What are the top inventory control challenges and how can you overcome them?

1 Data quality

One of the most common inventory control challenges is poor data quality. Data quality refers to the accuracy, completeness, and consistency of the information you use to track and manage your inventory. Poor data quality can result from manual entry errors, outdated systems, lack of integration, or insufficient validation. To improve your data quality, you need to implement data standards, automate data collection and entry, use barcode or RFID technology, and perform regular audits and reviews.

2 Demand forecasting

Another inventory control challenge is demand forecasting, which is the process of predicting how much inventory you will need to meet customer demand. Demand forecasting can be affected by many factors, such as seasonality, trends, promotions, competitors, and market changes. If you overestimate demand, you will end up with excess inventory that costs you money and space. If you underestimate demand, you will face stockouts, backorders, and customer dissatisfaction. To overcome this challenge, you need to use historical data, market research, and analytical tools to forecast demand more accurately and adjust your inventory levels accordingly.

3 Inventory shrinkage

Inventory shrinkage is the loss of inventory due to theft, damage, spoilage, or misplacement. Inventory shrinkage can reduce your profitability, inventory accuracy, and customer service. To prevent inventory shrinkage, you need to implement security measures, such as locks, cameras, alarms, and access control. You also need to train your staff on proper handling and storage of inventory, and conduct regular physical counts and reconciliations.

4 Inventory optimization

Inventory optimization is the challenge of finding the optimal balance between inventory availability and inventory costs. Inventory availability refers to how well you can meet customer demand with your current inventory. Inventory costs include the expenses of purchasing, storing, handling, and transporting inventory. Inventory optimization can be difficult because it involves trade-offs and uncertainties. To achieve inventory optimization, you need to use inventory management software, such as WMS or ERP, that can help you monitor and control your inventory levels, costs, and performance.

5 Inventory compliance

Inventory compliance is the challenge of meeting the legal and regulatory requirements related to your inventory. Inventory compliance can vary depending on the type, location, and destination of your inventory. For example, you may need to comply with safety, environmental, quality, or customs standards. Inventory compliance can be complex and costly, and failure to comply can result in fines, penalties, or legal actions. To overcome this challenge, you need to stay updated on the relevant laws and regulations, document and report your inventory activities, and use compliance software or services.

6 Inventory visibility

Inventory visibility is the challenge of having real-time and accurate information about your inventory across your supply chain. Inventory visibility can help you improve your inventory control, planning, and decision making. However, inventory visibility can be hard to achieve due to siloed systems, fragmented processes, or unreliable data. To improve your inventory visibility, you need to integrate your systems and data sources, use cloud-based or mobile solutions, and share information with your suppliers and customers.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?