of Silver Inventory Management System
2.6.2 Golden Inventory System
Golden Inventory system is integrated with QuickBooks and is able to track Purchases, Sales, Work Orders and payments. This is a complete inventory management system that performs the functions of Purchases, Sales and payments. The system guides you through the creation of vendors list, purchase orders, products list, receiving lists, sales orders, invoices, sales and payment receipts. In addition to product labels with barcodes, work orders for creation inventory assemblies, transfer orders between locations, customers and vendors’ balances and various types of reports for monitoring your business, it also supports XML synchronization with remote locations. Golden Inventory system works with MS SQL Server 2000, MSDE and desktop database files. Golden Inventory system works as a single application or as a client server system and as a distribution database system. You will be able to work with remote outlets and warehouses even without a reliable connection between them. The system uses unique data exchange technology in XML format that allows quickly processing orders and synchronizing information with all your branches.
Figure 3: Screenshot of Golden Inventory System
Easy to understand interface that can be used without need for training.
Application offers a simple to use interface, that could be used to perform tasks without the need of training
Application can be integrated to support multiple warehouses for one company
Support for warehouse is only limited to one warehouse for one company
Point of Sale
System has a point of sale panel where a sales transaction can be performed in real time
Does not provide functionality for Point of Sales
Users access functions can be limited depending on access level or role
Secure security prevents unauthorized access from outsiders.
Supports a multi user environment
Supports a multi user environment
Systems allow ordering for manufacturing operations. It also supports payments for ordered products and purchase orders at the same time reserving inventory for sales orders
This system allows conducting payments for obtained products and for ordered products in the purchase orders. It supports the partial payments and payment under several orders or receiving lists. The payments arriving from sold products are similarly ensured.
Inventory reservations for Sale orders
Work orders for manufacture operations
Screen customization support
Export reports in Excel files
Compare and Comparison of Golden Inventory system and Silver Inventory System
When comparing the inventory systems there certain features that feature in both systems and there some features that are absent in the other system. One of the key differences between the two systems is that Golden Inventory system supports multiple warehouses for a company meaning the system could be integrated between all warehouses as one system whereas the downside to Silver inventory is that it can only be integrated to one warehouse. A similarity between the two is that both can support multiple companies.
In terms of size and functionality, Golden Inventory system is much superior to Silver Inventory system. Both systems offer the basic concepts of inventory management systems that is, invoicing, sales orders which is fulfilled by business, purchasing which would be the inbound inventory, barcode scanning whereby the inventory object is automatically identified before it is processed. Depending on the size of the business, Golden Inventory system is most suited for a large size business that could be in the field of manufacturing, stock supply or production and Silver Inventory is best suited for small to medium sized business because of the limited functionalities.
Some of the key features that make Golden Inventory superior to Silver Inventory system are that Golden Inventory system can offer a Point of Sale Option whereby a transaction could be processed at a terminal and the inventory status is updated in real time. Golden inventory system can support reports from Microsoft Excel which means it can be integrated with other systems that could be run by a business. The Golden Inventory System has a feature to manage work orders for manufactures and the screen and work permissions by user meaning the added security whereby the access granted to each user can be defined exactly depending on their level of authority minimizing unauthorized access to functions and data not related to that user.
Silver Inventory System Software Informer: Screenshots