When we moved our inventory system off the server in the back office, the biggest change was that I stopped getting calls about the server. The counts were exactly as wrong as before, because they were still being keyed in after the shift ended.
The pitch for cloud inventory management gets two things right. Your team can reach the system from any site with an internet connection, and nobody in the building has to look after an inventory server. I'd make the move again tomorrow.
Moving to the cloud puts the software on a provider's servers. Whether the inventory record is right still gets settled on the dock and in the aisles, by whoever does the scanning or the typing. If you're still working out what kind of system you need, start with choosing a warehouse management system.
What is cloud inventory management?
Cloud inventory management is tracking stock with software that runs on a provider's servers and is reached over the internet, instead of software installed on a server you own. The provider looks after the servers, operating systems and network underneath, and your crew signs in from scanners, tablets and office computers.
That is the software as a service model in NIST's definition of cloud computing. The line I'd underline is that the customer "does not manage or control the underlying cloud infrastructure."
You'll also see it called cloud-based inventory management, cloud inventory software, a cloud inventory system or a cloud inventory management system, all names for the same thing.
NIST also points out that a private cloud can be run by the company itself and "may exist on or off premises," so the word cloud doesn't tell you which building the server is in. Buy inventory software as a service and somebody else runs the servers, wherever they sit.
Cloud vs on-premise inventory management
| Cloud (software as a service) | On-premises | |
|---|---|---|
| Where the software runs | The provider's servers | A server you own or lease |
| Who runs the servers, operating systems and network | The provider | You |
| How people reach it | Over the internet, from phones, tablets, laptops and desktops | Through your own network, or remotely over a connection you set up and maintain |
| What you still own | Your data, user accounts and the devices that sign in | The data, accounts and devices, plus the servers, operating systems and network under them |
| How it meets your ERP | Runs inside a cloud ERP or connects to the ERP. With an ERP on your own server, some products install a small program there to handle the exchange | Installed inside the ERP or on a server you run |
Read down the rows and two things change hands: who runs the servers, and how people get in. The data, the user accounts and the devices people sign in on stay with you.
I don't read that table as cloud good, on-premises bad. Warehouse software that runs inside an ERP lives wherever the ERP lives, whether that's a server in the building or the cloud. When I look at any setup, the first thing I ask is which system holds the inventory record and how the two systems talk to each other.
What moving to the cloud fixes
Access from every site and device
You reach cloud software over the internet from whatever you're holding: a handheld on the floor, a laptop in the office, a tablet in the second building. NIST's name for this is broad network access. With more than one site, every building signs in to the same system the same way.
I borrow my test from the post on one system of record across more than one warehouse. The person in the aisle with a handheld and the rep at a desk should see the same number.
No inventory server for your team to run
With software as a service, the provider runs the infrastructure, the operating systems and the network. Patching the server, replacing it when it dies and remembering how it was set up come off your list.
That mattered more to us than I expected. The one person who knew how our old server was set up retired the same quarter we moved, and I'd rather not think about how that quarter would have gone if we'd still been on the old box.
If your ERP stays on a server in the building, though, that server is still yours to run, along with anything installed on it to talk to the cloud system.
What the cloud doesn't fix
Late counts are the main thing a cloud move leaves alone. If counts go on paper and get typed in after lunch, cloud-based inventory software holds the same late number, and you can just see it from more places. Hosting decides where the record is stored, and when it gets written is still up to the people on the floor.
Most inventory problems I've dealt with were recording problems. Product moved, and nobody told the system until later, or ever.
Putting a spreadsheet in the cloud gets you a spreadsheet in the cloud. Counts get fixed by changing the process: scan each step at the moment stock moves. The post on the difference between digitization and digitalization goes further into it.
I also ask any system whether it sends the operator to the next bin or just records where they went. Cloud or on your own server, it can go either way.
A cloud move leaves these exactly as broken as they were:
- Counts written on a clipboard and keyed in at the end of the shift.
- A pallet received in the system to clear the paperwork while it still sits on the dock.
- The spreadsheet somebody keeps on the side because they don't trust the system. Ours belonged to the purchasing team, and they kept it going straight through our cloud move.
How cloud inventory software connects to your ERP
The cloud pitch usually skips the ERP connection. It's where I spend most of my time in an evaluation.
Warehouse software reaches an ERP one of two ways. Either it runs inside the ERP and writes to it directly, or it runs as a separate system and hands transactions over, often from the cloud. Endpoint sets the two side by side on its page about how warehouse software connects to your ERP, and its own products sit on both sides.
Endpoint Cloud is the connected kind: a cloud WMS that sends the work done on the floor back to your financial system. It is hosted in Microsoft Azure and links to NetSuite, QuickBooks Online and Sage 100. Where Sage 100 runs on a server in your building, a small agent installed on that server carries the data back and forth. Endpoint for Sage (for Sage 100, 300, 500 and Intacct) and Endpoint for Acumatica take the embedded route and run inside the ERP instead.
That means an ERP on a server down the hall doesn't rule out a cloud system. A connected system can also outlast the ERP: switch ERPs later and it stays, as long as it links to the new one.
Either way, the ERP keeps the financial record and the warehouse system records the physical work that changes it.
Then there's timing. Some connections post every transaction the moment it is recorded. Others run on a schedule, and a schedule can be measured in minutes or in shifts. Ask for the actual interval, workflow by workflow, from receipts to counts.
At a food distributor I worked for, someone keyed the whole day's counts into the ERP in one batch after second shift. Purchasing started every morning on the previous day's numbers, and a good part of my afternoons went to explaining why they were off. Timing has been my first question ever since.
Questions to ask before you move inventory to the cloud
Before you sign for any cloud-based inventory management software, get answers to these:
- Will it run inside the ERP or connect from outside, and how often does each workflow post?
- When a transaction fails to post to the ERP, who sees it, and where? I ask to see that screen in every demo I sit through.
- What happens on the floor when the internet drops? Have the vendor show you on a handheld.
- How many users and sites is it built for? You want what the product is designed for, which is a separate question from how far the provider's servers can scale.
- If we leave, how do we get our data out, and in what format?
- Which devices will the crew carry? Read up on a rugged mobile computer or a smartphone, then hand both to the people who will carry them and let them work the aisles before you decide.
FAQ
Does cloud inventory software work with QuickBooks?
Some cloud inventory software connects to QuickBooks, and the edition decides it. Endpoint Cloud connects to QuickBooks Online. With any vendor, name your edition (Online, Desktop or Enterprise) and get a straight answer for that one. Then ask which transactions post to QuickBooks (receipts, picks, counts) and how often. A connection that posts once a night leaves your books a day behind the floor, so get the interval in writing.
Is cloud inventory management the same as cloud supply chain management?
No. CSCMP's definition of supply chain management covers sourcing, procurement, production and logistics, plus coordination with suppliers, intermediaries, service providers and customers; inventory management is the narrower job of knowing what you have and where it is. For the wider view, see building supply chain resilience.
Is a cloud WMS the same as cloud inventory management?
Not quite. Cloud inventory management is the broad category: tracking stock with software that runs on a provider's servers. A cloud WMS is one kind of it, a warehouse management system delivered as cloud software. It records the physical work on the floor (receiving, putaway, picking, counts and shipping), directs some or all of it depending on the system, and either runs inside a cloud ERP or connects to the ERP that keeps the financial record.
Is cloud inventory management secure?
Cloud inventory management security is shared: the provider secures its infrastructure, and you secure your data, accounts and devices. That is how Microsoft's shared responsibility guide lays it out for its own cloud. Your inventory vendor may run on a provider like Microsoft, so ask the vendor where its half ends and yours begins. Removing access when someone leaves stays your job, so ask how quickly an administrator can do it in that system.
