5 Inventory Management Mistakes You Could Be Making

Do you think inventory management is a monster that cannot be reined in? Are you among the retailers who collectively lose over $1 trillion globally due to poor inventory planning and management? Shoddy inventory handling methods can make or break a retail business. There is simply no two ways about it. How, then, do so many retailers trip up here? For one, a lack of awareness of inventory handling best practices results in huge product losses annually.

NOT USING BAR CODES
Bar codes are the simplest, most efficient way of data storage. When every product in the inventory is labeled with the bar code, the chances of human error in identifying, packing, and shipping the right product are reduced significantly.

Bar codes are very cheap to print as well, and can be scanned in a matter of seconds with a bar code scanner. You can map your product SKUs to their bar code to help identify the products in your inventory much more easily.

For example, if you have two products of the same type but different attributes (such as weight, quantity, etc.) you can assign two separate bar codes to them. When a consumer places an order for a product with a certain attribute, all you need to do is find the matching bar code for that particular SKU.

NOT HAVING RELIABLE INVENTORY PROCESSES
Do you have a set process for how products are shipped out of your warehouse? It probably involves matching the product with an order, packing, labeling, shipping, and delivery. At each step of the way, you have a means to keep an eye on the order and adjust inventory levels depending on its journey.

If you don’t know how many products you have received, when you received them, and with how much lead time, it becomes hard to sell effectively. Raising a purchase order and receiving goods is not as simple as it sounds. How much of a certain product should you order? What is the reason behind ordering only so much, and not more or less? Calculating the amount of inventory you need can make this part of the process easier.

Then there is the actual process of receiving goods, inspecting them, and adding them to your inventory. Do you have a mechanism in place to check all incoming goods within twenty-four hours of receiving them? Is this 24-hour period part of your lead time calculation? Also, once you do receive the products, how do you add them to your inventory? How do you update inventory for all of your channels of sales?

UNTRAINED STAFF
Human error, lapses in judgment, and subjective handling of inventory are still prevalent in retail. For example, one warehouse worker may look at a product, decide it is fragile and add packaging to it appropriately. The intention is good, but the package may eventually end up weighing a lot more than the product itself, thus costing more to ship.

Another worker may be unaware of correct storage of a product and unknowingly reduce its shelf life. A third may misplace goods by storing them at the wrong location, and any stock you cannot find in time is effectively dead stock later.

While it is impossible to have SOP's for every single product and process, training your staff about your products, their proper storage, and handling, when to make exceptions, etc. can help them make decisions more easily and effectively. You may not be able to account for every single scenario, but you can address commonly reported problems every quarter or so, so that your staff are aware of what to do in different circumstances.

UNTIDY STORAGE
Not just that, if you set a bad precedent, your staff will be more than happy to follow through the same way. Boxes that are strewn around, a lack of knowledge about storing products carefully, goods that get damaged due to them being stowed around casually can all become part of the culture itself quite quickly.

Constant monitoring and audit of the products is a must-do. You can use several different methods to count your inventory accurately. You can attach a premium to keeping the warehouse in good shape. While not entirely recommended, sometimes, penalizing bad storage and handling can help.

NOT USING THE RIGHT INVENTORY MANAGEMENT SYSTEM
Gone are the days of using spreadsheets for keeping a count of stock. For one, they need to be manually updated every time you make a sale. Also, a spreadsheet is highly prone to human errors in counting.

So, if the consolidated inventory gets sold out on one channel, people will not be able to buy from any of the other channels as well, until you receive fresh stock. Integration such as Accounting and Shipping ensure that you are able to manage your business from a single platform.