Chapter 11. What Are Common Inventory Management Challenges? | Descartes Sellercloud
Chapter 11. What Are Common Inventory Management Challenges?
Welcome to Chapter 11 of our inventory management guide. In this chapter, we will go over the many challenges of inventory management and how to solve them. Not every challenge has a ready-made solution. In fact, a number of the challenges we’ll cover are ones you’ll have to constantly work through.
Top 20 Challenges of Inventory Management and How to Solve Them
You’ll notice throughout this chapter that several of the challenges listed have overlapping causes and solutions.
1. Limited Visibility on Warehouse Activity
The problem: When you have limited visibility on what goes on in your warehouse, all kinds of mistakes could be made, and you could miss out on areas for improving efficiency.
The solution: You can’t be on the warehouse floor 24/7. What really helps is software to monitor how staff use the space.
2. Overstocking
The problem: Overstocking can lead to too much of a particular product that you can’t sell.
The solution: Forecasting tools can help reduce overstocking by allowing you to order the right amount of stock needed.
3. Obsolete Stock
The problem: Slow-moving stock can soon become obsolete.
The solution: Track the aging of inventory to identify stock that may become obsolete and forecast to avoid this.
4. Poor Communication Between Departments
The problem: Communication gaps can lead to mistakes and delays.
The solution: Train employees on how their tasks impact others and ensure visibility across departments.
5. Poor Warehouse Management
The problem: Causes missed inventory, late deliveries, and increased labor costs.
The solution: Ensure proper training for employees and delegate tasks effectively.
6. No WMS
The problem: Without a Warehouse Management System (WMS), it’s difficult to manage inventory.
The solution: Source a WMS that meets your needs.
7. Inaccurate Reports
The problem: Can lead to misunderstandings of inventory levels and product demand.
The solution: Invest in software known to create accurate reports and ensure proper training is provided.
8. Poorly Organized Storage Areas
The problem: Difficult for pickers to find products and increases the chance of accidents.
The solution: Use a WMS with warehouse visualization features.
9. Unaware of How to Deal With Defective Products
The problem: Lack of a process for managing defective products.
The solution: Have a specialist determine the best course of action for defective products.
10. Unable to Forecast Demand
The problem: Disrupts inventory balance.
The solution: Invest in technology with forecasting features and regularly monitor sales data.
11. Handling Kits
The problem: Issues with missing components in kits.
The solution: Train employees and use software to track kit components required.
12. Multiple Warehouses
The problem: Managing inventory across multiple warehouses can be challenging.
The solution: Increase warehouse visibility with appropriate software.
13. Using the Wrong Software
The problem: Frustration with software that doesn’t meet needs.
The solution: Reanalyze needs and find software that can fulfill them better.
14. Unable to React to Changing Demand
The problem: Chaos with sudden changes in demand.
The solution: Develop a strategy to manage inventory depending on demand changes.
15. Poorly Defined and Inefficient Processes
The problem: Leads to errors and inefficiencies.
The solution: Establish proper processes based on workload.
16. Complex Stock
The problem: Handling perishable or oversized stock can be time-consuming.
The solution: Simplify storage of complex stock and allow enough space for maneuvering.
17. Broken, Ruined, Missing, or Stolen Inventory
The problem: Such inventory can be expensive and challenging to manage.
The solution: Establish processes to handle these issues and increase security measures.
18. Handling Product Variations
The problem: Confusing product variations can lead to errors.
The solution: Clearly mark variations and provide training to employees.
19. Not Learning From Mistakes
The problem: Inability to resolve repeated issues.
The solution: Set KPIs and focus on consistent improvements.
20. Neglecting Cycle Counts
The problem: Inaccurate inventory records due to neglect of cycle counts.
The solution: Schedule regular cycle counts and use reporting software.
Key Points From Chapter 11
You’ve now heard it all! There’s not a single challenge you’re not prepared for. Remember these key points:
- Many challenges have similar causes and solutions.
- Reporting and forecasting are vital.
- Proper training can prevent many issues.
- Some challenges may never be completely solved.