March 9, 2022

5 Ways Poor Inventory Management is Hurting You

The most common reason for business failure is poor inventory management and insufficient ways people manage their inventory. Inventory management is a delicate balancing task between either too little or too much. It would help if you learned why inventory management is essential to a successful business.

Some signs of poor inventory are as follows:

1. Missed Sales

This occurs when you cannot fulfill an order promptly due to less stock of the requested item. When this happens, the client will hunt for another store to purchase. The cost of lost sales is set by the product's price and the number of orders. Having a popular item out of supply during a peak shopping season may be pretty expensive. Many firms keep a bit more stock on hand than they think they'll need to avoid running out. It's critical to have enough supplies on hand. A company with a reputation for regularly running out of goods will struggle to attain its full potential.

2. Fewer Customers

Customers seldom look back once they locate a provider that can fill their requests quickly and at a reasonable price. They would continue to do business with the corporation unless they have a definite cause to do otherwise. You have lost their recurring business if these consumers were turned away due to a stockout situation in your inventory. Each of these lost consumers represents a lost supply of regular revenue for your business. Getting a stock out and losing a large number of consumers during a high buying season, as with the preceding point, will have a long-term impact on your firm.

3. Poor Cash Flow

If you have an excessive amount of money invested in unsuitable inventory, e.g., slow-moving or outdated products, you will have fewer resources available for your fast-moving stock. When you are stocking up on slow-moving stock, it's a sign that your inventory levels aren't optimal. You'll always have trouble with overstocking and stockouts. You will better understand your inventory movement if you use an integrated business solution. You'll be able to anticipate inventory more accurately, which will aid in your Purchase process and ensure ideal inventory levels.

4. Physically Verifying The Stock Levels

You know your inventory control system fails when your sales and customer care staff have to physically check that there is adequate stock to take an order as they don't trust the charts. In addition, the requirement to manually count your inventory reduces staff efficiency and impacts your company's overall operations. Adopting an inventory control solution will solve this problem since your team will always have accurate data on stock availability.

5. Excessive Inventory Costs

The cost of keeping inventory is also a factor. It entails paying rent for large warehouses. In addition, excess inventory obstructs warehouse operations or takes up too much space that can be used for things that move more quickly. Excess inventory management involves employment costs as well.

In addition to having too much or too little inventory, inefficient inventory management results from a lack of precise actual info on what stock you have. This raises the danger of making mistakes while reordering goods from suppliers or selling product that does not exist. These errors result in loss of revenue and recurring consumers and an excess inventory of the incorrect SKUs.


If you're still not convinced that poor inventory management is hurting your business, take a look at the five points we've outlined. And if you're looking for a reliable software system to help with your inventory management woes, get in touch with our team. We can help you find the perfect solution for your business needs. 

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