Open source inventory management: Pros, cons, and when to choose a cloud-native alternative

Inventory management is a fundamental process for fulfillment providers, especially for fast-scaling companies. It’s the process of buying, sorting, storing, and selling your business’s inventory across all stages of the supply chain.

Inventory management enables you to hold the right stock levels at the right place and time. However, when the order volume increases and businesses enter new markets, managing inventory manually becomes rather challenging.

Dedicated software helps resolve this issue by automating critical manual processes, performing the role of inventory management accurately and efficiently. The only question is, which software to choose when switching to automation?

The two most common options include open source inventory management software or a cloud-native solution. While the first excels in customization options and has no licensing fees, it may not always be the best option.

This article explores the benefits and drawbacks of open source inventory management software and when to switch.

What is open source inventory management??

An open source inventory management solution is software with publicly available source code. Having access to source codes allows you to tailor the software to complement your company’s unique inventory management workflows. 

You can deploy open source inventory management software in the cloud or on your company’s local servers to take control of your inventory data. 

Open source inventory management software can work for fulfillment providers regardless of size. However, small and upcoming ecommerce providers and 3PL partners are more fond of it, thanks to its perceived cost-effectiveness.

Advantages of open source inventory systems

These are the biggest benefits of using open source inventory management software in your business.

Low upfront cost and no licensing fees

The software is free to use with zero licensing costs. However, you will incur fees if you opt to engage a professional to customize the software and tailor it to manage specific inventory duties like creating asset labels. These fees can quickly become costly. The other upfront fee involves buying related hardware and accessories, like barcode scanners that integrate with the software.

Open source inventory management software can be a cost-effective option, considering the costs of proprietary inventory management software. Additionally, the top open source inventory management solutions have vibrant community support groups where seasoned users and developers share insights, ideas, solutions, and bug-fix updates. You can leverage the free insights from such groups to optimize your software and achieve peak productivity. It’s a reliable strategy for improving profits with inventory management solutions.

Full control over features and customization

Fulfillment providers enjoy full customization over their open source inventory system because the source code is readily accessible. This is a big plus because fulfillment demands evolve fast, driven by new consumer trends.

For instance, you can tweak existing codes or add new modules to the system to prep it for integration with a new ecommerce system. Creating these features/code from scratch enables you to adapt your software to meet the demands of any new workflows.

Data control and transparency

Open-source inventory management software provides you with greater control over the ownership of your inventory data. You control when to run security patches, who has access to your data, and how to audit codes to achieve and maintain compliance with industry regulations, such as the General Data Protection Regulation (GDPR) or relevant internal control standards.

Such flexibility helps dev teams customize the inventory management process for greater efficiency and productivity. Additionally, it’s easier for third-party auditors or tech-savvy users to audit the code’s quality and integrity, building trust in the software’s transparency.

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Limitations and risks of open source inventory management

Unfortunately, the advantages come with their own costs. Whether that is in the need for tech-savvy developers on staff or potential downtime during updates.  The risks of using open source software include:

• High maintenance and support burden: After selecting a solution, you’ll need an internal developer to write code to customize it and integrate it with other external applications. The more you grow your business, the more extensive maintenance and support levels you’ll require.
• Security vulnerabilities and update lags: It’s easy for bad actors to access the public source code and infiltrate the system with malicious code, jeopardizing its functionality. Additionally, you’re more likely to experience continued lags if you update the software incorrectly, like testing system updates live instead of on a staging environment.
• Integration and scalability challenges: Every time you expand your fulfillment network, you also need to update the software. This can create delays and hinder your growth if you run into integration or security challenges, such as using the wrong PHP version.

Open source vs. cloud-native inventory management

An open source solution typically stores data on your local IT network, allowing you to access the data via your local computers or servers. Conversely, a cloud-native inventory management system stores and processes data on a remote network, accessible via the internet. 

Here are the main differences between the two options:

• Real-time visibility: A cloud-native solution offers higher visibility because it uses modern cloud infrastructure that offers quick remote connectivity as long as there’s an internet connection.
• Built-in automation and reporting: Automation and reporting features are built into a cloud-native solution, making them readily accessible for immediate use. Open source solutions offer you the environment and flexibility to design unique automation features.
• Cost of ownership over time: Open source solutions have low upfront costs but high long-term costs, while cloud-native solutions have higher upfront costs and low long-term costs. 
• Multi-warehouse sync: You need to program this feature into an open source solution, while a cloud-native solution has it built in, syncing automatically.

Speed to value: You’ll take longer to realize value from an open source solution, and you’ll need more human effort. Conversely, you can reach value faster with a cloud-native solution as long as you select the right one.

When to choose a cloud-native alternative

Like many fulfillment providers, you may opt for open source inventory management software when you’re starting your business. However, as you scale your company, your inventory needs will ultimately outgrow the solutions offered by an open-source system. You’ll notice signs such as:

• Persistent lagging/crashing, especially during peak periods 
• Loss of real-time inventory visibility
• Constantly reverting or referring to your manual inventory records
• Poor or a lack of integration with standard business systems, like a customer relationship management system

Such signs will prompt you to transition to a reliable cloud-native solution. Schedule a demo of Logiwa’s AI-driven digital warehouse management software and discover improved inventory accuracy and visibility, seamless barcode scanning and labeling, and dynamic integration with top eCommerce platforms.

FAQs about open source inventory management