Top 10 Toughest Inventory Management Challenges – Part I

More than anything, inventory management is about understanding and managing your customers' needs. You want to have the product they want when they want it because you will struggle against your competition if you don't.

But it's easier said than done. Inventory management is really complex, there are a lot of moving parts, and you're only as strong as your weakest link. Which is why you need to ensure the strength of each piece.

It sounds tough, and it is, but don't worry. There are solutions. There are ways to overcome the challenges and master inventory management for good.

We created this two-part series on inventory management to help you do just that.  

This first post is all about the most common problems and stubborn challenges in inventory management. Our next post breaks down how you can overcome them.

Challenges in Inventory Management

1. Inefficient Processes – Using legacy systems or manual processes makes it harder for your business to grow. When spending so much time accomplishing simple inventory tasks, you cannot spend that time cultivating business, innovation, or customer satisfaction. Time is your most valuable asset, the one thing you can never get back or make more of. Make sure you spend it where you want to, not where you have to.

2. Limited Visibility – Without an integrated solution that updates in real time, it's hard to know what inventory you do and don't have. Which makes it hard to fulfill orders and satisfy your customers. Let's say you have inventory that's not available for sale. This could be for a handful of reasons: maybe it was just received and is being inspected. Or perhaps it's not usable, and you don't want to see it as available to sell inventory. Or, for whatever reason, it's being re-worked, and you don't want to see it as available while it's being worked on. So it would help if you could see into what inventory is available for sale and what's not.

3. Manual Documentation – When you document your orders or inventory in Excel or e-mail or on a whiteboard, you're stunting the distribution of data and limiting its potential. If you're not documenting in a centralized place that updates in real time, your teammates cannot know what's available, what's not, and how to satisfy the customers effectively. And let's say a teammate manages inventory with a specific supplier and mentally tracks when, what and how often to order. But, if that person were to leave or become ill, that information and knowledge aren't documented anywhere.

4. Increased Volume – With the onslaught of single-parcel orders and ecommerce orders, you must be able to move your inventory quickly to meet customer demand. Because if you can't, your customers aren't going to wait patiently for you to get organized. They're simply going to go elsewhere for what they need.

5. Unknown and Inaccurate Inventory Levels – Knowing exactly what inventory you do and don't have is the only way to fulfill customer orders successfully. If you sell an item that you don't actually have (because you don't have an inventory management software that tells you precisely what you do and don't have), then you're going to have a very unhappy customer. Many companies err on the side of caution. It's safer to have too much inventory than too little. That way, at the very least, you can meet customer demand. Still, having all that extra inventory isn't ideal. And if you're monitoring your inventory levels by walking the warehouse floors, you're not accounting for inventory in transit. A solution that lacks visibility into all inventory (whether it's in the warehouse or not) is necessary for solid inventory management.

6. Under/Over Stocking – Overstocking and understocking are two of the largest challenges in inventory management. Keeping a tight, accurate inventory means walking a fine line. You don't want to have too little and risk not meeting your customers' demands. But on the flip side of that, having too much means limited shelf space, unused and already-purchased product, and the risk of product spoiling—all three of which indicate a massive waste of money. Your CFO and executive team aren't going to be happy that mone is tied up in inventory that's just sitting in the warehouse. When you lack visibility into your inventory, you can't be sure of historical trends or inventory data, making it more challenging to be accurate when ordering inventory.

7. Inefficient Warehouse Environment – Are you running up and down the same aisles, again and again, trying to find, count and manage your inventory? Do you have to retrace your steps hundreds of times each day because your warehouse isn't organized in a way that's effective and efficient? All those minutes add up, and you can't get that time back.

8. Accurate Lead Times – In terms of inventory management, forecasting is huge. If you don't have the tools and technology to enable forecasting, knowing what your customers want basically boils down to good guesses. And working off good guesses often means either overstocking or understocking. With inbound shipments and containers, it's essential to have visibility into current status timelines (port date, delivery date, delay time, etc.) and efficiently get that data into the system. You also want to be able to update it as new information arises.

9. Confident Decision Making – The only way you can be confident in your decision-making is to have hard data to support you. But without a data repository or a solution to house, communicate and update your data, it's going to be really hard to find up-to-date, accurate data points every time you need to make a decision. You need visibility into all your inventory (and its corresponding data) to make bold, confident decisions on what you need and what you don't.

10. Insufficient Software – This means that to make your software work the way you want or have the functionality you need, you've purchased add-ons or created workarounds to manage your inventory. Your software should work for you. The way you need it to.

Inventory management is challenging. What you need is a robust enterprise solution. Something like a distribution enterprise resource planning (ERP) solution. To overcome all of these competing challenges simultaneously, you need software that's integrated and has functionality specifically for inventory management.

This is part one of a two-part series. Our second blog post will explore how to overcome all these challenges to master inventory management. It is doable, we promise. Tune in.

Ready to tackle your toughest inventory management challenges? Reach out, now.