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Inventory Management Mistakes Are Ruining Your Business – Avoid Them

In the world of supply chain and inventory management, even the tiniest of errors could cost you millions. Once you have invested money in inventory, that money is not coming back. You can only hope to sell those items fast with maximum profit.

So undoubtedly managing inventory and warehouse operations requires a little extra TLC. Yet, the fact is that inventory management is no easy task and mistakes of all sorts & scales are bound to happen.

In this post, I’ll be talking about some common mistakes in inventory management and the necessary solutions.

Inaccurate Demand Forecasting:

Demand forecasting is often the chink in the armor of managers when it comes to inventory management.

The goal of demand forecasting is to make predictions and estimations about what products customers want, where they want them, when they want them, and how much they want.  Demand forecasting can be determined by factors such as competition, historical data about past sales, changing customer preferences etc.

Inaccurate forecasting that is based on outdated data, could have a debilitating impact on the business, leading you to overstock. This results to reduced cash flow; not to mention the high storage cost for carrying excess inventory and lost opportunity cost of storing highly saleable items. While on the flip side, you could run out of stock due to inaccurate forecasting and risk displeasing customers by failing to fulfill their orders.

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Disorganized Warehouse:

A poorly organized warehouse can lead to decreased productivity and efficiency of the whole inventory management process from the very beginning. Both perishable & non-perishable items as well as seasonal or non-seasonal items have to be treated and stocked in smartly, also differently, benefiting quicker out-movement during order processing & shipping. A lot of time wasted in searching for items and moving/replacing them unnecessarily can be saved. If you have adopted a certain LIFO or FIFO method for inventory movement, you need to have your stock organized in the warehouse accordingly. Simply identifying the more popular or seasonal items and placing them closer to staging and shipping areas for easy retrieval and dispatch, would save the time and energy of warehouse managers.


Infrequent Inventory Checks:

Are you checking your inventory regularly? Most businesses do full inventory checks, but only once or twice a year. Now that isn’t quite advisable or productive. Infrequent or inventory checks at very long intervals leaves much room for error and a small window for rectifying those errors. If you audit your inventory only a few times in a year, and check back later, there are high chances that you will suddenly see many discrepancies. Instead a plausible solution would be to do cycle counting where you can divide your warehouse into smaller sections and audit separately as well as timely. This is a quicker, real-time and more effective substitute to large-scale audits.

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Resistance To Technology And Automation:

Statistics say that even a skilled data entry operator makes an error for every 300 characters entered. If you’re still maintaining records and tracking inventory via excel sheets and account ledgers, then you might be at risk of countless manual errors.

Manual entry processes don’t work in real-time to give you accurate and updated data about your stock. An automated system , allows multiple users to access the data, enables real-time updates and greater precision in planning and forecasting. An additional advantage- it saves you a ton of money and time in rectifying errors as compared to manual data entry process.

Untrained Staff:

Consider this scenario. You’ve invested in a sophisticated software with all the right tools, giving you a wealth of information needed to manage your inventory in the best possible manner. Yet somehow your employees aren’t being able to make the most of it.

The most common reason being that although businesses get an advanced software they often adopt a narrow minded approach when it comes to spending on training their staff. If you’re spending on a specialized software, a well-trained staff will only help to fulfill its purpose well.


No doubt, inventory management can be overwhelming. It is a complex process one that requires a great deal of energy, effort and attention to detail. While small errors are only natural , but big mistakes could have major consequences for your business. Like they say, prevention is better than cure, avoiding the aforementioned mistakes will streamline your inventory management process and help your business to grow.

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Kriti AgarwalAbout the Author:

Kriti Agarwal is an avid reader. An ardent animal lover. She loves to travel, enjoys dancing and cooking is a stress buster. She is the content writer at

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6 Responses to “Inventory Management Mistakes Are Ruining Your Business – Avoid Them”

  1. Hellan says:

    Interesting blog, helped to clarify many things, definitely this will be a useful article. Good work, excepting these kinds of more useful blogs and articles.

  2. Alisa says:

    These tips are helpful for me. Thanks for sharing this meaningful content.

  3. sahil sharma says:

    Interesting blog, helped to clarify many things, definitely this will be a useful article. Good work, excepting these kinds of more useful blogs and articles.

    • EXEIdeas says:

      Welcome here and thanks for reading our article and sharing your view. This will be very helpful to us to let us motivate to provide you more awesome and valuable content from a different mind. Thanks for reading this article.

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