How to Avoid the Most Common Inventory Management Mistakes

The inventory management software market in the U.S. was estimated at $669.1 million in 2021.

Inventory management is essential if you want your company to run efficiently. However, business owners continue to make mistakes that unnecessarily compromise their business operations.

Luckily, being aware of these mistakes and correcting them before they get out of hand can change the outcome. Again, it’s possible to avoid fundamental mistakes completely, thereby, perfecting the art of inventory management and control.

Read on to learn about common inventory management mistakes and how to avoid them.

Lack of Training

Inventory control and supply chain systems are normally complex and unintuitive to manage. But, most businesses avoid training because it’s expensive and time-consuming.

Such businesses only hold training seminars for a few managers. This results in only a few employees understanding how inventory management systems work while the rest follow instructions.

Downtimes become common as there’s a lot to do and only a few people are familiar with the system. Luckily, you can now go for the cloud-based inventory management system. These systems are intuitive and allow staff to learn on the go.

Cloud-based inventory systems eliminate the need to read through hundreds of pages to learn about inventory control and asset tracking. The systems come with a simple learning curve, and it doesn’t take long to train employees.

Lack of Automation

If you are still using spreadsheets to track inventory, you are doing it wrong. Manual tracking is time-consuming and less accurate.

Again, it’s a waste of resources that you could use elsewhere to grow the company. There is also the fact that manual tracking is vulnerable to employee pilferage and errors.

Avoid such risks by automating and using inventory management software. This software is reliable, flexible, and designed to streamline supply chain networks.

Less Frequent Inventory Checks

Many companies avoid carrying inventory checks as this ceases operations for a day or two. It’s even worse for companies with huge inventories, as checks could take weeks.

As a result, businesses avoid regular inventory checks. However, regular inventory checks are vital to updating your database and ensuring you make the most out of your inventory.

A smart small business owner schedule inventory assessments at the beginning of every financial year—some go-ahead to carry extra assessments before and after key sales events.

However, if you are still relying on physical count to determine inventory levels, you are doing it wrong. Online inventory management systems are effective as they provide updates on inventory levels in real-time.

With such a system in your firm, there is no need to stop operations for a day or two to run inventory checks.

Inefficient Storage Systems

It’s not unusual for businesses to struggle to find efficient ways to handle inventory. A simple re-arranging of goods in your warehouse can save you thousands of dollars.

If employees take too much time to search for items, this is a sign it’s time for a change. Remember, time wasted in the warehousing industry is money lost.

An efficient solution in such a case is figuring out what products sell more and placing them close to the shipping dock. Taking a quick look at your sale records should help determine what items should be close to the dock.

Again, avoid placing items randomly where there is space. Instead, allocate available space for products based on popularity for easy retrieval.

If you are having trouble developing an efficient storage system, consider hiring storage consultants. These professionals will help you develop ways to minimize bottlenecks and ensure the flow of goods is optimized.

Poor Demand Forecasting Techniques

Most firms develop problems as a result of inaccurate demand forecasts. Erroneous forecasts can disrupt your manufacturing plan by either producing less or overproducing.

Wrong calculations could result in excess inventory. With perishable goods, you might be at risk of throwing away the excess amount. Again, overstocking utilizes storage space and adds on inventory holding costs.

On the other hand, producing less could lead to loss of customers.

Be safe by investing in inventory tracking software that provides real-time data. This way, you will always know what is in stock and what you require to manufacture.

Also, it’s easy to forecast what customers want with constant accurate data.

Failure to Measure Results

The best way to identify and fix mistakes is by having a standard measure to assess performance. So, what inventory management KPIs do you use to track the performance of your supply chain network?

Again, how do you tell if your inventory management systems are working correctly?

If you are in the warehousing industry and don’t have a way to measure performance, you are doing it wrong.

It’s essential to track your performance. Measuring performance constantly offers better insight into your investment, putting you in a better position to improve.

Warehouse Located Far From the Workstation

Having your retail outlet in the city while the warehouse is located on the outskirts brings incontinence. That one or two-hour drive can be tiresome, and thus, the visits to your warehouse become less frequent.

Again, not seeing your inventory regularly disconnects you from reality. At times one may assume they have enough stock, while in reality, they don’t.

Top companies in the logistic industry work next to or even in the middle of their inventory.

Forgetting to Reorder and Restock

Running out of stock is a leading cause of financial losses to many organizations. If your warehouse or retail store is very busy and with many employees handling stocks, it’s easy to run out of stock.

This situation is problematic and quite hard to manage. However, running stock audits from time to time can help you keep track of what is available and what isn’t.

Gain an Edge by Learning Common Inventory Management Mistakes to Avoid

Poor inventory management practices may lead to issues like high inventory holding costs and loss of customers. These are risks to avoid as a business.

Luckily, you can easily streamline your inventory management with the help of cloud-based inventory management systems. Such tools greatly reduce mistakes and improve efficiency, resulting in increased sales.

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