Types of Inventory Management Systems for Businesses

With the growing size of businesses, it has become essential for businesses to have a proper inventory management system. By using an inventory management system you can track, manage, and organize your inventory. At present, various types of inventory management systems have their benefits and features. Now you may face some difficulties while deciding which inventory management system would be suitable for your business. Don’t worry; in this blog, we will discuss different types of inventory management systems that can help you improve your business operations.

1. Manual Inventory Management:

Manual Inventory Management is an old-school form of inventory tracking method. A team is formed and assigned to manually write and update the inventory using pen and paper or Excel spreadsheets. Generally, this type of inventory management technique is used by small businesses that have very low or limited inventory. However, using this method has some major flaws, i.e., errors and time-consuming. Manual Inventory Management has the highest chance of errors, making inventory management a difficult task.

2. Barcode Systems:

As the name suggests, it uses barcodes to track the inventory. When a product is manufactured, each product is given a unique barcode. This barcode is then scanned whenever the product is received or sold. Unlike Manual Inventory Management, this system is fast and immune to errors. This makes barcode systems a better consideration than manual inventory management. The Barcode System is suitable for different business sizes, making it a scalable option for tracking inventory.

3. Radio Frequency Identification (RFID) Systems:

Like in the Barcode System, barcodes are used. Similarly, radio waves are used to track inventory in the RFID System. Each product has an RFID tag which contains a microchip and an antenna. You can track inventory in real time using radio signals emitted from the RFID tags that are picked up by RFID signals. This inventory management system is much faster than the Barcode System. The RFID system is suitable for businesses that have large amounts of inventory and supply chains.

4. Just-In-Time (JIT) Inventory Management:

Just-In-Time (JIT) Inventory Management is a cost-effective system, whose primary focus is to reduce the inventory level by receiving necessary goods only when they are required. Using this method, you can cut carrying costs and utilize resources. The important thing to note in JIT is that it requires the full cooperation of suppliers and the best inventory management software to deliver the products on time. Businesses that have irregular demand for their product must not consider this form of inventory management system.

5. Perpetual Inventory System:

The word perpetual means continuity. Thus, what the Perpetual Inventory System does is that it continuously updates the information of the inventory as the transaction occurs. The system provides you with accurate and up-to-date information which you can further use to make necessary decisions. The main catch here is that all these things can be done in real time. This type of inventory management system is suitable for medium or large-scale businesses.

6. Periodic Inventory System:

Just like the Perpetual Inventory System, the Periodic Inventory System also updates inventory information but at regular intervals. You can set the intervals on a weekly, monthly, or quarterly basis. Another difference is that the periodic inventory system involves manual updates and changes in the inventory records, making it inaccurate. Small businesses must consider such type of inventory management as it is less expensive than a periodic inventory system.

7. Cloud-Based Inventory Management Systems:

Nowadays such type of inventory management systems are gaining immense popularity. In this, inventory information is stored on cloud servers. Businesses can then access this information from any device through the internet. The main advantage of cloud-based systems is that they provide regular updates, and scalability and can be easily integrated with other devices and software. Businesses who are looking for good and reliable inventory management can consider this as an option.

8. Mobile Inventory Management Systems:

Mobile phones are currently the highly accessible electronic device. Using a mobile inventory management system, employees can record and update the inventory level on their mobile phones. This saves a lot of time, improving the overall efficiency of the business. Businesses that have more than one working location can use this type of inventory management system to easily manage their inventory.

9. Vendor-Managed Inventory (VMI):

Vendor-managed inventory is a collaborative initiative between the suppliers and the business. Till now we came to know about systems in which employees manage the inventory but in the case of Vendor-Manage Inventory, suppliers are responsible for managing the inventory on behalf of the business. It now becomes the job of the supplier to look after inventory. The key benefit of this system is that it removes the burden from the business. Businesses that have strong relationships with their suppliers must use this system.

10. Enterprise Resource Planning (ERP) Systems:

Lastly, we have an Enterprise Resource Planning (ERP) system that not only manages your inventory but also provides you with a smooth integration with other business aspects such as finance, supply chain, and HR management. This provides you with ready solutions for different departments of your business. It is suitable for large enterprises.


In conclusion, having good inventory management is the most important part for any business to be successful. When combined with the right inventory management system, businesses can also boost efficiency and productivity as well as cut costs while providing high-quality customer service. From a manual system to an ERP solution, there are a variety of inventory management systems.
Since each business is unique, and has its own set of requirements to be met from the inventory management software they choose. You can work with an experienced software development company in Delhi to get the full power of inventory management software.



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