Inventory management system: what it does and what comes before it
What an inventory management system does for traders and manufacturers, where it stops and why the order in your mailbox is still entered by hand.
The backbone of the business
An inventory management system — in German-speaking countries simply the Warenwirtschaft — records what happens to the goods in a trading or manufacturing business. The item master holds item numbers, names, units and prices. The customer master holds addresses, terms and contacts. The documents build on these: quote, order, delivery note, invoice and credit note. Every delivery note books stock out, every purchase order to a supplier replenishes it.
Depending on the system there are also storage locations, serial numbers and batches, dunning, the hand-over to accounting, for example via a DATEV export, and e-invoices in the XRechnung or ZUGFeRD formats. For many small and medium businesses the inventory system is therefore the most important software in the house. Once it is in place, nobody likes to change it.
Inventory system, ERP or both
The line between an inventory system and an ERP is blurred. As a rule of thumb, the inventory system covers purchasing, warehouse and sales, while an ERP also covers production, projects, staff and often financial accounting. Many programs that call themselves inventory systems now have modules for manufacturing or accounting, and many ERP systems for small companies are essentially an inventory system at their core.
When choosing, the label matters less than the processes your business really needs. A wholesaler looks at customer prices, packaging units and partial deliveries, a workshop at bills of materials and material costs. Pointers for the choice are on Inventory software for small businesses.
Where the inventory system stops
An inventory system works with data that is already in it. An order exists for it only once someone creates it. If the order comes through an online shop, a B2B shop or EDI, that happens automatically. If it comes by e-mail, as a PDF from the customer’s system or as a photo of a handwritten list, someone in the sales office creates it by hand.
In many businesses that is most of the incoming orders. The sales office reads the e-mail, looks up the customer, finds every line in the item master, converts “3 cartons” into pieces and types it all in. If something is unclear, there is a question by phone or e-mail whose answer has to be found again later. The inventory system hardly helps with this step, because it is built for structured input.
Onshop works next to your inventory system
Onshop does not replace an inventory system. It takes over the step before it: turning the order in your mailbox into a reviewed order. Onshop reads the e-mail with its attachments, recognises customer and line items, matches them to your catalogue by item number or exact name and shows, for every line, the passage it came from. Anything unclear stays marked, and for missing details Onshop prepares a question for the customer. You review and confirm.
Today you bring products and customers over from your inventory system as a CSV file and export confirmed orders back as CSV, either for Excel or in a technical format for import. A direct integration with common inventory systems is planned. How order entry works in detail is described on Order entry and order processing software.