Common Inventory Management Problems You Might be Suffering With

August, 2020

Inventory Management is necessary for any product-based business to run efficiently. Having such a system saves you money and allows you to fulfil your customers ‘needs. It allows you to check what is in your warehouse and how you can manage the supply chain properly. This is the reason why you simply cannot afford to have Inventory Management problems because it will cost a lot of money for you.

Here, we discuss common Inventory problems you might be suffering from.

1. Stock Visibility

It’s Grocery day at home and it’s time to check the availability of the food left in the cupboard. How do you check it? Do you write in manually or type it on your phone? Writing your grocery list manually is prone to problems like misplacing your grocery list or missing out on some items that you need to buy. This could have been prevented with the right inventory management.

When you’re starting out your business or small business, using a manual spread-sheet to check your stock levels, manage your purchase orders, and maintaining your inventory might have worked for you, but as your business grows, the demand and tasks also pile up. You simply cannot afford an outdated, time-consuming and manual Inventory.

But, some business owners fail and overlook this problem causing them a lot of time, manpower and resources. Outdated Inventory Management systems usually count their stock manually causing them to miss out on the availability of some items.

Not keeping track of your Inventory properly may lead to these scenarios, which you would not want to happen to your Inventory:

a. Out-of-Stock:

OOS or sometimes also referred to as Stock outs, is when you experience a shortage or run-out of the product in your inventory. That is why maintaining the right inventory levels and establishing a safety stock is important to prevent this from happening.

b. Excess Inventory:

When you ordered more than what is the demand for the product this will not only increase your carrying cost but may also become a dead stock in your inventory. This will cost you more because of the additional space in the inventory and the time it will take while waiting for the product to move to your customers.

c. Misplaced Inventory:

Simply put, a lost product. Items that are not properly marked will go to a different section in the warehouse and preventing it from being sold. This will also cost you a lot of money if the misplaced products are raw materials that will spoil.

d. Spoilage:

Keeping items with expiration dates in your inventory puts you in a risk that these products may become rotten. Combined with inefficient inventory management, that risk might just become your reality. Disposing of these products means your investments also go down the drain.

Knowing what products you have on hand, and where that item is located in your inventory, at any given moment, is such a convenient scenario no matter how you look at it.

2. Stock Profitability

How you manage your warehouse also affects how much you will earn from the products you sell. When buying a finished product, you are also paying for the expenses incurred on creating that product. There are several factors that may affect your potential earnings such as the raw materials, the operational expense, and even how it was delivered to the storage facility which is also known as the landing cost.

Landing cost is the cost of getting the product to where you are may it be via air or sea. Prior to distributing these products to your customers, there are also operational expenses on your part which also affects your potential earnings on that product.

To show a simple example of landing cost, It is like going out to buy something from the grocery. When you buy your items, you know how much each cost is based on the tag that is already placed on the item by the grocery store. What you usually do not consider, is how the product got into your house. You consumed gasoline when you used your car from going to the grocery store and back, which adds to how much you really spent to get the product.

That is why it is important to know where you put and invest your resources in managing your business and inventory. You have to consider all the variables involved in your business. Wherein on your end, you could have made improvements on your processes that could reduce the amount you spend on keeping a product in your inventory.

3. Connectivity / Integrations

If you are manually inputting data to several of your systems just to manage your business, then you know how much time and effort you are consuming just to do it for you to get your real-time inventory. Taking into consideration the possibility of human errors which could also create losses for your business.

Put yourself in a position where your business involves using software to sell your products, warehouse and a supplier. If these systems are not connected and not integrated well, you end up updating each software solution of the business separately. The end result might be costly and time consuming for your business.

You might sell products, which you think you have in your warehouse or it arrived already from your supplier because you thought it was still available and that is what your data shows. Unknowingly, it was not yet updated to reflect the latest data in your inventory and you still have not ordered yet to replenish your inventory. This will greatly affect your productivity and
customer service.

There are plenty of scenarios that could arise just because your systems are not integrated with each other. Having connectivity over your warehouse, supplier, and distribution can save you a lot of time, effort and minimize your losses.

4. Forecasting

Good forecasting is having products that sell according to the projected customer demand. This means that all your products are selling off-the shelf like pancakes. Isn’t that amazing? All your hard work is paying off just because you have analyzed the demand for that month, making you prepare products that will only sell for that specific season.

But, It is difficult to anticipate the trend and make better decisions about the volume of your product at a given period. For you to deliver the expected results, it would involve a lot of manpower so that you can forecast effectively and have enough lead time when you order your products to replenish your stock, but this would entail more cost.

To achieve your business goals, you need to lower the cost in maintaining your inventory, lower the cost in moving your product from the warehouse to your customer or to other locations and have the right data. You cannot afford more losses for your business because of poor inventory management. This can affect how you are perceived by your customers, especially with the increasing competition in the market.

These are just the most common problems encountered by business owners in managing their Inventory. Do you want to know the solutions? Then click on the next page to know more or you can get in touch with us to help you manage your Inventory Management System. To know more you can visit us at

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