7 Challenges In Inventory Management And How To Resolve Them

Warehouse management team checking organization and distribution in storage shipping center. Two beautiful elegant business people discussing about business improvement.
2 years ago

Inventory management is the practice and process of controlling the levels of records, cutting down costs and obstructions, and overseeing current and future stock requirements. It’s used to control the service levels required for internal and external customers, as well as visibility in supply chains.

There isn’t one accurate way to perform inventory management. The various systems available each have their pros and cons. You’re better placed if you’re able to determine current and future supply or distribution arrangements. Successful inventory management is achieved by recording correct data in all operations, making sure that stock is available in the right quantities as needed. For more insights on this practice, reach out to an expert RFID consultant.

Despite their willingness to ensure proper inventory management, companies still face a wide range of challenges. Below are some of the challenges companies face and ways they can address them. Read through to learn more.

1. Inconsistent Tracking

This means not having a systematic way of tracking, such as in manual tracking on different software. You’re bound to make so many errors. Instead, a company should invest in a centralized inventory tracking system that includes accounting features and tools.

In Retail Warehouse Manager Uses Computer with Inventory Checking Software, Talks with Storehouse Worker about Package Delivery. International Distribution Center with Shelves Full of Products

2. Interruption In Supply

The COVID-19 pandemic is one of the issues that adversely affected the supply chains of most companies. To address this, companies have resolved to prioritize the reduction of the risk of supply interruption as much as possible. They’ve been minimizing interruptions by working with local suppliers, setting up supply chain risk management teams, and embracing technology that improves makes supply chain processes, as well as being more transparent.

3. Restricted Visibility To Inventory

If you’re unable to find the stock in your inventory, it means that there’ll be a delay in shipping. Unfortunately, this will present the company in a bad light. To address this challenge, companies should invest in real-time inventory management systems that allow for the instant location of stocks. This results in accurate inventory and will in turn significantly increase customer fulfillment.

4. Heightened Customer Expectations

Increased customer expectations will push companies to keep up with higher demand and deliver flexibility in distributing their customers’ orders. You also have to be fully aware that other companies are also doing their best to keep up with the different needs of customers. To be able to compete effectively, you have to learn and clearly understand customer needs and constantly give them assurance that their expectations will be met.

5. Overstocking And Understocking

A company is said to overstock when it has more stock than what it’s selling. When this happens, the excess stock may no longer be in demand. In case a company is using a manual inventory system, it’s possible to forget the excess stock. This will lead to purchasing more stock when there is demand instead of using what is in excess.

On the other hand, understocking could be a result of an error on the side of the people managing inventory especially if they’re using a manual system. This means that production is slowed down or even stopped completely because of less stock, which is ultimately a loss to the company.

A proper inventory management system will help address this problem of overstocking and understocking. Keep in mind that effective inventory management ensures correct quantities of stock are available throughout the company’s operations. Thus, these processes will improve the financial well-being of a company.

6. Limited Or No Access To Inventory Information

Certain policies may work against a company to the extent of incurring additional expenses. These policies include restricting inventory information to a few chosen members of the organization. It’s important that all workers have access to all relevant information according to the particular departments they work in. This way, any of the workers can follow up on actions in case the person responsible for the task is absent and thus maintain a seamless process.

7. Incompatible Inventory Management Systems

Trying to manage a large inventory manually is setting up the company to significant losses that will affect the growth of the business. Note that as the sales increase, the same happens to one’s inventory. Therefore, it’s important to have an automated system in place to properly manage and track stock from the time it’s received to when it leaves the company premises. This will increase the overall efficiency of your operations.


Proper inventory management is an essential activity, whether for a startup or a well-established business that has been in operation for a long time. However, maintaining and achieving effective inventory management can be challenging. This article discussed a few of the most common difficulties companies face in managing their inventories, as well as the most effective solutions to these challenges.

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