Inventory management problems. Where do we start?

Managing inventories or stocks is not an easy task, since many times the logistics area does not manage to have sufficient visibility of possible problems in inventory management, which may be causing delays in the supply chain and cost overruns for the company.

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Inventory management regulates the flow between inputs and outputs of stock in a company. The way to regulate the input flow is achieved by varying the frequency and volume of orders made to suppliers. The control over the output flow is much less because the conditions are imposed by the consumers.

The importance of inventory management lies in the fact that it guarantees that the product requested by the customer is delivered. In an ideal situation, the input stream would be the same as the output stream, but this is not physically possible because it takes time to adequately respond to customer needs. For this, the company must ensure that inventory levels are minimal, avoiding breakages at the exit.

One of the fundamental objectives of inventory management is to be able to satisfy the needs of customers, guaranteeing the arrival of the products in the expected time, form, and quantity. However, this is not the only objective, since it is essential to maintain a balance between the above and the costs that derive from the possession of inventories.

However, many times these objectives are not met and that is when customers complain. In this article, we reveal the main inventory management problems that most companies suffer from and why they arise.

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1. Unconscious tracking.

Using manual inventory tracking procedures in different software and spreadsheets is time-consuming, redundant, and vulnerable to errors. Even small businesses can benefit from a centralized inventory tracking system that includes accounting features. It's ideal to have a software tool that automates manual monitoring tasks.

2. Warehouse efficiency.

Warehouse inventory management controls are labor-intensive and involve multiple steps, including receiving and putting away, preparation, packing, and shipping. The challenge is to perform all of these tasks as efficiently as possible.

Unfortunately, this is not always the case because either there is not enough staff, or the staff is not properly trained. Although another cause can also be the rudimentary machines that delay the production process, which can generate an increase in inventory management problems due to inefficiency in warehouse controls.

3. Inaccurate data.

You need to know, at any time, exactly what inventory you have. Gone are the days when inventory could be counted once a year with a hands-on approach. Modern times involve another class of challenges: the efficient use of time with improved results. That is why process automation tools, in this case, for inventory management, reduce human error.

4. Changing demands.

Customer demand is constantly changing. Carrying too much could result in obsolete inventory that you can't sell while carrying too little could leave you unable to fulfill customer orders. Commodity ordering strategies, as well as the technology to create and execute an inventory plan, can help offset changes in demand.

5. Limited visibility.

When your inventory is difficult to identify or locate in the warehouse, it leads to incomplete, inaccurate, and delayed shipments. Receiving and finding the right stock is vital to efficient warehouse operations and positive customer experiences.

6. Manual documentation.

Managing inventory manually is the most tedious thing there is since sometimes there are too many of them and this process can take much longer than it should. This happens when older companies get used to the old methods of doing everything yourself believing that human perception is more reliable, but the truth is that it is nothing more than prejudiced thinking regarding technological help.

The world has changed and there is no time to write an inventory by hand on a paper spreadsheet.

7. Stock problems.

Perishable foods and fragile products need specialized care and storage plans; otherwise, they could spoil in the warehouse before being distributed. High-value inventory needs specific loss prevention strategies and controls.

8. Warehouse space management.

Managing space efficiently is a daunting task. Planning and designing warehouse spaces with inventory management platforms help you better control the delivery time of new stock. You can take into account important factors, such as the space available.

9. Insufficient order management.

One of the most common challenges in reducing inventory management problems is avoiding overselling products and running out of inventory. Using historical and seasonal data trends can help you accurately predict customer orders.

10. Excess stock.

Having too much stock on hand can be just as problematic as having too little. Excess stock affects the company's cash flow and leads to inventory-related problems such as storage and loss.

11. Loss of inventory.

Inventory loss due to spoilage, damage, or theft can be a supply chain issue. It requires identifying, tracking, and measuring problem areas.

12. Poor communication.

Another problem in inventory management is the lack of communication. Communication and collaboration are key. When departments are apathetic about sharing information, it's much more difficult to identify inventory trends and find ways to improve.

13. Inefficient processes. 

Low-tech, manual inventory management procedures don't seem like a daunting challenge when inventory is small and there's only one warehouse location to manage. But as sales volume increases and inventory expands, inefficient, time-consuming, low-tech standard operating procedures are difficult to scale.

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These have been the most common inventory management problems generated in companies. There may be many more, and it stands to reason that this is the case as a company grows. If this information was useful to you, in another article, we will explain how to solve these problems most efficiently so that your supply chain is as efficient as possible.