Inventory management can be a cornerstone to a company’s success as much of their revenue is tied up in inventory, and always having inventory available at a customer’s whim is a key determinant of customer satisfaction. Therefore, it is a great idea to make sure you are aware of common inventory-related mistakes so they are not repeated unnecessarily, costing the company dearly. We will take a look at some of the most common mistakes companies make when considering inventory management.
Spreadsheet vs automated software
Perhaps one of the first mistakes a company can make regarding the management of their inventory is to use a spreadsheet system to keep track of it rather than a specially designed automated system such as Unleashed Software. Software that has been specifically designed for inventory management provides so many benefits including real-time tracking, remote accessibility, minimal risk of human error, automation, easy analysis of data and trends and meaningful report generation to name a few. Spreadsheets, although good for certain things, are steeped in problems when it comes to large amounts of data, real-time tracking, the likelihood of human error and remote accessibility from multiple sites.
With all the benefits of an automated system, real-time and meaningful data about sales trends can be obtained, providing intel for accurate ordering of inventory.
Mismatch of software and human intelligence
Bluntly put, ensure that your staff are intelligent, trained and equipped to utilize the software to its full potential. Often roadblocks to software introduction and proper use lie with the staff required to use it. Customer support and installation is catered for by the software provider however it never goes amiss to ensure proper training is provided to staff rather than just expecting people to wing it.
In tandem with this is making sure that the staff who are in charge of warehousing are in fact skilled in managing stock and understanding inventory storage and usage methodologies.
Failure to take stock
Taking stock (excuse the pun) of the company’s inventory systems is mandatory for good management. Spending the time now to understand the nature of the inventory and deducing sound ordering, transporting and storage operations will go a long way in making sure stock take counting is easy and accurate. It also helps to ensure items are where they are thought to be and are used or sold well within expiry dates rather than leaving them to become expired or obsolete.
Failure to integrate multiple platforms
If the company has multiple sites and a website where customers can also order product, it is essential that they have proper integration of all platforms because without this, there is a lot of opportunity for overselling and stock-outs. These are where either too much product is ‘sold’ or promised to the customer without the inventory to back it up, or when the customer demand is not correctly forecasted resulting in a lack of sufficient inventory to satisfy it. Both situations can cause distrust in the customer and a subsequent loss of clientele and revenue.
Failing to forecast
It seems it is a common mistake to focus on back-order reports and conduct business in a reactive manner. This is instead of taking the time to understand your inventory and its status in production and forecast customer demand accurately with the use of software. By operating proactively and taking time to consider sensible safety stock levels and purchasing trends, the company can taper ordering and inventory levels with what is being sold. This will result in reducing money wastage from stock expiring or becoming obsolete and will ensure the company is protected from a stock-out situation.
Not emphasising inventory balance and creating a way to measure it
Companies often can fail to consider inventory management as a key component to company health. Sometimes they can fall prey to the thought that as long as the customer is getting what they want roughly in the timeframe they want it in, then the inventory can be considered managed. However, because so much of the company revenue is tied up in inventory and the company is so reliant on the process of a product being ordered and converted into a sale, it is of paramount importance to look at the inventory in versus inventory out balance and ensure it is as closely matched as possible. Due to the lack of emphasis on good inventory health, companies can fail to measure it and promote it as a goal of inventory managers.
As the philosopher George Santayana said, those who cannot remember the past are condemned to repeat it. The same applies to mistakes in the management of inventory and the company in general. We have looked at a few of many inventory management mistakes that are seen all too often. It is important to carefully consider the mistakes others have made and make a commitment to avoid them. This is where an inventory management system with expert help on tap can really help.