Inventory management software is a new-era replacement for spreadsheets. Feature-rich systems help run smart inventory management strategies and optimize processes. 

There are tons of out-of-shelf systems with a wide assortment of features available. Yet, only about 60% of inventory management software features are used by an average business. Roughly 40% of functionality remains unused.

It's vital to develop software that comprises the inventory management system features a business needs to avoid wasting resources when developing a new solution.

Find the selection of the key and advanced features to implement when developing a new system below.

Key Features Advanced Features
1. Inventory tracking 1. Automated re-ordering
2. Identifiers issuing and scanning 2. Third-party software integration
3. Order management 3. Multi-location inventory management
4. Item storage management  4. Demand forecasting
5. Reports and analytics 5. IoT-driven inventory management
6. Backup and data import/export 6. Automated item quality check

7. Automated workflows

8. Bundles and multiple price tiers

Let's elaborate on the core and advanced features to implement. Discover problems they help solve and how these features are applied.

Custom inventory system —
built your way


The vital inventory management software features help enable the basic functionality of new software. They help track items in a warehouse, manage orders, and access analytics.

Key inventory management features

1. Inventory Tracking

Track the location and movement of items in a warehouse. The feature enables an inventory management system to record information about the placement of items, their quantity, and transfer history. 

By updating items' location data in live time, you can trace work-in-progress (WIP) products. An inventory management system alerts responsible managers when the in-stock level reaches a defined minimum value. Also, this feature of an inventory management system helps track the expiry date of perishable products.

Statistics: 95% of businesses consider inventory tracking as a critical feature.

Problems Solved Feature Application
Poor inventory visibility Real-time serial number tracking
Manual item counting Stock level monitoring
Stockout and overstocking Location tracking and movement history check
Erroneous inventory data Missing items identification 
Increased product wastage Expiry date tracking

2. Data Backup and Import/Export

Ensure data safety and enable fast recovery after unforeseen data losses. Import/export inventory data in bulk to rapidly migrate information between different systems in a supply chain. Validate and transform data to ensure its integrity for creating information exchange pipelines.

Statistics: 90% of businesses define data backup and import/export as the baseline functionality.

Problems Solved Feature Application
Data loss Full and incremental backup 
Manual backup creation and management Data check and validation
Poor information integrity Automated data backup and recovery
Insufficient data-sharing capabilities Inventory data import and export
Manual product information entry

Data transformation

3. Identifiers Issuing and Scanning

Create identifiers in the form of barcodes, QR codes, RFID tags, or SKU codes. Quickly scan packages to discover detailed information about items. Various equipment like barcode scanners, cameras, or smartphones can be used for scanning labels.

Data encoded into barcodes can be automatically fetched and input into an inventory management system. It helps enhance order fulfillment accuracy and performance.

Statistics: 87% of businesses identify efficient product identification as an important feature.

Problems Solved Feature Application
Data entry errors Product scanning and information update
Time-consuming or inaccurate order fulfillment Automated data entry and data forms pre-population
Insufficient product identification Identifier code generation and label printing
Poor item traceability Item movement tracking
Manual inventory audit Product identification for order collection

4. Order Management

Use a centralized system to collect and fulfill orders. The feature enables the opportunity to check in-stock inventory and discover the location of items to pick and pack rapidly. Trace the delivery of packages and manage returns effectively. 

Also, this inventory management system software feature enables the opportunity to reserve items in a warehouse and track the status of orders.

Statistics: 84% of businesses state that order management is an obligatory-to-have feature.

Problems Solved Feature Application
Time-consuming order processing Order processing
Order processing delays caused by stockout In-stock inventory check and reservation
Return-handling mistakes Order confirmation and tracking
Manual order status tracking Customer communication
Human errors Automated returns processing

5. Storage Management

Organize storage space and enable smart item placing to minimize the efforts and time required to pick and pack items. Easily discover the physical location of inventory. Besides, this inventory management system feature helps meet storage environment conditions requirements.

Statistics: 82% of businesses identify asset tracking features as critical functionality.

Problems Solved Feature Application
Insufficient storage space utilization Storage rules and policy creation
Item location challenges Space reservation for production
Improper storage conditions Guided item placement
Time-consuming order picking and packing Items' physical location identification
Inventory misplacement Smart stock rotation

6. Reports and Analytics

Collect all the data across a supply chain and extract valuable insights. Automatically create reports and visualize raw data. Also, the feature enables the opportunity to create data analysis pipelines to check inventory data in live time.

Statistics: 81% of businesses state that analytics is a key functionality of an inventory management system.

Problems Solved Feature Application
Poor supply chain management and visibility Data collection and storage
No real-time data Information analysis
Lack of data-driven decisions Data visualization and custom report generation
Improper inventory replenishment planning Dashboards and live-time data update
Manual report creation Trend and error identification

Let's build MVP with baseline features


Improve your inventory management system by supplementing it with top-tier inventory management software features.

Advanced inventory management features

1. Automated Re-Ordering

Replenish items automatically to maintain the optimal level of inventory in a warehouse. The feature monitors in-stock inventory and triggers automatic product re-ordering. It helps create replenishment requests that are sent to suppliers once approved by executing managers.

Also, the feature helps enable a vendor-managed inventory replenishment system. A supplier monitors the level of in-stock inventory. When it reaches the minimum required value, a vendor automatically delivers a new batch of products.

Problems Solved Feature Application
Stockout and overstocking Reorder points configuration
Manual new order submission Automated stock level monitoring
Data entry errors Order review and approval
Manual stock-level monitoring New orders tracking and management
Poor supplier management Vendor communication

2. Demand Forecasting

Apply algorithms or use machine learning models to forecast trends and demand changes by analyzing historical data. Avoid stockout by preparing for demand spikes and seasonal changes in advance. Smart adjustments of inventory replenishment strategies help decrease the wastage of perishable products.

Problems Solved Feature Application
Stockout and overstocking Demand change forecasting, based on historical data
Insufficient item replenishment strategies Identification of trends and repeating patterns
Lack of information on seasonal and repetitive demand changes Risk identification
Increased product wastage rate Market insights discovery
Faulty market analysis  Replenishment strategies optimization

Read also:

3. Third-Party Software Integration

Develop an integrated inventory management system by connecting software from different vendors. Fetch orders and inventory data from different platforms and process it in live time using this inventory management system feature. Besides, you can enhance the functionality of a system by connecting additional modules.

Problems Solved Feature Application
Ineffective workflows Inventory management system functionality extension
Isolated data in disparate platforms Centralized inventory data fetched from multiple systems
Manual data collection from different systems Automated data pipeline creation
Limited functionality of inventory management software Real-time information synchronization
System scaling up challenges Centralized order processing and tracking

4. Multiple Storage Facilities Management

Manage inventory stored in multiple warehouses. Choose the most optimal storage facility to fulfill and deliver orders fast, based on clients' locations. Enable full visibility across multiple facilities using a centralized warehouse inventory system. 

Besides, the functionality enables easy submission of transfer requests and automated multi-storage inventory management operations.

Problems Solved Feature Application
Poor order picking and packing efficiency Cross-docking stock transfer requests
One storage-focused inventory management Centralized inventory visibility
Inefficient item storage and distribution Multi-location items picking, packing, and replenishment
Lack of centralized visibility across disparate facilities Multiple storage facilities management
Excess inventory turnover Optimized order fulfillment

5. IoT-Driven Inventory Management

Internet of Things (IoT) describes a set of smart devices connected to one network. The most popular smart devices supply chain businesses use are sensors, scanners, thermostats, cameras, and robotics. They foresee the opportunity to track inventory and maintain warehouses.

Implementing robotic actuators and automatic guided vehicles enables the opportunity to move items automatically or create dark warehouses, 100 %-automated storage facilities. Also, smart sensors can alert you about emergencies like leakage, fire, or unauthorized access.

Problems Solved Feature Application
Insufficient inventory traceability Real-time data collection from sensors
Manual storage facility environment check and management Item tracking and automated scanning
Lack of real-time data on work-in-progress inventory Centralized warehouse control and management
Manual item scanning, picking, packing, and transportation Automated item picking, packing, and transportation
Increased level of errors Smart storage environment control

Read also:

6. Automated Item Quality Check

Ensure received and distributed items have no defects and match defined quality standards. To inspect inventory, incorporate diverse devices like cameras, weight scales, temperature sensors, or computerized tomography (CT) scanners.

Problems Solved Feature Application
Delivery of damaged or defective items Custom item inspection workflow creation criteria establishment
Increased wastage or return rates Automated inventory inspection
Regulatory compliance standards violation Inventory quality check results collection and analysis 
Ineffective manual random sampling inspection Alerts on items that haven't passed an inspection
Time- and resource-consuming quality control process Regulatory compliance standards check

7. Automated Workflows

Optimize the performance of the labor force and decrease the number of errors by implementing automation. Create custom rules that trigger actions when specific conditions are met. The feature implementation helps automate a lot of processes like item scanning, barcode creation, data update, transfer request creation, and others.

Problems Solved Feature Application
Manual data entry, order management, and document creation Automated order processing and transfer request creation
Increased manual error rate Automated Inspection and return of defective items
Timely item sourcing and order fulfillment Documents and form pre-population
Manual customer and vendor communication Automated picking and transfer of expired items to a disposal unit
Manual item sorting and return Automated message delivery to customers and vendor

8. Bundles and Multiple Price Tiers

Create custom offers and implement loyal customer price tiers. Using this feature, you can create product kits by bundling a group of items into a single unit. Also, the feature foresees the opportunity to set custom discounts or multiple price tiers to enable adjustable pricing strategies.

Problems Solved Feature Application
No membership or loyalty programs Product kitting
Inflexible pricing strategies Quantity-based discount
Insufficient upselling and cross-selling Custom discount creation
Decreased customer satisfaction Customer segmentation
No bulk sales opportunity Item cross-selling suggestions

Take your IMS to the next level with advanced features


The CodeIT team has hands-on experience in creating software with advanced inventory management system features.

ConnectSx - Inventory management system

Learn more about ConnectSx, the solution created by our team from scratch.


The client was unsatisfied with the internal processes' inefficiency. Medical staff used spreadsheets to track and manage inventory manually. The processes were time-consuming, with a high risk of making an error.

The client has hired the CodeIT team to develop an efficient digital solution.

The client has hired the CodeIT team to develop an efficient digital solution.


Our team has tapped into the existing solution development. Providing custom software development services, we've analyzed it and prepared a detailed project reboot plan. 

Our team has created three standalone applications:

  1. Web inventory management app 
  2. Mobile inventory management app 
  3. Mobile UDI scanning app

Using the developed web and mobile applications, users can:

  • Manage and trace all the inventory items 
  • Import data from external sources
  • Track medical product expiration dates
  • Collect inventory data and analyze it
  • Search lost items
  • Submit transfer requests
  • Scan barcodes to discover detailed information

Deep dive into the project and discover the application development processes with every step highlighted in our case study.

Case study:


Take the guesswork out of inventory management software development with best practices.

Pick Optimal Tech Stack

It's vital to pick the right tech stack for developing a new system due to the limitations of technologies used in inventory management. Choose the most optimal solution to:

  • implement inventory management system features
  • stay on track with budget
  • release features within a defined timeline
  • enable the opportunity to scale up and upgrade

For example, by considering the native app development approach, a business needs to create two distinctive applications involving two teams of software engineers. However, by opting for a cross-platform system, they may develop an app that works on different platforms using one codebase.

Read also:

Understand Business Challenges and Bottlenecks

Focus on implementing inventory management software features that solve the most critical business challenges. Unlock the true potential of your business by eliminating bottlenecks in workflows.

New features of an effective inventory management system should deliver feasible outcomes or solve business problems.

Define Inventory Management System Features List

For starters, you have to consider the key features of an inventory management system to implement. Focus on critical functionality to create a system's MPV. It can be further enhanced with other less critical but helpful features.

Create a list of the most important features that should be presented in a product's MVP. Other features should be prioritized to develop and release the most valuable functionality first.  

Enable Real-Time Data Sharing

Real-time data sharing helps create centralized software that fetches data from multiple sources. Also, it helps manage inventory across multiple facilities.

The most popular ways to enable real-time data exchange between systems is by using:

  • API integrations. The application programming interface comprises a set of rules that enable developers to connect software from different vendors.
  • Centralized data repository. An on-premises or cloud-based server can collect all the data across a supply chain and share it with other systems in live time. Besides, data can be preprocessed to improve the performance.
  • Point-to-point synchronization. A direct TCP/IP connection between two software applications for real-time data exchange.

The development of additional data mapping tools may be required to connect third-party systems.

Consider Scalability

Having a long-term strategy is important when developing a new solution from scratch. The two software architecture options to choose from are:

  • Monolith: Easy to build core functionality. However, the more solutions' complexity increases, the more challenging it is to add new features.
  • Microservises: Requires more effort to develop inventory management software with the baseline functionality. New features can be easily added as distinctive microservices, even if they are built using different technologies.
Read also:


The key features of an inventory management system that help enable the baseline functionality are:

  • Inventory tracking
  • Identifiers issuing and scanning
  • Order management
  • Item storage management 
  • Reports and analytics
  • Backup and data import/export

The advanced inventory management system features that help enhance the functionality of the existing software are:

  • Automated re-ordering
  • Third-party software integration
  • Multiple-location management
  • Demand forecasting
  • IoT-driven inventory management
  • Automated item quality check
  • Automated workflows
  • Bundles and multiple price tiers
Need IMS with a custom feature set?
What is real-time inventory tracking, and why is it crucial?

The real-time inventory tracking and control software enables continuous visibility across a supply chain. Trace the movement of items in live time. Receive instant updates on in-stock/out-of-stock inventory, detected issues, processed orders, etc.

How does an inventory management system assist with order fulfillment?

The feature helps enable automatic order fulfillment capabilities by checking in-stock inventory before accepting a new request. Also, the feature helps reserve items, track their processing statuses, and automate workflows.

What role does demand forecasting play in inventory management?

This inventory management system feature helps avoid stockout and overstocking by creating data-baked product sourcing strategies. Demand forecasting features help predict seasonal demand spikes and trend changes or detect repetitive patterns in customer behavior.

What is the significance of barcode scanning functionality in inventory systems?

Barcode scanning helps increase item sourcing, picking, and management efficiency and speed. Also, it reduces the risk of human error and eliminates the need to enter data manually. A barcode or QR code can contain encoded detailed information about a product.

How does inventory reporting help businesses make informed decisions?

Inventory reporting tools help pre-process collected data and deliver useful insights. Businesses can use detailed analytics to define bottlenecks and track the results of their strategy adjustment decisions.

What is inventory automation, and how can it benefit my business?

Automation helps optimize inventory management processes by reducing the amount of manual input required. The main activities that can be automated are:

  • Barcode scanning and label issuing
  • Inventory tracking
  • Order processing and management
  • Item picking and packing
  • Inventory receiving, replenishment, and returns
  • Item inspection
  • Vendor and customer communication
What are some best practices for implementing an effective inventory management system?

The best practices for implementing an inventory management system that matches 100% of business needs are:

  • Optimal tech stack selection
  • Business challenges and bottlenecks identification
  • Inventory management system features list creation and prioritization
  • Real-time data-sharing functionality development
  • Product scalability opportunities identification

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