How to Build an Inventory Management System: Ultimate Guide for 2025

Development

Digital Transformation

January 29, 2025

How to Build an Inventory Management System: Ultimate Guide for 2025

Inventory management software started with paper and then electronic Excel spreadsheets. It was only with large-scale e-commerce development that it continued to evolve into a complete inventory system that takes modern business to a new high level.

Not long ago, the global inventory management software market was estimated to be worth USD 2.31 billion in 2024. However, it is forecast to fluctuate closer to $2.51 billion in 2025. Statistics confirm the demand for effective inventory management solutions that will solve the challenges faced by modern businesses. As experts in this field, the Artkai team has prepared a guide in which we will tell you about the features of an inventory management system and when it may be necessary for your business.

Inventory management software in a nutshell

Inventory management software (IMS) is a unique digital solution that mainly monitors and controls the company's inventory levels. This practical approach is used primarily in wholesale, retail, logistics, and other areas where the main focus is tracking products and sales.

The inventory management system is designed to ensure that the company has all the resources to meet market needs and can effectively manage a large number of stocks.

In a broad sense, implementing such a system is necessary to track product movement throughout the supply chain and interact with related business systems.

Benefits of using inventory management software

It is clear that the necessary inventory involves a large number of units. Sometimes, if you take inventory manually, the process can take hours or even days.

If you use inventory software, it will significantly automate and speed up the process, allow you to control important financial data, and avoid human error. Below, we'll look at the main benefits of using an inventory management solution for a productive business.

Improve inventory tracking

To manage your warehouse efficiently and effectively, you must keep track of your inventory and order statuses. Therefore, the use of custom inventory management software can eliminate problems with inventory tracking and replenishment due to several technical aspects:

Centralized real-time management. Inventory software can integrate with databases and ERPs and provide up-to-date information with constant updates on the availability or movement of products depending on the main activity of the enterprise.
Automation of order processing. Automatic updates with product data and status can reduce the processing time of new orders and process new ones faster. Integration with POS systems and e-commerce will ensure fast order fulfillment.
Alerts and analytics. When real-time inventory tracking is provided, one of the most successful applications of automatic notifications is when there is a critically low stock level or technical problems in supplying goods.

This approach will allow you to quickly respond to any changes and comprehensively improve the positive dynamics of logistics processes.

Cut stockouts and overstock

When there is a shortage of goods or their excess, it can lead to potential problems. For example, stockouts can lead to a loss of sales, while overstocking can freeze capital and increase the cost of storing products and their aging.

Therefore, another benefit of implementing a good inventory performance process is to reduce shortages or overstocks.

Reorder point optimization can be used to successfully implement this process. This in your inventory management software will allow you to calculate the most profitable order points based on actual demand indicators. This way, you can ensure the necessary balance by observing standard stocks and minimizing inventory costs.

Boost productivity

To ensure the company's high productivity and yield the expected results, a well-designed and implemented inventory system should speed up routine processes, constantly scan and count inventory, optimize order processing, and integrate directly with ERP and CRM systems.

Implementing this process should involve coordination between departments to ensure smooth operation. Another aspect of increasing productivity is integrating RFID technology and barcode scanners for faster scanning and counting.

What will this do to increase revenues? Undoubtedly, reduced operational costs will allow you to focus on more global and strategic valuable insights.

Leverage precision from automation

Another key feature when using inventory tracking software is maximizing the accuracy of the data entered. A customized solution can collaborate with related business platforms for automated data transfer, eliminating the need for manual entry.

This will allow you to have a centralized management system with synchronized important financial and logistics data. Webhooks and API integrations will also allow information to be exchanged without human intervention, which will avoid the risk of human error.

Algorithms for data validation in supply chain processes will help identify anomalies that may be caused by system discrepancies. Automated auditing, which can help identify sources of possible errors and trace the history of changes in inventory management, will also help.

Predict demand with pinpoint accuracy

Modern inventory management software with an inventory management application can cover many business needs, such as analyzing historical data, identifying trends, forecasting, and improving competitiveness.

Customized solutions use machine learning and artificial intelligence to forecast demand and increase competitiveness. This allows us to identify patterns, focus on seasonality, and pay attention to behavioral factors and macroeconomic indicators.

Forecasting systems integrate with supply, management, and production modules to create procurement plans that account for potential product demand.

This can have a positive impact on a company's competitiveness through several advantages: optimised finances, increased control over the supply chain, quick response to the market.

Enhance decision-making

Inventory software can provide analytics and detailed reporting so that the customer company has a comprehensive view of inventory levels, product turnover, and sales trends.

This advantage is realized through the main aspects:

Assessment of efficiency, including avoiding excessive storage of goods with a loss of need.
The ability to identify problem areas in the supply chain early, such as production disruptions or inefficient logistics.
Dashboards with the necessary business metrics are available. Custom inventory system development can guarantee the ability for managers and employees to analyze work processes, as they will be able to see the level of order fulfillment and financial metrics to make informed decisions for business development.

Integration with other critical systems

It is important to note that the full use of inventory management software is impossible without integration with other systems. For example, working with ERP, CRM, or e-commerce platforms will guarantee the integrity of the business's information environment.

The primary integrations that can be included in customized inventory management software and serve as a significant competitive advantage are:

Logistics and WMS (Warehouse Management System) solutions. Connecting to such systems for logistics and warehouse management makes it possible to improve delivery routes, speed up order processing, and automate these processes.
Financial Software. For example, integration with QuickBooks, SAP, or Xero can optimize cost and tax calculations and improve financial transparency, reducing the risk of reporting errors.
CRM systems. This will provide ways to link customer data to actual product balances and availability status. This will add advantages in analyzing consumer trends and increase the practicality of order fulfillment.

The Artkai team focuses on creating practical solutions for our customers. Our business strategy is to build products that will meet expectations and help expand the market.

Therefore, we understand the benefits of implementing specific systems in modern enterprises to achieve their business goals. In one of our materials about Top 20 Diverse Enterprise and Business Solutions, we gave examples of how any business can thrive with the help of well-chosen and applied software solutions and recommendations.

In particular, we have also successfully worked on the development of custom inventory management software for an e-commerce platform.

In the following, we will look at the main types of inventory management systems. Choosing the right type can meet most of the inventory needs and help you understand which category should be used for different business niches.

The most common types of inventory management software

To successfully select inventory management software, you must understand the dependencies of business specifics, the likely volume of operations, and the requirements of a particular niche.

Inventory systems can be divided into general-purpose systems and industry-specific systems. General-purpose systems are more versatile and suitable for many business areas related to procurement and tracking of goods.

Meanwhile, industry-specific systems are developed focusing on the specifics of particular industries, such as manufacturing, pharmaceuticals, retail, and others. Therefore, their systems include specially developed modules that are tailored to their needs.

Complex inventory systems

Custom inventory management software. Inventory software helps create solutions with different functions to meet your company's specific needs. This includes analytics and reporting, inventory database management, product management, custom order management, supplier and purchase order management, and inventory control. As a result, this will primarily result in lower operating costs and faster adoption of strategic decisions, such as analytics to track KPIs.
Warehouse Database. A database is a central repository for an enterprise's inventory data. It allows companies to meet performance goals and balance inventory costs and risks. Inventory data storage and navigation, inventory database management, inventory control, and advanced data analytics are some of the main features we recommend building into an inventory management database.
Automated Inventory System. This type is relevant for large enterprises with extensive product inventories and complexly distributed networks. Such a system must have certain elements: inventory planning, accelerated SKU management, automated reverse logistics. This approach will save time and ensure resources are invested in core needs.
Automated Stock Control. To control stocks, it is worth considering the importance of using an inventory management system. Depending on its features, this type of system will ensure cost control and optimal cost of goods. A custom solution will be required to manage stock databases, a large number of goods, and sales orders. Also, depending on the business's specifics, it is worth integrating inventory management software with CRM, ERP, or SRM in this case.
Stock Counting Software. In order to practically apply the stock counting method, it is worth focusing on the development of an IMS that relies on scanner, barcode, or QR code technologies. The main options for systems such as Stock Counting Software are warehouse, point-of-sale, and production counts. Therefore, such software may require handheld barcode or QR code scanners, computer vision counting, and RFID-based devices. Also, the main functions of Stock Counting Software should be inventory control by the above means, automated counts, and full reporting with analytics of weaknesses.
Inventory Management. Inventory Management applications are mainly based on helping businesses avoid inventory overstocks and rebalance if there is a shortage. In this case, effective custom inventory management software should be implemented through the functions of optimal calculation and data analysis, contain a model of inventory optimization, and have regulatory analytics. Of course, these comprehensive systems apply to most businesses, warehouses, consumer goods, and electronics. At the same time, industry-specific types are designed to be developed and applied to specific niches that require unique solutions based on requirements and needs. Let's look at what industry-specific inventory management systems can be and what they can do to particular niches.

Industry-specific systems

Retail inventory systems. Businesses focusing on retail use them to control different channels and locations, such as warehouses, physical stores, and online stores. They often include built-in features such as artificial intelligence, omnichannel sales tracking, customer loyalty programs, barcode scanning, and point-of-sale. An example of such a system is Lightspeed Retail, which has POS functions and loyalty support. This off-the-shelf SaaS solution does not require development from scratch but can serve as an example for specific niches.
Production inventory systems. Systems of this type are used for distributing goods and controlling them. The main features of such systems are picking and assembling, order transfer management, and a list of required materials. It's worth noting that off-the-shelf solutions, such as SAP Business One, may be limited for your business due to the clearly defined set of functions. A custom solution can be integrated with your own MES or WMS, and specific algorithms can be applied to forecast demand or production lines.
Healthcare inventory systems. This type of system is relevant for companies engaged in medical services. It will help businesses manage stocks of medicines, equipment, and goods. In this case, the main functions may include regulatory compliance management and tracking expiration dates and serial numbers. It is worth noting that one of the best and most effective practices for your company is to use custom inventory management systems, as such a system will be fully adapted to your business's key features.

Although it is more expensive than implementing third-party software, it avoids many unnecessary costs, makes integration with internal systems easier, and, above all, increases the quality and value of your enterprise. Creating a high-quality product or enterprise and its further development is an ongoing issue that should be systematically addressed.

Depending on the specifics, it involves different strategic directions, but the long-term growth strategy, main barriers, and technological infrastructure remain always relevant. Therefore, understanding this business stream and its main goals and obstacles is worth keeping abreast of the modern IT market.

For this purpose, the Artkai team, based on many years of experience, has created a Roadmap that explains in detail the features of developing high-end products for compliance and ROI. We focused on real cases with their specifics and prepared actionable recommendations for implementing your business ideas.

Step-by-step inventory management software development process

Developing custom inventory management software requires the technical knowledge and strategic vision to understand the processes.

Not all companies should focus on software development only instead of other significant strategic tasks. Therefore, to implement this critical tactical move, it is worth turning to technical outsourcing teams that can fully take over the technical component and execute all business needs, considering time and financial resources.

The entire IMS development process includes several essential stages:

Advisory

At this initial stage, an experienced team that will develop the IMS meets with the customer to understand the needs, define the implementation goals, and obtain a list of desired functions in the inventory management software.

The main goal of the consultative stage is to collect information, deeply investigate the enterprise's needs, and suggest ways to develop and solve the identified issues. After that, a project plan is created to turn the requests into specific goals. This includes the technical part with the appropriate technology stack and UI/UX design.

UI/UX Design

The inventory management system must be designed with the user personas in mind so that it is relevant to business needs.

It is important to emphasize that this process should be based on the gradual development of prototypes and wireframes. This is because constant research during project development can change user flows. For the design to be successful and intuitive for its target audience, qualified specialists should focus on user flow analysis and information architecture.

Wireframes and high-fidelity prototypes are primarily created using Figma, Adobe XD, or Sketch. As a result, it will allow you to test hypotheses and improve user experience practically.

Software Development

This stage involves developing the technical component with the necessary frontend and backend components and building interaction through APIs.

On the frontend, this is implemented with the help of:

React, Angular, and Vue - to create and then correctly display a user-friendly web interface. This is necessary to display accurate inventory data in tables, graphs, and interactive dashboards.
TypeScript is best used for large corporate systems. However, this programming language can also be used in the context of IMS for scalable logistics companies.
The Pixel Perfect approach will ensure that the development is consistent with the approved interface layouts and that the displayed UI on different devices is correct in the future.

The backend component for inventory management software should support faster request processing and integrate with other business systems.

The backend is built using Node.js, .NET, Java, and Python. It processes operations such as order creation, inventory updates, supply management, and analytics.
GraphQL and REST APIs facilitate flexible data exchange between modules, including IMS, ERP systems, marketplaces, payment gateways, and suppliers.
SQL and NoSQL databases store information about products, suppliers, sales, and inventory operations.

The infrastructure component of IMS development must ensure data security and reliable and fast query processing.

The following tools and systems implement this component:

Docker, Kubernetes (K8S), AWS, and Microsoft Azure enable flexible system deployment in the cloud or local servers, allowing for scalability based on load requirements.
Grafana, Kibana, and Prometheus are tools for performance monitoring, error detection, and log analysis.
To ensure the stability of all features during automated API and UI testing, Selenium, Jest, Mocha, and Postman are used.

Testing

At this stage, your internal or outsourced technical team begins working on developing and testing your inventory management software. They troubleshoot issues and gather feedback. This agile method allows you and your developers to work together and will enable you to add new features and improvements gradually.

A comprehensive quality assurance strategy combines different testing methodologies that address different levels of verification:

Unit Testing – Tests individual components and functions to ensure they work correctly. Typically implemented using frameworks such as Jest, Mocha, Chai, and AVA for JavaScript applications, as well as JUnit, NUnit, and PyTest for backend services.
Integration Testing tests the interactions between modules and APIs, ensuring smooth data flow and functionality across the entire system. Tools such as Postman, Selenium, Nightwatch, and Loader.io automate API and UI interoperability testing.
User Acceptance Testing (UAT) ensures that the software meets end-user expectations and business requirements, conducted in real-world scenarios before final deployment.
Performance and Load Testing measures the stability and responsiveness of the system under high loads, using tools such as JMeter and Loader.io to simulate real-world traffic conditions.
Security Testing – Identifies vulnerabilities and ensures compliance with industry security standards using tools such as OWASP ZAP, Burp Suite, and various automated penetration testing tools.

Deployment

The deployment phase is critical for a smooth transition from development to a fully operational system. This process includes setting up the necessary infrastructure, servers, and databases and configuring and optimizing the software for production use.

Key steps include:

Provisioning Environments: Setting up cloud or on-premise environments using AWS, Microsoft Azure, or Google Cloud to ensure reliability and scalability.
Containerization and Orchestration: Deploying applications with Docker and managing workloads with Kubernetes to achieve efficient scaling.
Database Configuration: For secure and efficient data storage, establishing SQL (PostgreSQL, MySQL) or NoSQL (MongoDB, Firebase) databases.
CI/CD Pipelines: Automating software releases using tools like GitHub Actions, GitLab CI/CD, or Jenkins, which reduces manual work and minimizes deployment risks.
Security and Monitoring: Implementing encryption and access controls and utilizing tools like Prometheus, Grafana, and Kibana for real-time system tracking and issue detection.

An experienced team can leverage automation, cloud solutions, and best security practices to ensure your software is stable, optimized, and production-ready with minimal downtime.

Support and Maintenance

At this stage, the team provides ongoing support to ensure the inventory management system works correctly and brings positive dynamics to the enterprise.

Also, the following components can be included:

Performance Monitoring: the team continuously tracks system health using Prometheus, Grafana, and Kibana to detect and resolve issues early.
Bug Fixes and Issue Resolution: address errors, crashes, and performance bottlenecks to maintain a seamless user experience.
Security Updates: Regular patching and enhancements are performed to protect against vulnerabilities and ensure compliance with security standards.
Feature Enhancements: implement new functionalities and improvements based on user feedback and business needs.
Scalability and Optimization: adjust infrastructure and system configurations to handle increased workloads efficiently.

With proactive monitoring, automated updates, and dedicated technical support, an experienced team helps your software evolve alongside your business, ensuring long-term success.

Thus, it is worth considering that the IMS development process is complex and multi-level and requires deep expertise from specialists.

Due to the complexity of the process, cooperation, even at the consulting stage with an experienced team, will be the most profitable solution. The Artkai team in the material Tech Consulting Services: Benefits for Your Business focused on explaining IT technology consulting, which can take the business to a new level in the modern industry.

With the development of cloud technologies such as AI, BI, and IoT, new ways are emerging for optimizing and increasing the efficiency of inventory systems. Therefore, it is worth paying attention to technological trends when developing inventory-tracking software to remain a competitive enterprise.

Below, we will consider the main trends of 2025 that are worth considering and explain how they can affect your enterprise's business efficiency.

Tech trends in inventory software development you should adopt in 2025

AI and ML

Artificial Intelligence (AI) and Machine Learning (ML) are crucial in developing inventory management software and are increasingly integrated into inventory applications. AI in logistics has numerous applications; for instance, it can automatically adjust inventory levels, optimize replenishment processes, and predict future demand changes.

The incorporation of machine learning enables inventory management systems to process large amounts of data and uncover hidden patterns. These systems continuously learn from past data, allowing them to improve their performance over time.

BI

Business Intelligence (BI) tools integrated into inventory management software offer actionable insights through data visualization, reporting, and analytics. These capabilities enable businesses to identify trends, optimize inventory performance, and make informed decisions that enhance operational excellence and competitiveness.

Advanced analytics tools, including business intelligence and data warehousing, improve the accuracy and predictability of stock turnover.

IoT

Connecting devices and sensors through the Internet of Things (IoT) allows for real-time monitoring of inventory levels, location tracking of goods, and automated data collection. Integrating IoT into innovative inventory management software enhances visibility and control over warehouse operations, resulting in improved order fulfillment and greater inventory accuracy.

So, even if your company has inventory management software, it doesn't mean that it doesn't need to be improved. After all, outdated software can greatly slow down operational processes and reduce efficiency.

In order to occupy top positions in its niche, the IMS must be maintained in good condition and constantly updated, adding new functionality, integrating cloud solutions, and increasing automation. Such an approach will ensure progressiveness and high results.

Also, your company's priority is effectively implementing AI technologies into corporate systems. In that case, integrating AI into your enterprise software will answer the technological trends that should be added to your system to make it fit for modern business. - requirements.

In its work, our team focuses on creating solutions that provide high results and benefits both at the finish line and in the process.Next, based on the practical experience of Artkai specialists, we will consider in more detail the features of creating inventory management in cooperation with our clients.

Our Expertise and Success Stories

A cloud-based inventory solution

One of our successful cases is BeverageX, a custom cloud-based inventory management system that we developed for a business operating in the beverage production and distribution niche.

The project's main objectives were to create a cloud-based tool to automate and process the work of suppliers and retailers. Also, to create opportunities for purchasing private labels for big and small stores through crowdsourcing.

Developing an inventory management system for Beverages presented a challenge that required a scalable, secure, and productive solution. We designed a microservice architecture that allows for easy expansion of functionality and adaptation to business needs. Using Node.js and NestJS, our REST API ensures high performance and rapid module interaction. We selected PostgreSQL to store large amounts of data, allowing efficient database management. To guarantee stable operation even under high loads, we implemented AWS infrastructure with Kubernetes, enabling us to scale the system according to changing business demands.

The frontend plays a crucial role in user experience; therefore, we developed an intuitive web interface using React and TypeScript. This design allows users to access real-time dashboards, view inventory updates, manage deliveries, and interact with other system modules through an integrated API.

Recognizing the importance of tracking available products and predicting future needs, we incorporated AI analytics to analyze historical data, seasonal trends, and external factors. This implementation helps the company make more informed purchasing decisions, reducing the risks of product shortages or surpluses.

To ensure the system's smooth operation and security, we employed Amazon CloudWatch, ElasticSearch and Grafana for real-time performance monitoring. Additionally, we implemented Role-Based Access Control (RBAC) to manage access at different system levels. Automated testing using Jest and Selenium guarantees the stability and functionality of each module, making the system reliable even under heavy load.

As a result, Beverage received a flexible, scalable, and secure cloud-based inventory management system that automates inventory management, optimizes logistics processes, and supports effective business growth.

We created a market solution that connected all four business levels: distributors, suppliers, retailers, and brands. Thanks to our assistance, crowdsourcing under private labels, advanced ordering and product management, and close monitoring of sales and market trends were all possible.

Digital Platform for antique dealers to sell across multiple marketplaces

Antiques Marketplace combines the functions of a marketplace and an inventory management system (IMS), providing a unique solution for selling antiques. The primary challenges include managing a dynamic inventory, automatically updating stock, integrating with logistics services, and forecasting demand. To address these issues, we developed a flexible microservice architecture using Node.js, PostgreSQL, RabbitMQ, and AWS, which ensures high performance and scalability.

The inventory system allows for automatic updates of product statuses, preventing duplicating or selling items that are no longer available. Using React and TypeScript, we created a user-friendly interface for sellers, enabling them to manage their catalogs, receive notifications about low stock levels, and utilize analytics for improved sales planning. The built-in AI analytics predict demand based on transaction history, while integrated dashboards in Grafana provide a comprehensive market overview.

With RBAC (Role-Based Access Control) and automated testing (Jest, Selenium), we have ensured high security and stability. As a result, the platform has improved inventory management efficiency, reduced instances of excess or missing goods, and offered sellers a flexible solution for sales automation and business scaling.

Conclusions

So, an effective inventory system is the main fundamental factor for businesses operating in the niches of manufacturing, logistics, retail, and marketplaces. Modern, adapted Inventory Management Systems can increase the operational efficiency of the enterprise, minimize human error, and automate all stages of production.

Therefore, the Artkai team, understanding the need for modernization or the creation of an IMS solution, is ready to share its experience and create a seamless system for productive work for our clients.