Inventory problems rarely start with bad intentions. They usually start with a lack of visibility.
A receiving shortcut here, a skipped scan there, a spreadsheet “just for safety,” and before long, no one fully trusts what the system says is on the shelf. That’s the problem Inventory Management Software (IMS) was designed to solve.
But understanding how inventory management software works is just as important as buying it. IMS isn’t magic. It’s a set of structured workflows that, when followed consistently, create accuracy, confidence, and control across the warehouse.
This article breaks down how inventory management software typically functions, why those workflows matter, and how companies benefit when they align their operations with standard IMS practices.
Why Inventory Management Software Exists
At its core, inventory management software exists to answer a simple question reliably:
What do we have, where is it, and what is it committed to?
As warehouses grow, spreadsheets and disconnected systems stop scaling. Manual updates lag behind reality. Errors compound. Inventory becomes something teams argue about instead of something they trust.
An IMS creates a single source of truth by enforcing structure around how inventory moves through the operation. When used correctly, it replaces guesswork with consistency and reactive firefighting with proactive planning.
What Inventory Management Software Actually Is
Inventory Management Software is a system designed to track inventory quantities, locations, and status in real time as items move through receiving, storage, picking, and shipping.
Unlike basic accounting tools, an IMS focuses on operational accuracy, not just financial totals. And unlike massive ERP systems, it often specializes in the physical movement of goods.
Most modern IMS platforms integrate with:
- Accounting systems
- Ecommerce platforms
- Shipping tools
- Manufacturing or assembly workflows
Popular platforms like Fishbowl and Katana are examples of IMS solutions that support these workflows while connecting inventory to purchasing, production, and fulfillment.
The Core Inventory Workflow: From Dock to Shipment
While features vary by platform, most inventory management systems follow the same fundamental workflow. Understanding this flow explains why IMS works when it’s used properly.
Receiving: Establishing the Truth Early
Everything starts at receiving.
Inventory is typically received against a purchase order, which tells the system what’s expected. When items arrive, quantities are verified, discrepancies are noted, and inventory is officially introduced into the system.
This step matters because it sets the baseline. If inventory enters the system inaccurately, every downstream process inherits that error.
Standard IMS practices at receiving include:
- Verifying quantities before posting
- Flagging exceptions immediately
- Avoiding “receive now, fix later” habits
Putaway: Giving Inventory a Home
Once received, inventory must be assigned a location.
Putaway isn’t just about organization. It’s about traceability. Inventory without a defined home becomes invisible the moment someone forgets where it was placed.
Inventory management systems enforce location discipline by requiring items to be put away into specific bins, shelves, or zones. This allows the system to answer not just how much you have, but where it lives.
Consistent putaway is one of the biggest contributors to long-term accuracy.
Storage & Visibility: Real-Time Inventory Awareness
Once inventory is stored, the IMS maintains real-time visibility. At this stage, the system tracks:
- Quantity on hand
- Quantity allocated to orders
- Quantity available to promise
- Optional attributes like lot numbers, serials, or expiration dates
This visibility allows teams across the business—warehouse, purchasing, sales, and finance—to rely on the same data.
When visibility breaks down, teams compensate with phone calls, spreadsheets, and manual checks. IMS exists to eliminate that need.
Picking: Guiding the Work
When an order is created, the IMS allocates inventory and generates pick instructions.
Rather than relying on memory or printed lists, pickers are guided to specific locations and quantities. This reduces mis-picks, short picks, and time spent searching for items.
Good IMS workflows make picking:
- Faster
- More consistent across workers
- Easier to train and audit
Skipping system-guided picking often feels faster in the moment—but it’s one of the fastest ways to erode inventory accuracy.
Packing & Shipping: Closing the Loop
The final step is packing and shipping.
Inventory is verified one last time before shipment, and the system decrements quantities in real time. At this point, the transaction is complete and visible across all connected systems.
When this step is skipped or delayed, inventory appears available when it’s already gone—one of the most common causes of overselling and backorders.
Why These Workflows Matter in a Warehouse
Inventory management software works because it creates repeatable discipline.
Every skipped step introduces ambiguity. Every workaround creates a gap between reality and the system. Over time, those gaps compound into distrust.
When workflows are followed consistently:
- Errors are caught earlier
- Training becomes easier
- Accountability is clearer
- Speed improves because people stop second-guessing the system
Ironically, structure often increases speed—not the other way around.
Standard Practices Found in Most IMS Platforms
Most inventory management systems share a set of best practices because they’re proven to work across industries.
These typically include:
- Barcode scanning instead of manual entry
- Location-based inventory control
- Cycle counting rather than annual shutdowns
- Clear separation between receiving, picking, and adjustments
- Full audit trails for changes
These standards aren’t arbitrary. They exist because they reduce error rates and make inventory behavior predictable.
What Happens When IMS Standards Are Ignored
When companies adopt IMS software but don’t follow its standards, problems usually show up quickly.
Common shortcuts include:
- Receiving inventory without verification
- Putting items “wherever there’s space”
- Picking without confirming locations
- Making bulk adjustments to “fix the numbers”
The result is inventory drift. Counts slowly diverge from reality, adjustments increase, and trust erodes.
At that point, the system gets blamed—even though the issue is almost always process, not software.
How Adhering to IMS Standards Benefits the Business
When companies commit to standard IMS workflows, the benefits extend far beyond the warehouse.
Purchasing improves because reorder points are based on reliable data. Sales gains confidence in availability. Finance trusts inventory valuation. Leadership makes decisions without caveats.
Inventory Management Software is often most successful when teams lean into their standard workflows instead of trying to bend them to old habits.
The payoff isn’t just cleaner data—it’s calmer operations.
How to Adopt IMS Workflows Without Slowing Down
One of the biggest fears around IMS adoption is that it will slow the warehouse down.
The key is phased adoption:
- Start with core workflows
- Keep steps simple
- Prioritize consistency over perfection
- Reinforce correct behavior daily
Training plays a huge role here. Teams don’t resist systems—they resist confusion. When people understand why steps matter, adherence improves naturally.
This is where structured, real-world training makes a difference, especially when it’s tailored to the actual warehouse environment, (LilyPad Onsite Inventory Training anyone?).
When IMS Workflows Need to Be Adapted
Standard doesn’t mean rigid.
Manufacturing, kitting, and high-mix environments may require workflow adjustments. High-volume distribution looks different than low-volume, high-complexity operations.
The key is adapting without breaking fundamentals:
- Inventory still needs locations
- Transactions still need confirmation
- Adjustments still need accountability
Flexibility works best when it’s intentional, not accidental.
Inventory Software Works When People Work With It
Inventory management software isn’t just technology—it’s a system of discipline.
When companies understand how IMS workflows function and commit to using them as designed, accuracy improves, stress drops, and inventory becomes a strategic asset instead of a constant problem.
The software doesn’t create control, the workflows do.
And when those workflows are supported by the right systems, training, and ongoing reinforcement, inventory management finally starts working the way it’s supposed to.