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Q: Our business processes hundreds of transactions a day. What is the best way to manage and track inventory for a small business that can't afford to pay the expense of an intricate inventory system?

Chris Gronkowski, owner
Everything Decorated

A: Based on this question, I believe you are asking two separate, but related, questions. If you are talking about point-of-sale tracking of inventory sales, I think several low-cost solutions exist on the market to record these types of transactions.

Since your website runs on the Shopify platform, the e-commerce piece is easily integrated with products like QuickBooks and Zoho accounting software. These software solutions are offered on a monthly basis and are fairly inexpensive. Their more-expensive services would allow you to track your inventory in the system, as well. Most of these systems can be purchased on a subscription for less than $100 a month per user.

If you need more advanced inventory tracking capabilities that allow you to track a large quantity of inventory through your entire supply chain, your organization will have to purchase software with additional capabilities.

There are several solutions, such as Fishbowl — that can be found with a quick search — for less than $5,000 or $10,000. These software solutions usually work in connection with a program like QuickBooks.

More important than your software choice is that you establish your measurement system related to your inventory management in the supply chain.

What are the important measurements that are needed to fulfill customer demand? These measures will help shape the information you need from your software system.

The true cost is the integration of the system, not the original purchase of the software. The more complexity in your supply chain and operations, the more the software integration will cost. For example, if you need a way to physically track inventory and need to add a bar code system, it will add a substantial amount of complexity to the system. Simple solutions using spreadsheets can be developed, but will lack the ability to scale up if your company grows.

John Olson is a professor of operations and supply chain management at the University of St. Thomas Opus College of Business.