Inventory is the lifeblood of any business that deals with products, and it is vital that you manage it efficiently for business success and growth.
The challenges of inventory management are several.
The right solution can help you boost profitability and deliver outstanding customer service.
This is regardless of what the inventory location is – one warehouse or several; or even supplier drop-shipping.
Proper management of inventory helps cut costs, enhance cash flow, and ensure continuous production, and fulfilment of customer orders in time.
Partnering with a reputed service provider like Tranquil can mean the difference between chaos and seamlessness.
Staying on top of your inventory will allow you to generate sales, fulfil customer demands, and maintain business continuity.
Let us take a look at the most common inventory management problems and solutions.
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Common Inventory Management Problems and Solutions
1. Lack of Inventory Visibility
If you’re unable to locate or identify stocks in your inventory, shipping products on time becomes very difficult, and this can dent your business reputation.
Inventory that is incomplete, difficult to find, or erroneous, is sure to hamper your bottom line.
In fact, the most common reason for delayed, wrong, or partial shipments is the difficulty of locating or identifying inventory in the warehouse.
Receiving in finding the correct stock is critical for ensuring warehouse efficiency, as well as good experiences for the customer.
Solution: Real-time inventory management system
When you implement a real-time inventory management system like Tranquil ERP, you will have all the accurate details regarding location data, and stock availability.
This will help in the easy location of stocks, which ultimately translates to better order fulfilment and customer satisfaction.
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2. Inefficient Inventory Management Process or Software
This is probably the most common, and the biggest inventory challenges.
Many businesses still try to manage their inventory with manual procedures, or outdated legacy software – which may stunt your business growth.
It may not seem much of a bother to use manual, labor-intensive, or low-tech systems when you’re a small, one-warehouse business – but that will change when you expand.
When sales volumes balloon, you need to expand inventory and add warehouses.
Old and inefficient inventory management practices will be tough to scale, and prove to be a handicap, and not give you the results you need.
Manual inventory tracking procedures involve either paperwork or tracking procedures across multiple spreadsheets and software, which can lead to data redundancy, incomplete data, and a lot of time spent on it; it also provides less security.
In today’s competitive age, it is essential to know at any point in time, exactly what inventory you have; you can no longer rely on physically counting inventory annually using all your employees.
Another big problem is inventory loss caused by theft, damage, spoilage, and so on; this supply chain issue requires the ability to properly pinpoint, track, and measure the problem areas.
You can scale inventory management software and support complicated logistics, only when you are able to integrate it with your existing business software.
This cannot be achieved with outdated, legacy systems.
Solution: IoT-driven inventory management solution
An inventory management system that leverages IoT will empower your warehouse staff, and help them manage stocks and track them throughout their time in your warehouse efficiently, and quickly.
You can streamline your inventory management with the right solution, and enhance inventory efficiency.
It’s not just large corporations, but even small businesses that can benefit from a centralized inventory tracking system with integrated accounting features – all of which can be found in Tranquil ERP; it is robust, intuitive, economical, flexible, and scalable.
3. Tracking Obsolete Material
In almost every business, you are likely to face this problem at some time or the other.
There will be some products or materials that remain unsold or unused, and they may become obsolete, or past their expiry date.
These materials or products tend to accumulate over time as they are mostly ignored by inventory managers.
When that product or material is needed sometime in the future, unfortunately, the unsold stock stays forgotten, and new stock is purchased; the older one may remain in the warehouse for so long that it gets damaged completely.
This increases expenses, and material wastage.
Solution: Efficient stock control system
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This feature is included in the Inventory management module of Tranquil ERP.
You will be able to locate the dead stock and make proper use of them.
Such a software solution can help inventory managers significantly in controlling stocks.
4. Identifying Incorrectly Located Materials
When there is no proper system to track products, materials, or equipment in the store, it can be cumbersome and time-consuming to find them when you have sales orders.
After all, a warehouse may typically store thousands of products. This can delay sales and make customers unhappy.
Solution: Product finder
All products that you have should be tagged with RFID, barcodes, or QR codes etched with a laser.
This will help your employees identify the products that are needed.
They only need to be equipped with a scanner. Once the scanner finds the required product, a lamp glows, indicating a match.
This helps your pickers to quickly find the product and send it to the sales agents, saving them time, speeding up the sales cycle, and making customers happy.
5. Keeping up with Overstocks
When you purchase new materials with a few unsold products lying in your warehouse, it can affect your profitability.
This situation mostly arises due to the inefficiencies of manual processes, which causes poor control of stock.
Storing too much stock is as bad as storing too little, as overstocking hampers your cash flow and creates problems related to inventory, like storage, or loss.
Solution: Stock audit process
When you implement a stock audit process, inventory managers will be able to audit stocks regularly so that unused stocks are quickly identified.
This boosts the efficiency of inventory greatly, enabling your company to cut costs, eliminate delays, and enhance profitability.
6. Managing Inventory Waste & Defects
Though it may seem small, it is one of the most common and repetitive inventory management problems that can cause huge losses eventually.
To be able to fulfil orders in time, it is essential that you maintain optimal inventory.
Without standard procedures and untrained operators, you could end up with inventory that gets damaged or wasted – and this can not only prove to be very expensive but also lead to dissatisfied customers.
Solution: Modern inventory management software
Tranquil ERP has a robust inventory management module that enables you to manage and control your inventory efficiently.
With streamlining of procedures and processes, your employees will find it easy to perform their jobs, and you can cut costs and eliminate wastage.
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7. Lack of Centralized Inventory Hub
Stocktaking becomes very challenging when you have inventories in multiple locations.
Discrete stock data from various locations makes shipping complex, resulting in delays.
It’s one of the biggest and continual challenges faced by most businesses today.
Solution: Central inventory system
You can significantly reduce expenses and save a great deal of time by simply creating a centralized inventory hub for your inventory-related data, including stock-taking.
This gives you comprehensive visibility and control of inventory and data in one single location, making stock management simple.
It also becomes much easier to track the inventory that enters and leaves your business premises.
8. Changing Demand
Consumer demand is in a constant state of flux; this makes storing inventory complicated.
How much to store? Too much, and you could end up with dead stock; too little, and you won’t be able to fulfill customer demands.
Solution: Technology to Plan Inventory
What you need is robust inventory forecasting technology that takes into consideration all these factors, and helps you plan your inventory more efficiently.
Tranquil ERP’s inventory management module has the forecast feature that helps create and implement the optimal inventory plan.
This can help you to keep up with fluctuating customer demand.
9. Supply Chain Complexity
International supply chains are dynamic and can create roadblocks in the management and planning of your inventory.
Manufacturers and distributors are impacted by unforeseen economic booms and slumps which impact raw material prices and availability.
They also decide when, how, and where to ship the inventory – and this means you have lead times that you cannot predict, necessitating you to be much more flexible.
Solution: Robust Inventory Management application
With the right inventory management application implemented in your business, you can predict lead times as close to accuracy as possible, and be better prepared to handle supply chain complexities.
10. Managing Warehouse Space and Efficiency
One of the most challenging tasks for any business is the efficient management of space.
Warehouses need to be planned and designed with the help of inventory management platforms so that you can control when new stock is delivered, and help you make the best use of available space.
If you deal in fragile or perishable products, you need to arrange specialized care and storage – for example, cold storage.
You have to implement specific strategies for expensive inventory, to prevent theft and damage.
Warehouse inventory control is labor-intensive, and necessitates multiple steps like receiving the stocks, putting them away, picking inventory, packing, and finally, shipping.
It is critical that all of these tasks are executed as efficiently as possible.
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Solution: Warehouse Management System
Inventory management modules either have warehouse management as a feature or are integrated with warehouse management modules.
This can help you automate many of the tedious tasks and bring in more efficiency in the entire warehouse management of your business.
11. Insufficient Order Management and Poor Production Planning:
Production planning is of critical importance if you don’t want to have a stoppage of production and cause budget overflows.
If you don’t plan it appropriately, your sales forecasts can go haywire, as can your project scheduling.
Thinking that there is sufficient stock, and overselling products is a common challenge faced by many businesses.
Solution: Production planning software
Production planning software makes use of seasonal trends, and historical data to make fairly accurate predictions that help you plan production better.
12. Lack of Expertise and Poor communication
While every business would love to have inventory managers who are excellent communicators and tech-savvy, taking to new technology easily, the truth is that it seldom happens that way.
Merely deploying the most feature-packed ERP system will not cut it if it’s not used properly.
Solution: Proper Training
From the outset, importance should be given to imparting proper training to all those who will use the new system.
It should be especially impressed upon the managers that they need to familiarize themselves with the new system properly.
The different department heads should also be told about the importance of collaboration and sharing data.
Disparate solutions for every process can cause confusion and improper data. A one-stop solution like Tranquil ERP can help you decrease wastage of materials, and attain more efficiencies in your inventory management, and across your organization. Tranquil is a robust, cutting-edge ERP solution deployed in the cloud that helps you maximize your inventory usage. Schedule a demo with us to know how our software works and how it can benefit your business.