Useful Tips for Maintaining Accurate Inventory

Main Reasons Why Businesses Fail to Maintain Inventory Accuracy

As a business owner, you may also face issues with your inventory which disrupts your entire supply chain. However, you may be unaware of all the factors that contribute to these errors in the first place. The following are the primary causes of inaccurate inventory:

1. Inaccurate quantities

Inaccuracy remains one of the most serious issues currently faced by warehouses. Inaccuracy occurs in various ways, including incorrect quantities, misplaced storage locations, erroneous pricing, and wrong identification.

Most businesses will encounter an incorrect quantity of one or more products in their warehouse at some point. This is common in retail companies, particularly big-box retailers with millions of product stock-keeping units or SKUs.?

Incorrect product quantity is frequently the result of another area of inaccuracy. An item placed in the wrong location of a warehouse may be overlooked when searching for inventory. As a result, the item count in the inventory will be incorrect.

2. Storage issues

Capacity issues are frequently associated with inventory issues in both large and small warehouses. When a warehouse becomes overcrowded with pallets and cases of inventory, basic warehouse management rules are frequently overlooked.?

Products are often damaged, lost, and not accounted for in the inventory management system in an attempt to store more inventory. Storage issues can also lead to obsolete inventory.

?A company may only have one product carton left but cannot locate it due to storage issues. As a result, the product becomes obsolete and is written off the company’s balance sheet.

3. Product damage

In a warehouse, inventory becomes vulnerable to damage every time it is touched or moved. Many businesses attempt to recoup some of the financial losses associated with damaged inventory by selling it at steep discounts to the general public—consider furniture liquidation centers that sell scratch and dent merchandise.

?Inventory damage can occur in various ways. If a company has a large amount of damaged inventory, it should consider additional employee training and root-cause analysis to determine the source of the problem.

4. Issues with product identification

Warehousing issues arise when inventory arrives with incorrect labels, barcodes, product SKUs, or packaging.?

For instance, an orange bottle has the SKU ABC123, whereas a blue bottle has the SKU DEF456. Both cups are sold in cartons of 100. The SKU and description of the product, as well as a barcode for scanning the product into the inventory software, are printed on the outside of each carton.?

When the orange bottle arrives, the warehouse scans the barcode label on the cartons, but the manufacturer inadvertently places the barcode on the labeled blue bottle. The warehouse employee accepts the barcode scan without inspecting the contents of the box. This results in inventory errors.

5. Lack of proper training

Many warehouse inventory problems are caused by insufficient or non-existent employee training. Human error is usually blamed for inventory accuracy, damage, and product identification problems. Inadequately trained warehouse personnel cause inventory problems that better-trained personnel routinely avoid.?

For example, an inexperienced forklift driver is more likely to damage products during inventory storage and retrieval. Proper training boosts warehouse efficiency and productivity while reducing inventory management issues.

6. Inaccurate return records

Another root cause of inventory inaccuracies is mismanaged returns. For example, if you coded returned goods incorrectly, you’ve created an incorrect return record and marked a damaged product as available. This human error results in false inventory records when the item is reintegrated into your inventory.?