Top 5 Challenges in Managing Inventory and How to Overcome Them

Learn to identify and eliminate your key inventory management challenges

In stock, on order, staged or stored, picked / packed / shipped… managing inventory can be complicated business. There are problems that may be easy to identify, and there are often other issues resulting from those problems that are less obvious.

These are the five most common challenges of inventory management that cause the most frustration in small and mid-sized businesses.

Challenge 1: Not having real-time data on inventory status

Managing your inventory requires that you know where an item is and what its status is. Not having up-to-date information on product stock ends up being costly. It costs more when you have to rush the shipment of items in, when you overstock on products, when transferring stock from a location that has the product to the location that thought they had it, or when there are losses due to spoilage. Shipping, overtime labor and other related costs can go up significantly simply due to not knowing the status of every item, not to mention customer satisfaction and loyalty going down.

Getting real-time information on inventoried items requires that item status be tracked throughout the inventory lifecycle. From purchase to sales, inventory stock tracking will allow you to more effectively manage your products and avoid the troubles and additional costs that come with not knowing whether you’ve got it or where it is. Centralizing the information in a software system that has the functionality to support end-to-end inventory management functions, and keeping that information up to date as activities occur, is the key to resolving this challenge.

Problem 2: Reliance on manual processes

Manual processes are inefficient. They are tedious and generally result in too many errors. Spreadsheets are considered manual processes. They are hard to manage and time-consuming to update. When information is managed through manual processes it makes collaboration and sharing of that information that much more difficult, and it often impedes the performance of those who rely on the data. Perhaps the worst thing about manual processes is that they do not lend themselves to analysis or history tracking, making it difficult to identify trends or areas of possible improvement. And manual processes just do not scale well, that is, they become even worse when the business grows.

Replacing manual processes by using software to manage your inventory introduces not just efficiency, but provides the information required to make informed decisions about purchasing and stocking items. Inventory management software delivers a level of automation in record keeping for inventoried items that reduces errors and makes the data more useful. When the inventory management software is combined with bar codes and scanning, manual entry of data is further reduced which increases the accuracy even more while also stepping up productivity.

Problem 3: Getting everyone the information needed to perform their work

Workers throughout the business need information to perform their jobs, but not everyone needs the same information. Buyers may focus on which products are in demand, so they can negotiate the best deals with suppliers, but finance likes to see that purchased stock is not languishing in warehouses or on store shelves. While all users may work with the same product inventory, not all users need to view or change data that is outside of the scope of their work. A change made inadvertently by one user could become a costly issue to track down and correct.

Getting access to the information necessary to perform the work is a challenge when the systems or software are not geared to fully support all the business processes. The key is in providing the right functionality and information for each worker, enabling them to perform their tasks efficiently but not exposing them to other information or processes that may complicate or interfere, or simply take focus away from the task at hand.

Another aspect of information access is making the solution available to workers regardless of where they work from. Warehouse locations and sales offices or retail stores are often dispersed, so any central system should also address remote or mobile worker access. Cloud deployment of desktop and network software solutions enables anytime/anywhere access and allows remote workers and warehouse locations to work seamlessly together.

Problem 4: Manual inventory control is not scalable

Keeping track of inventory may be doable when there are just a few items and a single location, but increasing the numbers turns manual inventory into an unmanageable beast and a disaster waiting to happen. More items mean a greater likelihood that products will be missed or miscounted, and more locations increases the complexities of stock management and logistics. Without detailed item and location tracking a business will not be able to recognize costs or losses per location.

Scaling a business needs the support of good software and systems to ensure that productivity and performance are not stifled even as business requirements expand. Manual systems or low-tech approaches to managing products and inventory may seem usable when there are few products and limited sales activity, but when the activity and volume cranks up, so does the need for a robust system that can keep up. With more orders, products, locations and workers involved, a business also increases the chances for loss due to logistical issues, theft or purchasing mismanagement.

Among the considerations when implementing an inventory management solution should be the ability of the system to adjust to changing business needs through customization of processes or by integration with other solutions which extend and expand functionality. Additionally, training workers to use the software should be straightforward and not complicated by other unrelated processes, making it easier to expand use of the solution throughout the business’ growth.

Problem 5: You know you need better software but it all looks so complicated

Software to automate business processes, including inventory management, should make the business more efficient and profitable. The challenge is that there are many software products to choose from, and they all seem expensive and complicated. Inventory management and stock control is not a simple endeavor, but the right solution should deliver business benefit quickly rather than requiring extensive training and complicated configuration that eliminates a near-term return.

Mendelson Consulting specializes in delivering the inventory management and control solutions that meet the needs of growing businesses. Not only does Mendelson understand the intricacies of single- and multi-location inventory management, just in time inventory and purchasing for stock, we also know that small businesses cannot be overburdened by their software.

Our business consultants get to know your processes so we can recommend the right solution to address the business need, and we work with your team to make sure the implementation and the training cover everything necessary to get operating on the new software quickly and efficiently.

We are accounting professionals at heart

Any inventory management solution implementation carries with it the assurance that proper accounting principles are at work, so the resultant data is correct and accurately reflected in the financials.

Recognized as a leader in implementing QuickBooks order and inventory management solutions, Mendelson Consulting has the experience and the capability to help your business clean up inventory processes, streamline order management, improve pick-pack-ship, and get better reporting that delivers more insight and actionable intelligence.

We Solve Big Problems for Small & Mid-sized Businesses.

Contact us today to learn more


Joanie Mann

Joanie Mann

Focus is on Digital business transformation for small/medium businesses. As the principal consultant for Cooper Mann Company and Noobeh's Director of Cloud Services, Joanie Mann provides support and guidance for businesses seeking to implement cloud solutions and hosted services in their IT environments and consults with solution providers to develop or expand application hosting and application delivery service offerings. Joanie is the Director of Delivery for Noobeh Cloud Services (a division of Mendelson Consulting), and is on the board of advisors of ACE Cloud Hosting &

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