Avoid Top 5 Inventory Management Problems, and Improve Your Inventory Practices

Inventory Management

12 minutes reading

avoid these 5 inventory problems

The management of inventories is essential to corporate operations. It guarantees sufficient inventory to fulfill your company’s demands, prevents overall costs, and lowers the cost of warehouse operations. Businesses desire to successfully manage their inventory, but there are a few difficulties they could run against.

In the business market, it can be difficult to comprehend your customers’ needs and decide on the most effective way to ensure effective stock management. Numerous concerns management of inventory are examined, however, there are also problems with this process. The management of your inventory is trickier than it first appears. The most frequent issues with inventory management are listed here, along with a solution.


Common Problems with Inventory and Their Solutions:

The following is about inventory problems examples that can have a limited and indirect impact on the purposes of inventory control:

  • Traditional Tracking:

This is most likely one of the biggest and most typical inventory problems.

Many companies still use manual processes or out-of-date legacy software to handle their inventories, which could stifle your company’s growth.

When you run a tiny, one-warehouse firm, using manual, labor-intensive, or low-tech solutions may not seem like much of a hassle, but as you grow, things will change, but when sales volumes rise, you must increase inventory and build more warehouses.

It is important to notice that ineffective inventory management techniques will be difficult to scale, show to be a disadvantage, and fail to produce the outcomes you require.

Using various spreadsheets and software programs to maintain inventory manually can result in redundant data, inaccurate data, and other problems.

You can no longer rely on physically counting your inventory once a year with the help of all of your employees in the highly competitive world we live in today, but the question is how to solve inventory problems that can be caused by traditional tracking.

Traditional Tracking Solution

You can solve it only when you combine inventory management software with your current company software, and you will be able to track it and support complex logistics, but by using the traditional way, this cannot be accomplished.

Here are the main benefits of accurate inventory tracking.

1- Satisfy consumer demand

You may avoid overselling or stockouts by being fully aware of your inventory levels at all times. Customers may become dissatisfied if they can’t obtain their products, but maintaining them in stock can make the purchasing process easier.

2- Reduce capital invested in inventory.

The ideal amount of inventory is neither too high nor too low. Making better decisions about just how much stock to order at any particular time can be assisted by an inventory tracking system.

3- Recognize when to broaden your range and which goods to eliminate.

Whereas many businesses believe that adding more items to their range would boost sales, the total units don’t help your bottom line. Certain products can cost more to maintain than they do to sell.

  • The Unpredictability of Consumer Demand

The Unpredictability of Consumer Demand

The nature of customer behavior makes it impossible to make any accurate predictions. Demand patterns can suddenly increase or decrease due to social, political, and economic changes, creating enormous sales peaks or valleys, which is why you may face such inventory problems. market trends also differ from one another. This may result in surplus inventory during times of low demand or scarcity of items during times of high demand.

For organizations to capitalize on sales prospects, it will be essential to exercise the capacity to estimate demand accurately. A corporation won’t end up with surplus stock if demand suddenly declines thanks to accurate inventory forecasting and some awareness of consumer demand volatility.

Here are some tactics you can apply to solve this problem.

The Unpredictability of Consumer Demand Solution

1- Watch out for proxies.

 In some domains, you need to keep an eye out for proxies to comprehend shifting consumer preferences. The restaurant business can offer a lot of light on how consumer tastes are evolving like the new orientation to desire healthy food rather than ordinary meals.  

2- worldwide trends.

 to follow global trends can serve as guidance; global trends can serve as guidance; The Swiffer cleaning products were developed by Kao Japan, and Procter Gamble now markets them internationally. 

 Western gyms are becoming more popular in India, yoga first gained appeal in the West. Understanding your client demands is the greatest approach to determining whether international products will be successful in your local markets.

  • Difficulties of the Supply Chain

The modern supply chain’s complexity leads to numerous blind spots and can cause many inventory problems.

There was a time when all you needed was a data analysis interface to put up specific KPIs, secure a clear overview of company records, and report. Such a system today only touches the surface of what companies need to manage intricate processes successfully and provide world-class customer service.

Compared to small, regional enterprises, international operations are much more vulnerable to environmental and political upheaval. Businesses are becoming more multimodal as they grow internationally. Not all technology supports every mode, which forces businesses to scale while dealing with limited visibility or several siloed solutions.

Your inventory planning and management processes may be hampered as a result. Manufacturers and wholesalers who control where, when, and how your merchandise is shipped demand flexibility and provide erratic lead times, but the most important issue is how to solve inventory problems like this.

Difficulties of the Supply Chain Solution

Fortunately, there are several strategies you can use, including branded supply chains and a few further adjustments to their business, to reduce the operational and financial effects of supply chain complexities. Here are the best strategies for navigating your supply chain’s complexity and building a successful future in the growing competitive industry.

1- Improve Demands Across Multiple Channels for Inventory and the Supply Chain.

There are now a multitude of alternatives for both businesses and consumers to purchase items. You must oversee each path to market with precise demand planning. By doing this, you can keep your inventory levels at the right levels and prevent product shortages on your channels.

2- see All Marketplace Channels in One Place.

Even when you simply need to consider a few distribution routes, managing demand through a supply chain is challenging. Things get considerably more complicated when you include wholesale, drop shipping, third-party marketplaces, and e-commerce. You require open reporting that demonstrates demand and supply strategy throughout all channels. This makes it possible for someone like you to react to new demand rapidly, enabling you to place orders and move inventory before stock levels become a threat.

3- Create a Supply Chain with Never-ending Continuous Improvement.

The analysis of supply chain data makes a great foundation for initiatives to improve. To cut waste and increase efficiencies, data can be gathered on quality, speed, pricing, or any other important criteria. To understand the effects of changes in the real world, you can keep studying statistics as you implement supply chain process enhancements.

  • Inventory Shrinkage

Inventory Shrinkage

If you own a retail firm, you may have dealt with theft, shoplifting, or other types of fraud that resulted in unanticipated inventory losses all of these inventory problems refer to inventory shrinkage caused by a variety of factors like theft from stores, employees, mistakes in documentation and administration, ruined goods, and expired goods.

For instance, X Company Ltd. had 5628 accessories in its inventory, but a total amount revealed that there were only 3850. Inventory shrinkage is the term used to describe this loss of stock. Inventory shrinkage can indeed result from theft, shoplifting, damage, or any other type of inventory loss, as was mentioned above.

According to surveys, just inventory shrinkage alone results in billions of dollars in annual losses. Therefore, it is obvious that retailers need to take action to stop this unintended loss that lowers their profitability.

Now let’s cover the part about how to solve inventory problems that are related to inventory shrinkage.

Inventory Shrinkage Solution

To reduce inventory shrinkage, you need to integrate safety precautions with staff engagement strategies. A few of these are:

1- Protect the Pricey Inventory: Any priceless inventory can be kept in a separate place, and that can be a place that is locked off.

Moreover, hire a specific employee with exceptional permissions to handle this part of stock management.

2- Prevent Purchase Order/Vendor Fraud.

Check up with sellers sometimes. Verify that the manager of your purchase is not taking part in any dubious or illegal transactions with the vendors.

3- Make a security system investment.

There are many devices with software assistance on the market to protect your inventory from theft. CCTV cameras, intruder detection, door auto-lock systems, and door security systems.

4- Submit an employee integrity check.

You may want to have an employee integrity screening if you work with high-value/small-size merchandise that is simple to steal, including truffles, caviar, diamonds, or pricey electrical equipment.

Many documents can be checked to ensure employee integrity like criminal records, certification of education, credit the report, history of prior employment, etc.

  • Deadstock 

If you’ve ever worked in retail, you’ve probably dealt with the problem of having a ton of merchandise that does not sell, which really can be classified as one of the serious inventory problems. Dead stock is the term for your unsold goods that have been sitting on the shelf for a while without any immediate prospects of being sold.

Dead stock is the stock that is never sold, the stock that has been sitting on your shelves longer than expected, and the stock that has a risk of not selling shortly.

Any retailer may suffer significant commercial issues as a result.

 Even if you maintain inventory levels, there is often a risk that it will remain unsold for weeks, months, or maybe even years.

We will attempt to capture as much as we can be given the variety of factors that might result in deadstock is as follows.

1- Product uniqueness.

 There are always kinds of consumers who like to order goods with an extraordinary touch. Customers now demand distinctive products that stand out from the competition. They continue peering out at several stops to find that.

2- Avoid communicating with clients.

A successful relationship between you and your customer relies on effective dealing, that is why you must interact with your customer and address their suggestions. you won’t be able to understand their interests if you don’t connect. 

3- Fall class

if the quality of your products is inferior, they might never contact you again.

4- Order in bulk

Purchase goods in quantity, but don’t order in bulk. The key is to order in high volumes, but not so much that can become problematic

5- Incorrect forecast.

A prediction could occasionally be off. At that point, you should review your sales history to determine if there have been any adjustments. The most crucial thing to remember is that market trends are constantly changing. 

Deadstock Solution.

Here are some efficient methods for getting rid of deadstock:

1- Use a tool for inventory. 

You must first determine how much excess inventory you have if you plan to get rid of deadstock. With the ability to combine all of their goods from several locations into a single system and provide inventory levels in real-time, cloud-based inventory management systems have today made life easier for merchants. By using inventory management software, your company will have simple methods for determining the precise percentage of current inventory that is deadstock. Additionally, a few inventory management programs include a dedicated deadstock control system built in. If you are aware of your deadstock, you can create a list of each item in decreasing order of value.

You can quickly recover the costs associated with dead stock by focusing on higher-value stock items initially.

2- Set a time limit.

A key component of getting rid of deadstock is to instill a time limit. Since no matter what strategies you use, if you use the best strategies to get rid of deadstock, you’ll waste a lot of time if you don’t act quickly, so you can try these tactics like indicating the limited availability, such as “just 10-15 items are in stock, set a deadline, emphasize the amount of cost savings, you can also use many inventory formulas as Inventory Turnover Ratio.


How to Avoid Inventory Management Problems?

The financial health of a corporation can be determined by looking at its inventory. Unbalanced inventories result in, inventory problems that lead to business instability due to either having an abundance of goods or not having enough inventory to restock shelves, both of which can have a disastrous impact on a company’s incoming revenue.

Here are three inventory management strategies to help you stay clear of issues with inventory management.

  • Form a team for inventory.

Does one person currently decide on how much stuff to order?

Instead of having one person take inventory decisions, think about forming a group that is responsible for selecting purchases, you can vary the specifications of involved members in this team, as an example a marketing expert might be a useful addition as he can be aware of impending initiatives that might result in supply and demand.

When you are setting an inventory plan, you should take into consideration that external circumstances have an impact on inventory levels.

  • Take a moment to think before ordering.

Choosing how much product to buy shouldn’t involve chance. Ordering excessively results in the extra product being left in a warehouse, taking up space and raising carrying expenses. 

Insufficient ordering could lead to products running out during periods of high demand. Instead of ordering the same quantity repeatedly out of habit, spend some time reviewing past months to determine whether adjustments need to be made to your regular order to prevent problems.

  • Include a strategy in place for overstock stock.

In a perfect world, you would have very little extra stock. Even if your administration is sound, unforeseen circumstances can still occur and leave you with an excess of things that are no longer in use.



Whether a company is just getting off the ground or has been in operation for a while, proper inventory management is a crucial responsibility. It might be difficult to keep and achieve excellent inventory management. In this article we covered many inventory problem examples, ways of how to solve inventory problems through the most practical solutions, along with some of the most frequent inventory problems that businesses have while managing their inventory.

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