Researchers report that $1.1 trillion, about 7 % of the United States GDP, is tied up in inventory. The amount includes accounts receivable and payable.
Surprisingly, managers can tend to overlook the critical department. Ideally, poor inventory management only leads to the loss of valuable company resources.
Inventory issues are more likely to occur where there is an inventory backlog and inconsistency in record keeping. If you have noticed this in your company, it’s time to take corrective measures.
Streamlining your inventory is essential in avoiding huge errors and loss of opportunities. Join us as we break down some of the most challenging inventory issues and how you can overcome them.
The stock in your inventory sheet can read six; in reality, you have four or eight items. On a large scale, this simple error can cost you a lot of resources.
Inaccurate data has a ripple effect causing many inventory issues. For instance, the negative stock will lead to negative sales, adversely affecting the figures. Performing random stock checks will help you in managing your inventory.
Change in Market Forces
Sometimes, market forces are steady and predictable. In such seasons, managers easily predict how long stock can stay in the inventory. However, there are seasons where there are drastic changes in product demand.
It would be unwise to have high stock levels in a volatile market. The best way to overcome this inventory issue is by keeping up with current trends.
Conduct predictive research so you can curb this issue.
Inconsistency is a common issue among companies that use manual tracking procedures. Hiring manual labor to track spreadsheets across various programs and devices invites trouble. Not only is it tedious, but it’s also an insecure method.
Small businesses overlook this issue because they find other methods too costly. However, they stand to benefit the most from having centralized inventory management software.
Going paperless is a risk that more inventory managers need to take. This way, the software can track all transactions.
Lack of Expertise
Another issue that plagues the inventory for small businesses is the lack of skilled personnel. Finding employees who can adapt to the latest technology will take a while.
When streamlining your inventory processes, consider outsourcing an expert. They can train your staff to navigate the inventory software.
Most people find the inventory process so draining because they can’t figure out how to manage the warehouse. Effective store planning is the first step to streamlining your inventory.
This procedure involves labor-intensive measures. You will need to receive, pack, and ship products at the same time.
The tasks might be intimidating, but you can manage them through effective planning. The easiest way to overcome this challenge is by having a first in -first out system.
Besides, you can introduce a performance metrics system. It will help you measure your progress. With the new system in place, it would be rare to encounter an inventory backlog.
Failing to locate an item is a common derailer to many shipments. In some bad cases, you have to ship off incomplete orders only to find the item ways later.
Having total visibility on all products is an efficient inventory management skill you will need to learn.
Streamlining your inventory can include labeling your shelves. This action will help you identify exactly what goes where. It would help to organize products by category beforehand.
Inventory management of perishable goods like foods and flowers can be a bit hectic. When dealing with other products, you have the luxury of stocking them for a long time. So mild changes in the market focus won’t affect you much.
However, perishable goods demand constant care and attention. Your priority should be delivering fresh produce to the final consumer.
Take time to develop stock preservation strategies. This measure will involve the transit and the warehouse.
Supply Chain Shifts
Part of being a manager is accepting that the supply chain shifts will always affect the inventory process. The suppliers and shipping companies must also adjust to any supply chain shift.
Choose to work with companies that you can rely upon at all times. This will demand flexibility from both ends.
Inaccurate Order Prediction
Inaccurate orders are one of the major inventory issues. These arise when managers make errors in predicting future orders. Overestimation can lead to the retainment of many products.
To curb this issue, it’s wise to use analytical software. The digital tool uses empirical data on past orders to accurately predict future trends.
When a company is starting, it adapts inventory processes that ensure smooth running. At first, they may seem sufficient, but the methods become outdated with time. So it’s important to review processes from time to time.
You will need to come up with flexible inventory management strategies that can accommodate huge stock volumes. Keep on researching current trends to create foul-proof strategies.
Inventory serves as a link between the supplier and the shipping company. Thus, the smooth running of inventory processes will depend on the collaboration of other departments.
Communication across all sectors is critical. A breakdown of the same can lead to inaccurate orders and other issues.
To overcome this problem, encourage teamwork across sectors. Ensure you all share a common goal of delivering quality products to the consumer.
Overcoming Inventory Issues
Inventory management can be hectic when there is no system in place. Streamlining your inventory issues will demand that you come up with flexible strategies.
The use of inventory software will help you follow the flow of goods at every stage. Besides, it would help to research what products to stock up on.
Apply the above corrective measures to improve inventory management in your business.
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