How Much is Bad Inventory Control Costing You?

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Inventory is one of biggest assets for a company. However, keeping track of inventory can be tricky. Acquiring the inventory from other suppliers is only part of the equation. Once you have the inventory it needs to be adequately organised and you need to monitor stock levels.

Managing a warehouse with sound inventory control is important to maintain this asset. As a business owner, if you have bad inventory control habits, you’ll see it across your business. Neglecting to get on top on your inventory control can impact your sales, customer satisfaction, and general business operations.


Keeping healthy stock levels is key to sales. Now that inventory management software can show customers stock levels, it can also show customers when there are stock-outs. This can alter a customer’s purchasing decision both in-store and online. Often, if a customer is shopping online for a few products from your eCommerce site, they might abandon their shopping cart if one of the items they want is out of stock. There might have been three items they wanted, but if the fourth is out of stock, there’s a good chance that they’ll leave the purchase altogether. They don’t want to pay for the shipping of the three items and then need to pay for separate shipping of the fourth item from a different retailer.

In this instance, a business owner needs to recognise the total lost sales from having one inventory item out of stock. If that one item cost $12 dollars, but the remainder of items in the abandoned cart was $86, then you just missed out on $98 dollars in sales.

Bad inventory control might be the problem if your system isn’t identifying when stock levels are low. Without enough warning, business owners’ bottom lines will suffer.

Customer satisfaction

Bad inventory control can also lead to poor customer satisfaction. Products should be aligned strategically in a warehouse. If fast-moving goods are hard to access or scattered around the warehouse, it will slow down shipping processes. If product shipments get delayed because of a mismanaged warehouse, then customers will be unimpressed. Additionally, damaged goods due to poor inventory stocking techniques will cause customer disappointment as well.

Business owners need to recognise that dissatisfied customers will lose their loyalty. Problems with inventory control, delayed shipments, and damaged goods need to be managed swiftly. Otherwise, customers will go elsewhere and they might not come back.

Business operations

One of the main responsibilities that a business owner needs to oversee is the forecasting and planning of the business. With bad inventory control, tracking history might not be as accurate as it could be. This planning process is a fundamental part of how a business operates. If a business owner cannot make intelligent, forward-thinking decisions because of a roadblock in their inventory control systems, then operations will take a hit. This might be a business owner makes more reactive inventory orders and it puts stress on the staff and on warehouse capacity.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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