Common Inventory Management Errors

Inventory management is one of the most complex tasks that those running a business have to undertake, because making a mistake with stock can mean running out of supplies or, conversely, having too many products accumulated that cannot be sold. For this reason, it is important that you know the fundamentals of inventory management to avoid making mistakes that can end up being very costly.

What is inventory management

Inventory is the set of goods or materials that a company has stored with the aim of making them available to its customers, thereby obtaining profitability.

Inventory and warehouse management is the process that controls the entry and exit of goods from the warehouse, ensuring that a certain product will be in the correct destination at a specific time.

This way you will know where everything is and you will be able to control the remaining quantities to know when you need to replenish.

We also recommend reading our article "How to reduce packaging costs in a company?"

In stock and inventory management, it is not only important to know how many products of each unit are held, but also exactly where they are within the warehouse. This is where having boxes for organisation and other similar elements is essential. This prevents part of the stock from getting lost within the storage location itself.

Types of inventories

Perpetual inventory

This is one of the systems with the greatest control, because it implies knowing at all times how many references are in the warehouse and where they are located. Today, it is only possible to do this if a good investment is made in stock management technology. The good thing is that it reduces errors and allows figures to be always updated for preparing financial statements.

Intermittent inventory

When the perpetual control system is not applied, a good option is to conduct a thorough inventory periodically. Ideally, this should be done at least twice a year to check the actual amount of stock in the warehouse.

Final inventory

This is carried out at the end of each financial year to determine the financial position at that specific time.

Initial inventory

This is what the entrepreneur carries out when starting their business, to ensure they have everything they need.

Common errors in inventory management

Inventory management methods can be more or less efficient depending on how they are applied. But there are a number of fairly common errors that can lead to significant inefficiencies:

• Ignoring demand Not being aware of demand to adjust stock levels appropriately.
• Lack of automation Not automating processes can lead to human error in data entry and large discrepancies.
• Poor organisation Inadequate organisation of merchandise in the warehouse, making access difficult or facilitating the "loss" of products.
• Infrequent checks Not performing regular, frequent stock verification.

Inventory management has direct effects on both customer service and company results, hence the importance of addressing this task in the best possible way and avoiding errors.

Inventory management significantly impacts both customer service and company profitability.

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