Dealing with inventory management challenges

Inventory management is indispensable, but it is often riddled with challenges. In the following section, we’ll discuss inventory management hurdles and how you can tackle them.

A lack of real-time inventory visibility

Many companies still rely on manual inventory tracking processes or outdated technology, which leads to reduced visibility into real-time stock levels. When inventory counts are inaccurate or unknown, a host of problems arise.

As a business owner, it’s crucial to have real-time insight into your inventory. Without this, you may face stockouts or overstocking that could impact customer satisfaction and your bottom line. Unfortunately, many businesses don’t maintain accurate, up-to-date inventory records.

Solution

Tools like POS and inventory management software can offer you real-time inventory management and complete visibility. The right tool will cut down on manual procedures and track actionable data, meaning your business will keep more money in its pocket.

Overstocking and understocking

Overstocking could lead to higher storage costs and the potential for obsolete goods. For a business earning $10 million in revenue, that translates to $400,000 in losses from carrying unneeded inventory. The more inventory a company holds, the greater these hidden costs become.

While overstocking causes its own challenges, understocking inventory can be equally detrimental to a business. When a company fails to keep adequate stock levels, it frequently leads to stockouts and shortages when demand exceeds supply. This can cause major headaches including missed sales opportunities, backorders, and most critically, dissatisfied customers.

Solution

Tackling this issue starts with effective demand forecasting. If you can predict demand, you’ll reduce the risk of surplus stock or running out of items. Using past sales data, current market trends, and analytics are key to making accurate forecasts for better inventory management.

Recognizing and tracking obsolete products

As consumer demands and tastes change rapidly, products can become obsolete seemingly overnight. Recognizing and tracking obsolete products in your inventory is essential to minimize losses and overstocking issues. Failure to address this in a timely manner could lead to wasted storage space and tied-up capital that could have otherwise contributed to your bottom line.

Solution

A stock control system will track product life cycles and alert you when items are nearing obsolescence, enabling you to plan accordingly. Whether it’s through discounting or creating promotions, establishing strong stock control systems can prevent obsolete stock.

Poor handling of perishables or fragile stock

Poor handling of perishables or fragile stock could lead to product expiration or damage, resulting in losses and customer dissatisfaction. Thus, developing and implementing smooth logistics processes for these kinds of stock items is a key challenge in inventory management.

Solution

Having an expiry management system can reduce losses. This type of system will monitor product life-cycle and alert management when items are nearing their expiry dates. With this information, quick action can be taken to sell or move the products before they become a loss.

Beyond the direct cost of wasted inventory, poor handling also creates hazardous waste removal costs and jeopardizes customer retention. Developing rigorous inspection, packing, and shipping procedures is vital for minimizing loss.

Understanding demand volatility

Solution

One way to understand and manage demand volatility is by consistently reviewing your reports dashboard. This will provide valuable insights into sales trends, showing periods of high and low interest. Armed with this data, you can adjust your inventory and ordering habits accordingly.

Conclusion

Inventory management may seem complex, but understanding its challenges and finding the right solutions can transform your business operations. As we have explored these five key areas, it’s clear that implementing specific and strategic approaches is key to success. 

9 perks of investing in an inventory management software

What are the advantages of investing in an asset tracking system for a business? There are some significant reasons to consider implementing a software tracking system for assets, especially inventory, for small retail shops to franchises and large department stores.

Reduction in operating expenses

Inventory management software systems are a great way to reduce the cost of doing business. It’s cost-effective for several reasons:

• It decreases the time it takes employees to review and track inventory, which reduces salary costs.
• There’s less excessive inventory purchased due to more accurate tracking
• Lower transportation costs and related expenses related to ordering more inventory than what’s required.

Overall, accurate tracking with software provides a more straightforward strategy of which items are required for an order, reducing costs.

Better customer service and experience

An accurate inventory system leads to greater efficiency in processing orders and determining customers’ stock. This feature increases the level of customer satisfaction and helps improve business and client retention. Inventory tracking software makes searching for specific products efficient, creating greater trust and loyalty between the business and customers.

Smooth coordination between store locations

Companies with multiple retail shops, kiosks, and distribution centers will benefit from coordinating with an efficient inventory management system. This improved process allows each location to view and determine which products are currently in stock and coordinate and place the products ordered.

An asset management system can provide an alert for low products and help initiate a new order for items running out or low in stock. Ordering is easy to process through the inventory software, which automatically updates the inventory to show which location receives the goods and when the shipment will arrive.

Improved inventory accuracy

Asset tracking software keeps accurate records of inventory levels, so there is little or no room for errors in the ordering process, including duplicate orders. Implementing this system creates a seamless way to replenish low levels or products without missing any factors while maintaining accurate inventory for each item.

Less manual, tedious work

Maintaining a history of orders and products

When you place orders through an asset management system, each order gets logged, the items included, and the total costs. These accurate details are maintained as historical data, which can be thoroughly reviewed and compiled into reports to review inventory and product trends. This information helps market-specific products, determining which items are best-sellers, and accounting functions.

Increased revenue

A well-maintained inventory system leads to better operations, efficient inventory, and more significant income. The overall flow of orders, stocking products, and selling to customers with ease makes the process effortless and pleasant for employees, customers, and management. 

Through data analysis and tracking, it’s easy to find which product lines are most in-demand during a specific season or holiday, which may result in increasing specific orders. This feature will keep customers returning and increase sales flow, resulting in better revenue.

Compatible for financial reports and accounting

All the details of ordering, product details, planning re-order points, and out-of-stock alerts compile easily into data for a wide range of reports. This information is vital for financial reporting and bookkeeping functions. Inventory tracking software provides an accurate record of every transaction, which is easy to export into another program, whether a spreadsheet or accounting software.

Information tracked in the asset management software is accurate and easily transferable into any format for reports and accounting functions.

Greater visibility

All levels of management, including each department, can access the inventory tracking system to view the same accurate data. From the warehouse or distribution center, managers can track shipped items, how many are left, and if there are any discrepancies in inventory. Customers have access to the process from their mobile device app, where they can view when their order is in transit and the expected delivery date.

Conclusion

Software inventory systems are essential for ensuring accurate data, seamless ordering, and accurate tracking of sales, purchases, and additional details needed for every type of business. Inventory management software significantly reduces errors, duplicate orders, and other inaccuracies, which leads to greater profits and improved customer satisfaction.