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20 Common Inventory Management Challenges

Managing inventory is a daunting task. The process and results impact every aspect of your business. To help, here are 20 common inventory management challenges to watch for in your supply chain.

Inconsistent Tracking:

Using manual inventory tracking procedures across 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.

Warehouse Efficiency:

Inventory management controls at the warehouse is labor-intensive and involves several steps, including receiving and putaway, picking, packing and shipping. The challenge is to perform all these tasks in the most efficient way possible.

Inaccurate Data:

You need to know, at any given moment, exactly what inventory you have. Gone are the days when inventory could be counted once a year with an all-hands-on-deck approach.

Changing Demand:

Customer demand is constantly shifting. Keeping too much could result in obsolete inventory you're unable to sell, while keeping too little could leave you unable to fulfill customer orders. Order strategies for core items, as well as technology to build and execute an inventory plan, can help compensate for changing demand.

Limited Visibility:

When your inventory is hard to identify or locate in the warehouse, it leads to incomplete, inaccurate or delayed shipments. Receiving and finding the right stock is vital to efficient warehouse operations and positive customer experiences.

Manual Documentation:

Managing inventory with paperwork and manual processes is tedious and not secure. And it doesn't easily scale across multiple warehouses with lots of stock.

Problem Stock:

Perishable and fragile stock need specialized plans for care and storage. And high-value inventory needs specific loss-prevention strategies and inventory controls.

Supply Chain Complexity:

Global supply chains shift daily, placing a burden on your inventory planning and management operations. The manufacturers and wholesale distributors that dictate when, where and how your inventory ships require flexibility and offer unpredictable lead times.

Managing Warehouse Space:

Efficiently managing space is an intimidating task. Planning and designing warehouse spaces with inventory management platforms helps you better control the timing of new stock deliveries. It can account for important factors, such as available space. Read more about the differences between warehouse management and inventory management.

Insufficient Order Management:

One of the most common challenges to sound inventory management is preventing the overselling of products and running out of inventory. Using historical and seasonal data trends can help you accurately predict customer orders.

Increasing Competition:

Globalized supply chains are subject to unpredictable economic shifts and market forces that impact the competition for raw materials. Small businesses are sometimes faced with choosing between competing for high-demand materials or holding enough inventory to control costs.

Evolving Packaging:

Compostable packagingor removing packaging all togetherto reduce waste presents new obstacles for warehouse design and storage. It may even mean new equipment or shorter shelf life for some items.

Expanding Product Portfolios:

Many online retail strategies remove the need for large warehouse distribution centers. These strategies make it easier to expand inventory and diversify product portfolios, but demand technology and resources for ordering, shipping and tracking.

Overstocking:

Keeping too much stock on hand can be as problematic as having too little. Overstock impacts business cash flow and leads to inventory-related problems, such as storage and loss.

Inventory Loss:

The loss of inventory due to spoilage, damage or theft can be a supply chain problem. It requires identifying, tracking and measuring problem areas.

Poor Production Planning:

Production planning is vital for avoiding delayed manufacturing and cost overruns. If not done well, it can impact sales forecasts and project scheduling.

Lack of Expertise:

It can be tough to find skilled inventory managers who are adept at the latest technology and can improve inventory strategy. Simply upgrading your inventory management platform with a host of features isn't enough. You need capable management.

Poor Communication:

Communication and collaboration are key. When departments are apathetic about sharing information, it makes identifying inventory trends and finding ways to improve much more difficult.

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 difficult to scale.

Inadequate Software:

To scale inventory management software to support complex logistics, it needs to integrate with your existing business process platforms. The difficult task is choosing from hundreds of inventory management solutions and mastering a host of features that require training and ongoing support.