5 Common Inventory Management Mistakes You Should Look To Avoid
It is no secret that disorganization can slowly eat away at your company’s successes and fortunes. The effect of disorganization can be felt most in the area of inventory management. Many business owners do not take inventory management seriously. This is something that experts warn against.
Underestimating the disastrous effects of faulty inventory management can exhaust your company’s finances, give rise to mismanagement and rising costs. In this article, we look at the five most common inventory management mistakes that businesses should look to avoid.
List of the 5 Most Common Inventory Management Mistakes you should avoid
1. Not spending time on the Training Period-
The last thing as a business owner that you would like to see is your employees spending weeks doing absolutely nothing while understanding how the software works. Yes, this is a major reason why most businesses are unable to effectively implement inventory management mistakes. Lack of training becomes counterproductive to a business organization.
2. Avoiding seeking help from the Software Company-
If you are using a new materials management software you need the guidance and support of the software company to help you get familiarised with the same. However, most businesses get the software, look at the manual and start going about it. This is something that should be avoided. Going in for help with the software company can help in getting the best out of it.
3. Maintaining too much Inventory-
According to experts, care should be taken to ensure that your inventory is clutter-free and organized. You need to clear the old and dilapidated stock and ensure that you are only using fresh raw materials and new stock in your inventory management. Too much inventory is never a good thing for a business and can drain it both organizationally and financially.
4. Not Performing Monthly Inventory Management Audits-
Let us get one thing straight. Inventory management audits are not a waste of time. In fact, on the contrary, they lead to a better, much more efficient, and productive organization. This is time invested in terms of improving processes, checking for wastages, identifying turnaround times, and fixing responsibilities among the workforce.
5. Not getting all employees on board-
Any new process might be introduced from the top-down. However, its success is only guaranteed if it follows a bottom-up approach in its application. You need to get all the employees of an office on board when going in for new inventory management software. This also includes housekeeping, as it is responsible for a lot of disposal work within an office.
Steps that can be taken to Eliminate Mistakes in Inventory Management
It is important that businesses take the following steps to mitigate the mistakes in their inventory management processes-
- The ‘price of the product’ cannot be a be-all and end-all. Rather the ‘total cost of the product’s ownership’ should be taken to calculate and fix actual costs.
- It is important that products that are being classified as an inventory be labeled and classified in a detailed fashion at all times.
- External factors like a seasonal hike in demand, lean periods, season changes, and other variables should be taken into consideration in inventory management.
- Integrating data studies and analytics into the process can help in integrating inventory management processes and demonstrating the results from the same.
- Employees should be properly trained and encouraged to use technology and digital integrations in place of work. This will help create a future-thinking workforce.
The Final Word
By reducing or eliminating the major inventory management mistakes, you can give your business a shot at succeeding. If you wish to add to the list of mistakes or want to know about specific elements of inventory management, let us know in the comments below.
