Inventory is one of the most important aspects of your business. By leveraging your inventory, you can ensure success in business and increase your profitability. But inefficient inventory management can spell doom for your business, however big or small it might be. Your assets can turn into liabilities and can result in a situation of crisis. To make sure that you do not face such inventory crisis, you need to steer clear of certain mistakes. Outlined below are five common inventory management mistakes to avoid:
1. Incorrect Demand Forecasting
Demand forecasting refers to the estimation of what your customers are likely to purchase. If you go by a wrong estimation, you may stock up excessively on the products that are not in demand. Worse still, you may have a shortfall of the products that your customers would like to buy. The result will be a chaotic situation where you stand to lose significantly in terms of sales as well as customer satisfaction.
There can be several reasons behind an inaccurate forecast of demand. One of the main reasons is not implementing an effective method for inventory demand forecasting. To have a better understanding of the ebb and flow of your products, you need to acquire correct data for the same. Investing in an inventory management system can help you have accurate demand forecasting and enable you to adjust your stocks accordingly.
2. Manual Inventory Tracking
Manual tracking of your inventory can turn out to be a big mistake as far as time and money are concerned. If you still depend on a pen and paper or an Excel sheet to track your inventory, it is time for you to step back and reconsider the whole scenario. Manual tracking of inventory requires that you invest a lot of time and resources. Additionally, you remain open to the risks of human errors. This means you may not have accurate data on your hands even after the manual tracking of your inventory.
Automation can turn out to be the corrective measure for this issue. With an efficient inventory management system, you can cut down on the time and effort needed for inventory tracking. The automated steps of inventory control process will leave little room for error. So, you will have accurate data regarding your inventory.
3. Lack Of Proper Training
It is not enough to just invest in an inventory management system. The employees who are responsible for maintaining the inventory should possess adequate knowledge to handle the system. If you authorize someone lacking in knowledge to manage the automated inventory system, it can turn out to be a huge error on your part.
To avoid such errors, you need to make sure that your employees are properly trained to manage the system competently. Sometimes even a small mistake in managing the inventory system can turn out to be expensive for your business. That is why it is important that you allow only properly trained people to take care of your inventory system.
4. Organizing Of Goods Inside The Warehouses
More often than not, goods are kept in an unorganized manner inside the warehouses. Workers do not take the effort to consider whether the place is ideal for stocking the products before they go ahead with the task. As a result, it takes employees a lot of time to retrieve the products when orders come in. This leads to inefficiency and less productivity. In other words, valuable time is lost in just searching for the products within the warehouse.
To do away with such inefficiency and to optimize the flow of products, an inventory management system can be quite handy. The system will be able to inform you about the items that are in high demand. Armed with this information, you can get your warehouse organized properly.
5. Infrequent Inventory Checks
Many businesses follow the practice of infrequent checking of inventory. Additionally, they shut down sales operation for the day on which the inventory is checked. This results in loss of sales. If the business is big in size, the loss can be even more as the inventory check may continue for even a week or more.
If you are following this method of inventory check, you need to discard it as soon as possible. You will be better off having inventory checks at frequent intervals. By using an inventory management system, you can eliminate the need to close down your sales during such checks. As such, you won’t have to bear the loss of sales while conducting this activity.