A Review of iHarmony Inventory Management

As noted in my last newsletter, this is the second installment of a multi-part review of iHarmony, a new business management system for small and mid-size companies that use QuickBooks. iHarmony includes a number of integrated modules that supplement QuickBooks’ functionality. These include inventory management, sales order management, procurement, customer/vendor management, and e-commerce. In this month’s issue, we will review iHarmony’s inventory management module. In the next two issues, we will provide reviews of the sales order management and procurement modules.

Inventory management is a key reason why users outgrow QuickBooks. QuickBooks includes a very basic feature set for inventory management that works fine for smaller businesses with simple requirements, such as a company with a low-volume, single-flavor product line. However, many QuickBooks users have more complex inventory requirements, as measured by the breadth of inventory they carry, the sheer number of inventory items they need to manage, the high value of their inventory items, or their requirements for tracking inventory across multiple internal and external locations.

Complex Inventory Management

Many businesses carry a broad set of inventory items that come in a number of variations (shapes, flavors, sizes, etc.). iHarmony enables these companies to organize their inventory with a feature called “item matrices.” These matrices are customizable tables that allow you to group inventory items into product categories, and then track the different variations of items within these categories by user-designated attributes. For example, a clothing distributor might create product categories of shirts, pants, shorts, belts, etc. Within the shirts category, they could create attributes such as brand, style, size, and color. They could then track and manage all the possible permutations within this category using iHarmony’s “item matrix.”

Other companies may have far fewer inventory items to manage, but the value of each inventory item is high enough to warrant tracking them at the individual item level (i.e., the specific identification method). An example would be a motor home dealer that needs to track each unit in its inventory separately by vehicle identification number. iHarmony allows you to track individual inventory items by an item-specific code, such as serial number.

In either of the two previous business scenarios, there is often the need to track inventory by location. iHarmony provides location-tracking capabilities across multiple sites. You can track inventory by specific address, and by specific location within each building, such as bins or shelves. A chain of jewelry stores, for example, is using iHarmony to track not only which store each piece of jewelry is located in, but also the case in which it is displayed. iHarmony also includes barcoding integration, allowing you to print barcode labels and use scanners to track inventory as it moves throughout the company.

Location Tracking Ability

iHarmony’s location tracking ability also extends beyond the physical bounds of the company. Companies can also use iHarmony to track items that are deployed in the field. For example, a medical products company that leases diagnostics kits to homecare patients uses iHarmony to track where each of it kits are deployed and when they are due to be returned. This capability is also useful for companies that need to track where certain items are sold for warranty or version control purposes. A software company is using iHarmony to track which versions of its software have been sold to which customers, so it can update these versions once revisions are available.

Organized Inventory

iHarmony also enables businesses to organize their inventory into kits or bundles. These days, many companies choose to outsource the manufacturing of sub-components and then assemble their finished goods internally. iHarmony allows these companies to create a hierarchical map of the various sub-component relationships, helping them maintain the proper inventory levels for each sub-component. This capability is useful for companies that ship kits containing different types of products. A medical products company, for example, creates sample kits for doctors that contain samples of many different products. Different kits are required for different types of doctors. This company uses iHarmony to organize these doctor/kit relationships, and ensure that the right items are packaged in the right kits for the right doctors.

Store Item Images

Another useful feature of iHarmony’s inventory management module is its ability to store item images. Users can upload digital pictures of selected inventory items to be stored as part of that item’s record. This can help reduce purchasing and shipping errors. For example, a flooring and tile company using iHarmony has its sales representatives view the style of tile and verbally confirm it with customers before finalizing and shipping any orders, greatly reducing the number of product returns.

Inventory Valuation

One area that iHarmony provides a great degree of flexibility in is inventory valuation. As you probably know, QuickBooks only offers support for Average Cost inventory valuation. iHarmony adds support for LIFO, FIFO, and Per Item Cost in addition to Weighted Average.

To assist with periodic inventory counts, iHarmony includes an automated cycle count feature. This enables you to reconcile inventory counts in iHarmony with your physical inventory. A cycle count can either be performed for all items within a given location or branch, or only for a selected group of items.

Often, products are purchased in different units of measure than they are sold. iHarmony simplifies this conversion process by supporting both standard and custom conversion factors. An example of a standard conversion factor would be a company that buys lumber by the yard, but sells it by the foot. For these inventory items, 1 yard of purchases will always convert to 3 feet of inventory. An example of a custom or item-specific conversion factor is a furniture business that buys palettes that consist of 5 boxes of chairs. Each box contains 10 chairs, which are then sold individually. This business could use iHarmony to convert palettes to chairs once items are received into inventory.

Advanced Pricing Capability

Another inventory management feature that is quite powerful is iHarmony’s advanced pricing capability. You can create special pricing rules or discounts for any combination of product, product category, customer group, timeframe and purchase level. These discounts can take the form of absolute discounts, percentage discounts, volume-based discounts, or free add-ons. For example, a retailer could set a 20% discount on a product category called “school supplies” for a customer group called “students” over a one-week period correlating with a “back to school” sale. Whenever a purchase is processed that meets all these criteria, iHarmony automatically applies the discount as part of the sales order. As another example, a distributor could apply a 5% discount if one of its customers places a $10,000 order for its products, 10% if the customer places a $25,000 order, etc.

Integrates with QuickBooks

Finally, unlike most other ERP and business management systems, iHarmony integrates with QuickBooks. Because of this, and because of the way it integrates, iHarmony provides a virtual extension to the number of inventory items you can use with QuickBooks. You can map inventory items in iHarmony with items in QuickBooks using a one-to-one or many-to-one mapping. This is critical because it allows you to overcome the item list size limitations inherent in QuickBooks. Also, because it always maps Items to Items, you can keep using the item-level reports in QuickBooks.

In summary, iHarmony provides a promising solution for many QuickBooks customers with moderate to complex inventory management needs. In my next issue, I will review the Sales Order Management module. In the meantime, if you have clients that might benefit from iHarmony, I encourage you to contact Serenade Solutions. You can reach them at their website at partner.serenadesolutions.com/sleeter, or call them at 800-686-4525.