{"id":5143,"date":"2021-08-12T09:57:31","date_gmt":"2021-08-12T09:57:31","guid":{"rendered":"https:\/\/www.brightpearl.com\/?p=5143"},"modified":"2025-09-09T16:54:02","modified_gmt":"2025-09-09T16:54:02","slug":"common-inventory-management-mistakes-and-how-to-fix-them","status":"publish","type":"post","link":"https:\/\/www.brightpearl.com\/blog\/common-inventory-management-mistakes-and-how-to-fix-them","title":{"rendered":"Inventory Management Strategies, Mistakes, and How to Fix Them"},"content":{"rendered":"

Inventory management is a central part of business administration and management. Your inventory doesn\u2019t just impact your customer relations and <\/span>customer service provision<\/span><\/a>, it also has a direct influence on your business\u2019s bottom line and forms an intrinsic part of your supply chain<\/a> management.\u00a0\u00a0<\/span><\/p>\n

These are just some of the factors that can come into play when businesses talk about inventory management<\/a> and some of the reasons why good inventory matters. What other benefits can your organization gain from having good inventory management? And what are the most common mistakes that stand in the way of this?\u00a0<\/span><\/p>\n

This article will have a look at these and give you the best solutions so you can master this essential business skill!<\/span><\/p>\n

Why Good Inventory Management Matters?<\/span><\/h2>\n

Good inventory management has an impact on all areas of your organization\u2014from business costs to punctual order fulfillment<\/a>. This makes it important to create a system that makes inventory management smoother and more functional. There are many ways to do this, the most popular being the use of software solutions.\u00a0<\/span><\/p>\n

But how can good inventory management benefit your business? Why does it matter? Here are a few good reasons to improve this aspect of your company management.\u00a0<\/span><\/p>\n

Inventory management techniques for cost reduction<\/h3>\n

Any worthwhile inventory management tool or structure should be able to conduct <\/span>economic order quantity (EOQ) estimations<\/span><\/a>. This helps you note the best cost-saving approach for placing orders. This technique compares the product storage costs against the product order costs. This way, you can reduce your warehouse<\/a> or storage fees by managing product levels in a way that cuts your storage costs.\u00a0<\/span><\/p>\n

Inventory management strategies to increase profits<\/h3>\n

When you have products that aren\u2019t selling just sitting in your warehouses, then your business makes a loss. You\u2019ve forked out money buying or making the products but you don\u2019t get returns on that investment. With forecasting as part of your inventory management, you can decrease the risk of unreturned investments by monitoring the number of sold items and estimating how many sales you may make in the future.\u00a0<\/span><\/p>\n

Good inventory m<\/span>anagement software<\/a> will also automatically update your stock levels with each sale or order, ensuring you don\u2019t buy too much product. We\u2019ll discuss this more when we look at some of the mistakes people make with inventory management and the solutions that exist to address these mistakes.<\/p>\n

Automated inventory management for better stock availability<\/h3>\n

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Image source<\/span><\/a><\/p>\n

There\u2019s little worse than going into a shop (whether online or brick-and-mortar) with your heart set on an item only to find that it isn\u2019t available. Very few customers in this situation tend to stick around and browse for an alternative item to purchase. Most, simply do a runner to try and find it somewhere else. If this happens repeatedly, then you might find customers no longer visiting your store at all.\u00a0<\/span><\/p>\n

Inventory management helps you monitor your stock levels and order the right stock numbers to cater to your customer demand, helping you make sales now and keep customers coming in the future. Furthermore, if you have many <\/span>sales touchpoints or many points of sale<\/span><\/a>, then inventory management makes it easier to keep tabs on all the sales coming in from different channels.\u00a0<\/span><\/p>\n

Good inventory management speeds up order processing<\/h3>\n

Great inventory management includes warehouse and order management<\/a>. With warehouse management<\/a>, you can keep an organized and clean storage space, ensuring product quality and minimizing the chance of lost packages or stock level miscounts. Furthermore, it makes it easier for your workers to select the right merchandise to match customer orders, ensuring the <\/span>dropshipping model<\/span><\/a> you use delivers exactly what they paid for.\u00a0<\/span><\/p>\n

On the order management front, it doesn\u2019t make sense to <\/span>record phone conversations<\/span><\/a> so you can remember what orders you have open. Rather, you can use your inventory management to make certain that you fulfill orders in time by tracking the order process accurately. Thus, you ascertain that your customers get what they ordered and that they get it on time.\u00a0<\/span><\/p>\n

Improves customer service<\/span><\/h3>\n

You can see above how product availability has a direct impact on customer satisfaction and loyalty. It\u2019s also clear how speeding up order processing leads to better customer experiences as buyers can get their items quicker.\u00a0<\/span><\/p>\n

Better order processing<\/a>, product availability, and customer service<\/a> all contribute to a better customer experience and loyalty to your business. Thus, inventory management has just as much of an influence on your customers as a <\/span>quality monitoring call center<\/span><\/a> might, for example.<\/span><\/p>\n

Promotes better use of storage spaces<\/span><\/h3>\n

Clearly, inventory management helps with warehouse organization. It allows you to make sure your storage spaces function more efficiently by analyzing space, considering pallet sizes, calculating the cost per square foot of space, and helping you find cost-saving storage methods. Some inventory management software<\/a> also includes barcode scan systems that can help with monitoring inventory levels, reducing inaccuracy.\u00a0<\/span><\/p>\n

Eases functionality<\/span><\/h3>\n

Overall, setting up an inventory management structure, tool, or software can assist you tremendously in coordinating all the elements above, especially if you have numerous sales platforms. You improve your business\u2019 productivity and functionality and streamline inventory activities for the better of your business!<\/span><\/p>\n

7 bad inventory management mistakes and how to fix them<\/h2>\n

1. A lack of performance standards<\/span><\/h3>\n

It\u2019s hard to address issues or problems when you have no clear standard to measure them against. While being aware that there are issues is a start, knowing what the ideal standard is means a whole different thing, and this is something that businesses tend to overlook.\u00a0<\/span><\/p>\n

You need to have measures in place to monitor whether your storage spaces are functioning efficiently, or your order management is good enough, for example.\u00a0<\/span><\/p>\n

The solution:\u00a0<\/span><\/h4>\n

Implement Key Performance Indicators (KPIs) that will help you track whether you are meeting the performance levels that optimize your inventory management. For example, you can choose to track your fill rate and inventory movement. That way you can track the number of orders, stock coming in and stock going out to fulfill these orders.\u00a0<\/span><\/p>\n

Once you\u2019ve decided on your indicators, it becomes easier for you to track metrics that show you whether your inventory management is performing as you would like it to.\u00a0<\/span><\/p>\n

2. Overordering\/overselling<\/span><\/h3>\n

Imagine this: your business has been doing extremely well with orders coming in every day. Your products are exceptional, customer reviews point to <\/span>customer satisfaction<\/span><\/a> and sales are out of the roof\u2026 That is until a customer tries to place an order and you realize you no longer have any more stock available. You\u2019ve oversold!\u00a0<\/span><\/p>\n

On the other hand, there\u2019s a product that hasn\u2019t been doing too well but you didn\u2019t notice <\/span>that<\/span><\/i> and now you\u2019ve got way too many units untouched and unmoving. You\u2019ve over-ordered!\u00a0<\/span><\/p>\n

These are two distinct scenarios and mistakes but both come from the same core issue: a lack of foresight.<\/span><\/p>\n

The solution:<\/span><\/p>\n