In manufacturing, distribution and wholesale, your entire business revolves around inventory – having enough stock to keep the production line going and to keep customers happy is essential. Here are four ways we’ve seen bad inventory control cause chaos in business.
Missing Valuable Sales
Just as in the B2C context, B2B customers value reliability and decision makers in the business want to know that they can get the inventory that they need for their business when they need it. When a business does not have what a customer needs, in the right quantity and at the right time, they risk losing valuable sales. In the short term, lost sales means lost revenue but in the long term, the inability to meet customer needs can mean lost business.
A business that cannot track inventory in real time or that cannot accurately forecast changes in demand is a business at risk of missing valuable sales. This is particularly the case with seasonal items. If you don’t order or produce enough of a seasonal product and miss out on a major spike in demand, your business could be leaving tens or hundreds of thousands of dollars on the table.
Where Did All the Inventory Go?
Most of a business’ employees are trustworthy advocates for the business’ success, but it only takes one or two staff members without scruples to put your inventory at risk. Without access to real-time inventory information, it is difficult to accurately monitor the whereabouts of inventory and to spot theft or malicious damage.
If you use paper-based or Excel spreadsheet records to manage inventory, how easy would it be for someone to edit a few inventory records so that no-one realises that inventory has disappeared? Inventory control software, on the other hand, can keep an auditable trail of which users have made changes to the inventory data. This makes it easy to keep staff accountable.
Stressful Product Recall
If you operate in the food and beverage or health industries, the prospect of a product safety recall might keep you up at night from time to time. When the worst happens, you want to be able to act quickly – crucially, you don’t want to be hunting through old emails and spreadsheets to work out what happened.
Inventory control software can take off some of the pressure during such a stressful time. By assigning each batch of a product a unique identifier and then tracking which ingredients or components went into that batch, it is possible to work backwards and find the source of the problem more quickly.
Far Too Much Stock
As much as your business should be concerned about missing out on business, it should also be focussed on operating efficiently, and that means keeping inventory costs under control. In a bid to simplify inventory control or to prevent stock-outs, some businesses regularly reorder a set amount of inventory on the assumption that they’ll use a constant amount. These ‘fixed orders’ can lead to inventory building up unused for a time and, worst case scenario, wasted altogether. Deliberately or accidentally, carrying too much inventory means that your business has tied up vital working capital in an asset that, for now, has no productive value.
Inventory control software can simplify the process of forecasting inventory demand, so that you can more accurately plan your stock needs. And if you’re fond of automatic reordering, real-time inventory tracking can trigger an order when stock levels actually drop, rather than every week or month.