What is Inventory Management Software?

What is inventory management software?

Inventory management software is a digital solution designed to track, organize, and manage a company’s inventory levels, purchase orders, sales, and other related data. It helps businesses streamline their operations by providing real-time visibility into stock levels, facilitating accurate forecasting, optimizing inventory turnover, and automating key processes.

By centralizing information and automating manual tasks, inventory management software minimizes human error, reduces costs, and enhances overall efficiency.

Main modules in inventory management software

Inventory management software typically consists of several interconnected modules, each serving a specific purpose. These modules may include:

  • Inventory Tracking: Enables businesses to monitor stock levels, locations, and movement in real-time, ensuring accurate inventory control.
  • Purchase Order Management: Automates the purchase process, from generating purchase orders to tracking deliveries, ensuring timely reordering and preventing stockouts.
  • Order Fulfillment: Streamlines order processing, picking, packing, and shipping, ensuring prompt order fulfillment and minimizing order errors.
  • Warehouse Management: Optimizes warehouse operations, including storage allocation, inventory replenishment, and picking strategies, to improve efficiency and reduce storage costs.
  • Reporting and Analytics: Provides comprehensive insights and reports on inventory performance, sales trends, and other relevant data to facilitate informed decision-making.

Graph describing the five main modules of inventory management software

Open source vs. proprietary inventory management systems

When it comes to inventory management software, businesses have two primary options: open source and proprietary solutions. Each option has its own set of advantages and considerations. Let’s take a closer look at the characteristics of both types:

Open Source Software

Open source inventory management software, such as Apache OFBiz, is developed and distributed under an open source license. This means that the source code can be modified, customized, and otherwise enhanced so the software meets the specific requirements of individual enterprises. Here are some key points to consider:

  • Flexibility and customization: Open source solutions provide businesses with a high level of flexibility so companies can adapt the software to their unique workflows, processes, and industry-specific needs. This can in turn lead to a more efficient and optimized inventory management system.
  • Cost-effectiveness: Open source software is typically free of upfront licensing fees. This can be a significant advantage for small and medium-sized businesses with limited budgets, as well as larger enterprises looking to save on their tech costs.
  • Community support: Open source projects often have a vibrant community of developers and users who actively contribute to the software’s development and improvement. This community support can provide valuable resources, such as forums, documentation, and user-driven enhancements, making it easier to troubleshoot issues and find solutions.
  • Access to innovation: More flexibility and ability to customize means open source software solutions provide an immediate access to innovation that can be really advantageous for enterprises looking to be leaders in their field and/or want a solution that’s custom fitted to their business needs.

Proprietary Software

Proprietary inventory management software is developed and sold by specific vendors who retain the rights to the software. Unlike open source software, proprietary solutions are subject to licensing fees and usage restrictions and can’t be modified to fit the unique needs of the business. Here are some key considerations:

  • Off-the-shelf solution: Similar to buying something at the store, proprietary software is  a package deal, which can be very convenient for businesses that don’t have any special custom requirements. Just purchase, “open”, and go! 
  • Vendor support: By opting for proprietary software, businesses can rely on the vendor to maintain and update their software. This can be beneficial for companies that prefer a hands-off approach and want to delegate software maintenance and support responsibilities to a dedicated team.
  • Cost Considerations: While proprietary software offers convenience and built in vendor support, it generally comes with licensing costs that can vary depending on the vendor and the scope of usage. These costs may include initial licensing fees, ongoing subscription fees, and potentially additional costs for upgrades or additional modules.

The choice between open source and proprietary inventory management software depends on several factors, including budget, customization needs, desired features, and the level of ongoing support required. Open source solutions provide flexibility and access to innovation, while proprietary software offers vendor support and out-of-the-box convenience.

Ultimately, businesses should carefully evaluate their specific requirements and weigh the pros and cons of each option before making a decision.

Graph comparing open source vs proprietary inventory management software

Apache OFBiz inventory management software

Apache OFBiz is a robust and feature-rich open source ERP system that includes a powerful inventory management module. It offers comprehensive inventory control, warehouse management, order fulfillment, and reporting capabilities that make it a viable option for businesses seeking a cost-effective and customizable inventory management solution.

Here’s a deeper look into the features and benefits of Apache OFBiz:

Flexibility and customization

  • One of the key advantages of Apache OFBiz is its flexibility. As an open source solution, it allows businesses to modify and customize the software to align with their specific needs. Whether it’s configuring workflows, defining inventory control policies, or creating customized reports, Apache OFBiz provides businesses with the ability to tailor the system to their unique requirements. This flexibility ensures that the inventory management processes can be streamlined and optimized according to the business’s specific workflows and industry demands.


  • Apache OFBiz is designed to be highly scalable, accommodating the needs of both small businesses and large enterprises. It can efficiently handle varying inventory volumes and adapt to changing business requirements as the company grows. This scalability is crucial as businesses expand their operations and deal with larger inventories, enabling them to manage their inventory effectively at any stage of their growth.

Comprehensive inventory control

  • The inventory management module in Apache OFBiz offers a wide range of features to ensure accurate and efficient control over inventory levels. It allows businesses to track stock quantities, monitor stock movements, and manage multiple warehouses or locations. The system enables real-time visibility of inventory, preventing stockouts and overstock situations. Additionally, businesses can set up automated alerts for low inventory levels, ensuring timely replenishment and preventing disruptions in supply.

Warehouse management

  • Apache OFBiz includes robust warehouse management capabilities that enable businesses to optimize their warehouse operations. It provides functionalities such as storage allocation, inventory replenishment, picking strategies, and barcode scanning. These features facilitate efficient warehouse processes, improve order fulfillment accuracy, reduce picking errors, and minimize storage costs.

Order fulfillment

  • Efficient order fulfillment is crucial for customer satisfaction and business success. Apache OFBiz offers features to automate and streamline order processing, picking, packing, and shipping. It integrates seamlessly with other modules, such as sales and customer management, to ensure smooth order flow and accurate order fulfillment. By automating these processes, businesses can reduce manual errors, improve order accuracy, and expedite order delivery, enhancing customer satisfaction and loyalty.

Reporting and analytics

  • Apache OFBiz provides robust reporting and analytics capabilities, allowing businesses to gain valuable insights into their inventory performance and trends. The system generates comprehensive reports on inventory levels, stock turnover, sales patterns, and other relevant metrics. These insights enable informed decision-making that helps businesses optimize inventory levels, identify sales opportunities, and mitigate risks.

How to choose an inventory management system for your business

Selecting the right inventory management software is critical to meet your business’s unique requirements. Here are some key factors to consider during the decision making process:

  • Scalability: Ensure the software can handle your current inventory volume and has room for growth as your business expands.
  • Integration: Look for software that seamlessly integrates with other business systems such as accounting software, e-commerce platforms, or POS systems to facilitate data flow and streamline processes.
  • User-friendliness: Choose software with an intuitive interface and easy-to-use features to minimize the learning curve for your staff.
  • Support and updates: Evaluate the vendor’s customer support and ongoing software updates to ensure that you receive timely assistance and benefit from future enhancements.

Graph with five tips for how to choose the right inventory management software for your business


Investing in robust inventory management software is essential for businesses seeking to streamline operations, maintain accurate inventory levels, and achieve optimal efficiency. By leveraging technology to automate manual tasks, businesses can save time, minimize errors, make informed decisions, enhance customer satisfaction, and realize cost savings.

Whether choosing an open source solution like Apache OFBiz or opting for a proprietary software, the right inventory management software empowers businesses to maximize their potential and thrive in today’s competitive marketplace.

DATE: Jun 13, 2023
AUTHOR: HotWax Systems
Warehouse and Inventory Management, Open Source Software, OFBiz