Cloud Inventory | More than just a glossary

We’re about to launch a series of blogs centered on defining and differentiating many of the Cloud Inventory platforms out there. Sometimes, there are some new words to learn. At the bottom is a glossary that may be helpful to reference, but:

  1. Glossaries are boring, and I say that as someone who loves glossaries

  2. You’re smart, and you probably know half of it.

  3. We’ve got bigger things to talk about, like Cloud Inventory!

Cloud Inventory

In order for us to classify something as a true Cloud Inventory platform, it must do the following:

  1. Track Purchase Orders. There are a lot of nuances, but the minimum requirement for “tracking” would stipulate that you can record a Purchase Order, indicate how much has been received, and take record of how much you’ve paid on it.

  2. Record Sales Orders. Sounds simple, but tracking everything gets tricky when we get in the weeds. Knowing what was ordered, when we shipped it, and how much has been paid are the bare minimums.

  3. Know Inventory Levels. In order to do this properly, a platform must know about all Purchase Orders, all Sales Order, and all warehouses. If you have multiple types of fulfillment, this gets even more difficult.

  4. Have exportable CSVs or an accounting integration. The whole point of tracking all of this information is to run your business better, but also generate financial data. If that happens in CSVs, then we’re at a good starting point. Also, not all accounting integrations are created equal, but more on that later.

  5. Be “in the cloud.” Shocker, I know, but I have to state it. If you find a platform that requires you to download it to a computer to run, it’s not Cloud Inventory. It may be the best inventory tool you’ve met, but I’m not interested in playing with it. Your team should be 100% virtual and VPN’s should no longer be required.

What a cloud inventory is not

The list above looks pretty simple, but sometimes defining a product is best done by defining what it is NOT. I will use real products as examples.

  • ChannelAdvisor – While an amazing product for what it does, it is NOT a Cloud Inventory product. Why? It only tracks sales and SOME warehousing (not all), and then completely disregards Purchase Orders. They have an important niche, but Cloud Inventory isn’t it.

  • InventoryLab – It has “inventory” in the name, so it must be Cloud Inventory, right?? Nope. InventoryLab is awesome, but only caters to Amazon operations and would never be able to understand your entire network. They don’t track Purchase Orders, you’d have to manually update (and summarize) your non-Amazon inventory, and the financial data they produce only applies to Amazon. A great tool for sure, but not Cloud Inventory.


  • Vendor | A person or company that your company buys products or materials from. If you print books, then you probably buy paper from a place like Staples or Office Max. Staples and Office Max are your Vendors. You pay them money.

  • Customer | A person or company that your company sells products or materials to. They pay you money.

  • Catalog | The exhaustive list of all products and materials used or sold by your company.

  • BOM | Bill of Materials, or the list that describes how products are created or bundled. If I make a chair, the BOM for the chair might include: wood, screws, wood stain, and fabric. If I make gift baskets, the BOM for a gift basket may include: basket, shampoo, conditioner, face soap, and plastic wrap.

  • PO | or Purchase Order, is an order that you place to buy products or materials from your Vendor. This is the beginning of your supply chain, and where one might begin tracking costs. Not to be confused with Packing Slip or Purchase Invoice.

  • Packing Slip | Usually used for large shipments, and usually from Purchase Orders only. Just because you order 1000 units of ABC does NOT mean that you receive 1000 units of ABC at one time. Packing Slips provide documentation of when a product is received.

  • Purchase Invoice | A Purchase Order is a legal document indicating a desire for a product/material, but the Purchase Invoice is a legal record of what is actually charged. A Purchase Invoice may include additional charges, like Shipping, Tax, Customs, or other fees that may not be included on the Purchase Order.

  • SO | or Sales Order, or most often just called Order. This is where your company makes money, because the end customer is buying from your company.

  • Invoice | Most Sales Orders have a Sales Invoice where additional charges are added, but platforms like Shopify and Amazon may treat an Invoice and an Order as the same entity. When Invoices are used, they most often allow businesses to set different payment terms.

  • 3PL | 3rd Party Logistics is an outsource fulfillment option, or a warehouse run by other people that will ship products for you. 3PL’s will do everything from bundle your products for you, to shipping products to customers, and even sending shipments to Amazon.

  • FBA and MFN | The two basic options for fulfilling Amazon Seller Central order are FBA – Fulfilled By Amazon, and MFN – Merchant Fulfilled Network (sometimes called FBM for Fulfilled By Merchant). For FBA, Amazon acts a specialized network of 3PLs for people selling products on Amazon. For MFN, your business is responsible for shipping the product to your end customer.

  • Ledger | A tool for tracking financial transactions. In the modern context, this is a set of databases of all transactions and assets in a business. When summarized properly, the ledger will provide the data that supports the three big financial tools – the Income Statement, the Balance Sheet, and the Cash-flow Statement.

  • Queueing Engine | Usually used for reporting systems, this allows you to run a report and navigate away from the page, while getting a notification after the report runs. This beats the old way, which is to make you sit on the webpage and wait until the report is done!

Photo by Olu Eletu on Unsplash