Managing inventories or stocks is not an easy task, since many times the logistics area fails to have sufficient visibility of possible problems in inventory management, that may be causing delays in the supply chain and cost overruns for the company.
The inventory management regulates the flow between the entries and exits of stocks in a company. The way to regulate the input flow is achieved by varying the frequency and volume of orders that are made to suppliers. The control over the output stream 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 inflow would be the same as the outflow, 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 outlet.
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 time, form and quantity expected. However, this is not the only objective, since it is essential to maintain a balance between the above and the costs derived from the possession of inventories.
However, many times these objectives are not met and that is when customer complaints begin. In this article, we reveal the main problems in inventory management that most companies suffer and why they originate.
1. Unconscious monitoring
The use of 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. The ideal is to have a single software that automates manual monitoring tasks.
2. Warehouse efficiency
Inventory management controls in the warehouse are labor-intensive and involve several steps including receiving and putting away, picking, packing, and shipping. The challenge is to perform all these tasks in the most efficient way 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 may also be the rudimentary machines that delay the production process, which can lead to an increase in problems in inventory management due to inefficiency in controls of warehouse.
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 the process automation toolsin this case, for inventory management, reduce human error.
4. Changing demands
The customer demand is constantly changing. Holding too much could result in obsolete inventory that you can’t sell, while holding too little could leave you unable to fulfill customer orders . Basic item 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 and inaccurate shipments and delays. 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 issince sometimes there are too many and this process can take much longer than it should. This occurs 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 assistance.
The world has changed and there is no time to write an inventory by hand on a paper sheet.
7. Stock problem
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 inventory controls.
8. Warehouse space management
Managing space efficiently is a daunting task. Warehouse space planning and design with inventory management platforms help you better control lead time for new stock. You can take important factors into account, such as available space.
9. Management of insufficient orders
One of the most common challenges to reduce inventory management problems is to avoid 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 inventoryrelated problems such as storage and shrinkage.
11.Loss of inventory
The loss of inventory due to deterioration, damage or theft can be a supply chain problem. It requires identifying, tracking and measuring problem areas.
12. Poor communication
Another of the problems in inventory management is the lack of communication. Communication and collaboration are key. When departments are apathetic about sharing information, it is 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, labor intensive and low-tech standard operating procedures are hard to scale.
These have been the most common problems in inventory management that are generated in companies. There may be many more, and the logical thing is that this is the case as a company grows. If this information helped you, in another article we will explain how to solve these problems in the simplest way so that your supply chain is as efficient as possible.