Small businesses should implement inventory management software early on.

It can be an important advantage.

43% of small businesses either don’t track inventory or they use manual processes. Organizations that use software will be more competitive and grow faster.

The Benefits of Effective Inventory Management

Good inventory management ensures that you maintain a steady production schedule. You can deliver products on time and never lose a sale or customer because you’re out of stock.

It will prevent you from storing extra inventory that ties up working capital. It’s essential for managing cash flow.

Free Inventory Software For Small Businesses

Small businesses can use free or open source inventory management software while they’re small. A freemium software pricing model starts with a free plan with basic functions. This may be sufficient for a small business that sells relatively few products.

Freemium software also has paid levels with more features and capacity. In this article, we’re focusing on free and open source systems.


Features in the free plan:

  • Free for one user
  • 1 own company
  • 1000 products
  • 1000 clients and suppliers
  • 1000 transactions
  • 50mb storage
  • Visit website


Features in the free plan:

  • 1 user
  • 1 sales channel
  • 50 orders per month
  • Batch create shipping labels
  • USPS, UPS, FedEx, Canada Post shipping
  • Return labels
  • Split shipments
  • Tracking number writeback
  • Visit website

Zoho Inventory

Features in the free plan:

  • 20 online orders per month
  • 20 offline orders per month
  • 20 shipping labels per month
  • 20 shipment tracking per month
  • 1 Warehouse
  • 2 Users
  • Composite items
  • Ecommerce integrations
  • 5 Automated workflows per module
  • Visit website

Sortly Pro

Features in the free plan:

  • Track with QR or barcode
  • Notifications
  • Manage your stock on any connected device
  • Supports multiple users with¬†permission levels
  • CSV and PDF reports
  • Spreadsheets support photos
  • Supports 30 currencies
  • Visit website

inFlow Inventory

Features in the free plan:

  • Barcode compatible
  • Customizable pricing models
  • Cost tracking
  • Inventory overview
  • Inventory optimization
  • Reorder management
  • Purchase order management
  • Shipping management
  • Supplier management
  • 13 reports
  • A total of 100 products and clients (combined)
  • Visit website

How Does Inventory Management Software Work?

Inventory management systems allow you to categorize your stock. Then it helps you organize it in a logical fashion. It ensure you have the right materials and the right amount at all times.

If you carry perishable items or those with a limited shelf-life, inventory management software will ensure they don’t expire.

Your software tracks inventory through your supply chain. This may require moving it to multiple warehouses, fulfillment centers, or retail stores.

With automatic alerts, you know when to order more supplies or products. You’ll be alerted when to offer a discount or promotion to clear out slow-selling stock.

How to Set Up Inventory Management

  1. Create a database
  2. Label each item
  3. Categorize items
  4. Create and document processes
    1. Purchasing inventory
    2. Receiving inventory
    3. Storing inventory
    4. Moving inventory between locations
    5. Fulfilling orders

Components of the Supply Chain

Inventory management is a function in the larger process of  supply chain management.

A supply chain includes the following components:

  • Non-capital assets
    • Parts
    • Raw materials
    • Work-in-process
    • Finished goods
    • Supplies
  • Processes
    • Ordering
    • Storage
    • Production
    • Packaging
    • Distribution
    • Transport
    • Recordkeeping
  • Supply Chain Entities
    • Your company
    • Producers
    • Vendors
    • Warehouses
    • Manufacturers
    • Shipping companies
    • Distribution centers
    • Other service providers
    • Customers
      • Retail customers
      • Business customers

Inventory Management Fuels Business Growth

“Inventory management software will be the keystone of your inventory management system, as it tracks, manages and organizes product sales, material purchases and other production processes. It essentially allows your employees to switch where they spend their work hours: less time inefficiently searching for products or tracking inventory by hand and more time analyzing and planning for growth.” Paul Trujillo, Informatics

Small businesses that use inventory management software combined with best practices will be poised for success in 2020 and beyond.

By Liz Strikwerda