Lack of visibility into existing stock can create the one of the biggest challenges in inventory management. Sales people sell unavailable stock, purchase people buy stock that is already available, leading too cash flow strains and customer dissatisfaction. The business of inventory is appropriate capital alignment.
Not Automating Reorder Levels
Manual reordering cause a fire fighting everyday. Not being able to track dead stock levels automatically leads to significant delay in procurement and thereby delivery. Most of the customers are dissatisfied for out of stock inventory and move out to competition.
Random placement of Inventory inside the Warehouse
Unplanned positioning of inventory inside your warehouses leads to your warehouse people going round and round with their fork lifts to search a product. Half of their productive time is wasted in searching and fulfilling orders.
Yearly Inventory Audit
Many companies audit their actual inventory levels once a year, sometimes the audit exercise is so long that either the business is put at halt or by the time the audit is completed, stock positions change significantly. It is advisable to audit a group of SKUs at more frequent intervals.
Not using statistical analysis for demand forecast
When demand forecast is done based on gut feel, things are bound to go wrong. It is always advisable to use statistical analysis to forecast demand. If you do not have qualified people, then use easy tools like Columbus that can help any person in your company to forecast demand very accurately.
Inability to identify the winners in your SKU.
If your business intelligence is not able to identify the best selling goods from the worst, then you are in serious problem. With increasing stock of inventory and variance, identification of the winners should also be automatic.
Too much cash stuck in wrong inventory.
Over investment in the wrong inventory will put all your cash flow at risk, increasing your holding costs, thereby eating into your profits.
Inability to identify and liquidate slow inventory.
You need to be able to quickly identify slow moving inventory, near expiry inventory so that you can apply appropriate incentives to sell it off faster. It will increase your profitability, increase your customer retention and satisfaction as well.
Using Excel to manage inventory
Most of the above mentioned challenges will persist if you are still stuck with excel sheets to manage your inventory.
If you are not using automation, you will remain dependent on people to guess every aspect of your business decisions. Guesswork increases with experience.