Inventory management is a critical component of the modern supply chain. It involves several moving parts, including the ordering, storage, and selling of raw orders and finished goods alike. An effective inventory management system can ensure desirable inventory levels, which, in turn, boosts product availability, order accuracy, and customer satisfaction.
As the basis of a properly functioning enterprise, inventory management has always been accompanied by significant challenges. Recently, however, these have accelerated as a result of supply chain issues and post-pandemic related instability.
Meanwhile, previous shortcomings related to inventory management processes have yet to disappear. For example, manual tracking continues to prompt errors and inefficiencies in warehouse operations. What’s more, outdated devices and software present huge security risks.
If anything, these problems are exacerbated by the unprecedented challenges of the past few years. With so much to overcome, businesses require every advantage they can find. Often, however, business leaders who face these challenges don’t realize how vulnerable their enterprises are — or if they do, they feel helpless to make meaningful changes in a timely manner.
In many cases, awareness is the important first step on the path to a viable solution. To help, we’ve illustrated a few of the greatest issues seen in modern inventory management, as well as options for resolving them.
8 Common Inventory Management Problems & Obstacles
A variety of concerns loom large in the world of inventory management and different industries face different struggles.
eCommerce in particular has struggled given the combination of heightened customer expectations and procurement issues prompted by an unreliable supply chain. Many challenges tie together, creating a spiral of struggle for small businesses and large corporations alike. Still, it’s worth sussing out which problems are most impactful. We’ve highlighted several of today’s most alarming and common inventory management challenges below:
1. Manual Processes
One of the greatest challenges in inventory management is using manual processes. Human error represents one of the most expensive issues in the warehouse space, but it also can be most easily resolved. Despite this, many businesses continue to cling to manual processes.
Often, this reluctance to adopt new, more effective technologies comes down to intimidation, cost, or fear of the unknown. With guidance, however, automation can easily be implemented in place of physical counts and other inefficient procedures. Upon seeing the advantages of these automated inventory systems, many previously reluctant entrepreneurs become enthusiastic about these new streamlined strategies.
2. Inventory Tracking
Reliable tracking is absolutely essential in today’s competitive market. As mentioned previously, manual systems often stand in the way; many businesses still rely on manual entry via spreadsheets or outdated software, which can lead to inaccuracy.
Centralized tracking solutions can remove some of the burden, providing automatic updates that are instantly accessible via the cloud. RFID tags and readers can also be implemented to optimize tracking. Well-defined read zones boost this effort, making it instantly clear when inventory is missing or otherwise compromised.
3. Inventory Visibility
Inventory loss is completely unacceptable, given the high level of oversight that today’s digital systems can provide. Often, limited real-time inventory visibility is at the heart of this issue. Digital processes can improve visibility but only if they’re customized and strategically implemented.
There should never be any question as to how many SKUs are available or where they’re located. Integrated tracking solutions and inventory management software promote end-to-end visibility, indicating exactly what is in stock and where issues such as shrinkage, stockouts, or overstocking might arise.
4. Multiple Systems in Use
From inventory management to asset tracking, today’s enterprises rely on a vast array of systems to keep operations working efficiently and effectively. With so many moving parts, however, it can be difficult to keep everything straight. If these various solutions are not carefully integrated, it can be difficult for them to achieve their stated objectives. Poor integration may prompt unacceptable delays or even errors.
These struggles are best resolved with a central solution, which should keep all systems working properly. A centralized inventory management approach limits confusion and will make every aspect more efficient, accurate, and secure.
5. Supply Chain Disruptions
Increasing supply chain volatility has made it incredibly difficult for enterprises to plan ahead. The unfortunate reality is that a lot more flexibility will be needed until current supply chain issues are resolved. Small businesses, in particular, will suffer if they lack agility in the midst of shortages and general uncertainty.
Moving forward, the ability to pivot at a moment’s notice will be crucial. Still, enterprises will need to handle these concerns without expensive overstocking, as this can lead to the costly problem of dead stock, which can impact your bottom line.
Demand forecasting can help businesses find a viable middle ground, while mobile insights and mobilized ERP data will provide the real-time data needed to make quick adjustments when necessary.
6. Warehouse Operational Efficiency
While inventory management encompasses a vast cycle that includes everything from ordering to delivery, the warehouse is one of the most crucial components. Unfortunately, this is also where many of the greatest inefficiencies lie.
Everyday warehouse management processes must be examined and updated constantly to ensure peak productivity. This begins with assessing warehouse design. Where can small adjustments be made to prevent congestion? How can limited space be utilized more efficiently to cut operational costs?
Again, inventory tracking and visibility play into this effort, as it’s impossible to make necessary changes unless the inefficiencies are spotted and addressed early on.
7. Accurate Reporting
Inventory cycles can be incredibly difficult to discern and understand in today’s complicated environment. Reporting systems provide much-needed clarity by examining everything from SKU profitability to turnover ratios and even stock levels. Equipped with this data, enterprises can determine the extent to which inventory will be required for fulfilling future customer orders and ensuring timely shipments.
8. Outdated Devices and Technology
Outdated devices aren’t merely less efficient — they can cause a whole host of security risks. As such, these devices need to be identified and attended to as quickly as possible. In many cases, replacements will be necessary, although some devices can get by with software updates. Either way, keeping up with the fast pace of change can be difficult — but the failure to do so can lead to security breaches and significant downtime.
Mobile insights are essential for addressing this problem; through careful tracking, it’s possible to determine when devices need repairs or replacements.
Inventory Management Solutions That Can Help
Take a quick glance through the challenges highlighted above, and it’s easy to see why so much frustration exists among businesses of all types. Tackling these problems can feel overwhelming, but today’s enterprises simply cannot afford to stick with the status quo.
Thankfully, a variety of compelling solutions are available. These must be selected and implemented strategically — but once they’re in place, they can make a world of difference. A few of the most valuable options are described in detail below:
1. RFID Tracking
Radio-frequency identification (RFID) systems rely on tags and readers to store and retrieve inventory data. RFID has been used for a wide variety of functions over the years, but it’s particularly valuable as an inventory management solution.
Under this approach, inventory can be processed far more efficiently, as there is no need for the line-of-sight scanning required with barcodes. Meanwhile, labor costs can be reduced dramatically, as RFID optimizes otherwise time-consuming manual inventory processes. Further savings are made possible when RFID solutions closely track returnable assets, thereby reducing the risk of them being lost or stolen.
2. Machine Vision Technology
Machine vision allows digital devices to perceive items much like the human eye typically would. This holds huge implications, as machine vision systems can efficiently scan to keep track of stock levels and organization. Increasingly, machine vision solutions are tied into RFID setups, as these technologies can work together to reveal and analyze patterns that humans alone might miss.
3. Mobile Insights
As mentioned previously, mobile insights help to determine how devices are functioning at any given moment — and whether any changes may be needed in the near future. An enterprise mobility intelligence solution can deliver tailored insights on data usage, battery level, and more. This enables a more proactive approach, thereby reducing the risk of downtime.
4. Proper Wireless Setup in Warehouses and Throughout Operations
Tackling these challenges is not possible without a reliable wireless connection. When this is lacking, the shift from manual processes to automated systems will provide little value; why switch from the clipboard to a mobile device if a spotty connection makes it impossible to access real-time data?
A wireless system assessment can pinpoint areas of weakness to ensure that the full scope of devices and systems remains accessible at all times.
Planning to Face These Challenges
At Peak Technologies, we are well aware of the myriad of inventory management problems that today’s enterprises face. We are committed to making a meaningful difference.
Our team is happy to provide further insight into the common challenges and solutions described above, as well as other opportunities for improving productivity and cutting costs. Contact us today to learn more about our customized solutions.