How to Avoid Inventory Management Mistakes
Inventory management is essential for your business to run smoothly and efficiently. However, many organizations continue to make fundamental errors that jeopardize their resources. For example, studies found inventory distortion costing businesses $1.8 trillion in 2020.
Here are the top 10 mistakes that we see in every inventory warehouse.
Excessive Inventory On Hand
Setting a clear reorder slot for each item helps merchants know when to purchase additional stock, ensuring you never have too much on hand at any given time. It is a precise point that works as a trigger once the stock reaches that level.
Lack Of Inventory Management KPIs
KPIs are essential. It is hard to know how well your team is functioning without them. A well-defined set of KPIs for your operations staff may also help prevent inventory management errors.
No Inventory Checks
Inventory audits are a pain in the neck and a necessary one. It would be best if you stopped processing orders in your warehouse at least once a month to count every item on every shelf, in every bin location.
Hiring The Wrong People
Any HR manager will tell you that terrible hiring may be a significant issue on your team. Whether you’re hiring for marketing, purchasing, sales, or warehouse operations is true. A survey conducted by E&Y found 61% of executives are committed to training their workforce to use new digital technologies.
Inadequate Inventory Control
Setting up inventory correctly in your warehouse may make or break your business. When done correctly, a well-organized warehouse may assist reduce shipping problems, enabling you to send orders more quickly and ultimately save money.
Too Much Storage
A storage location might be a warehouse, a shop, or a reserve. The more storage sites you have for the same goods, the more you expand your inventory mechanically without necessarily boosting your service quality.
Inadequate Real-Time Reporting
Real-time reporting tools increase visibility, leading multi-channel commerce organizations to prioritize them. To make the most of these process improvement opportunities, your firm should collect real-time data on stocks, orders, and other areas of the business to assist your organization in optimizing its processes.
Not Putting Up New Product Orders in Time
The implementation order or the new product request is the initial order you present to your supplier for a new product. It should ideally account for 30-40% of the yearly budget.
Lack Of Forecasting
Your business might fail to meet consumer needs due to inaccurate forecasting, resulting in decreased customer satisfaction. Monitoring inventory allows you to prepare ahead of time and know what is in stock and on the increase.
Reliance On Internal Resources
Every successful retail business realizes that handling logistics and eCommerce fulfillment in-house makes no sense. A logistics consulting specialist can help you choose the best time to outsource logistics and inventory management to a trustworthy third-party supplier.
How To Prevent These Inventory Management Mistakes?
Here are three short recommendations for getting your warehouse up and running:
- Place your best-selling merchandise as near to the packing workstations as feasible
- To digitally choose orders, use a mobile device. This saves a lot of time and can drastically reduce human mistakes
- During downtime, have your warehouse workers construct a batch of empty boxes in preparation for the next round of orders
Things change too quickly, both in your business and in technology. Even the most experienced inventory managers will struggle to create a system that reaches peak efficiency from the start. The best strategy is one that is self-improving and recursively improving.
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