What Factors Influence a Company's Choice of Inventory System?

by Jonathan Lister ; Updated September 26, 2017

A fully-functioning inventory system that operates in real time is a necessity for any modern business. Several factors influence a company's decision as to which inventory system to implement, including ease of installation, simplicity of use and the total cost to purchase the system. A good inventory system allows a company to manage its supply chain at a much faster pace and increase efficiency and gets products to consumers more quickly.

Comprehensiveness and Deployment

An inventory system should provide a comprehensive view of a company's inventory across its entire system. A comprehensive view entails a variety of inventory aspects including current product levels, status of current product orders and the trends related to different product offerings. This allows a company to see not just its stores of product but which items are leaving warehouses and retail locations faster than other products. The ease of deploying an inventory system is also an important factor for a business. A complicated inventory system may require more IT professionals to install and maintain, which could increase overall business costs.

User-Friendly Features

The user interface is a key feature of any inventory system. A system's ease of use is a large influence on which system a company chooses to implement across its production and distribution chain. An easy user interface allows a larger number of employees to use the system with a greater degree of success. This reduces the potential for errors in inventory information, which can cause problems further down the supply chain in the form of missing products and insufficient orders for clients.

Durability of the System

An inventory system that spends more time in need of repair than functioning properly can grind a company's deliveries to a halt, causing ordering problems at the point of sale. System maintenance also factors into an inventory system's durability. The number of IT professionals required to properly maintain an inventory system increases a company's payroll and can affect profits if the system fails routinely. A company that purchases a low-cost inventory system may find those savings quickly eaten up in maintenance costs and lost sales due to incorrect inventory numbers.

Utility Across the Supply Chain

The integration of an inventory system across a company's supply chain is an attractive feature for a business looking to keep tabs on the raw materials purchased from its suppliers. This allows a company to see where its raw materials are coming from and what locations these materials came from. This type of knowledge is critical if a business uses raw materials intended for human consumption. Using tainted raw materials could cost a business millions of dollars in lawsuits from affected consumers and lost sales due to recall orders of tainted goods.

About the Author

Jonathan Lister has been a writer and content marketer since 2003. His latest book publication, "Bullet, a Demos City Novel" is forthcoming from J Taylor Publishing in June 2014. He holds a Bachelor of Arts in English from Shippensburg University and a Master of Fine Arts in writing and poetics from Naropa University.