Business Lifestyle

For 2020 and Beyond, Here Are 20 Inventory Management Challenges and Solutions

inventory management

Getting your products to your clients on schedule is the lifeblood of any business. Keeping tracks of your inventory and managing it effectively also aids in meeting demand and increasing sales. We’ll go overs some of the most frequent inventory management issues and how to overcome them. Read our inventory management article to learn more.

The 20 Most Common Inventory Management challenges

Inventory management is a difficult task. Every area of your businesses is affected by the process and results. Here are 20 common inventory management challenges to look out for in your supply chain to assist you.

1. Tracking inconsistency:

Manual inventory tracking techniques spanning many software and spreadsheets are inefficient, redundant, and prone to errors. A centralised inventory tracking system with accounting features can assist even small enterprises.

2. Warehouse Productivity:

Receiving and putaway, picking, packing, and shipping are only a few of the steps involved in inventory management controls at the warehouse. The objective at hand is to do all of these duties in the most efficient manner feasible.

3. Incomplete Information:

You must know exactly how much inventory you have at any given time. Gone are the days when inventory could be counted with all hands on deck once a year.

4. Adaptive Demand

Demand from customers is always changing. Keeping too much inventory could results in outmoded inventory that you can’t sell, while keeping too little inventory coulds prevent you from fulfilling customer requests. Ordering tactics for essential items, as well as technologies for creating and executing an inventory strategy, can all help to accommodate for fluctuating demand.

5. Visibility Issues:

Incomplete, incorrect, or delayed shipments result when inventory is difficult to identify or locate in the warehouse. Receiving and locating the correct stock is vital to ensuring smooth warehouse operations and excellent customer experiences.

6. Documentation of the manual

Inventory managements using paperwork and manual processes is inefficient and insecure. It also does not scale well across numerous warehouses with a lot of stock.

7. Stock with a Problem:

Specialized care and storage plans are required for perishable and delicate stock. High-value inventory, on the other hand, necessitates special loss-prevention techniques and inventory management.

8. Supply Chain Difficulty

Global supply networks change on a regular basis, putting a strain on inventory planning and management. Manufacturers and wholesale distributors who determine when, where, and how your inventory ships need to be flexible and provide unpredictably long lead periods.

9. Warehouse Space Management

Managing space effectively is a daunting task. Inventory management tools can help you plan and build warehouse areas to better control the timing of new stock deliveries. It can take into account essential elements like available space. Read more about the distinctions between inventory management and warehouse management.

10. Order Management Is Inadequate

Preventing overselling of products and running out of inventory is one of the most prevalent challenges to good inventory management. You may reliably estimate client orders by using historical and seasonal data trends.

11. Heightened Competition

Unpredictable economic movements and market factors affect the rivalry for raw resources in globalised supply chains. Small firms are frequently forced to choose between competing for high-demand products and choosing sufficient inventory to keep expenses under control

12. Adaptive Packaging

To reduce waste, compostable packaging—or eliminating packaging altogether—presents new challenges for warehouse design and storage. It could even involve purchasing new equipment or reducing the shelf life of some commodities.

13. Product Portfolio Expansion

Many internet retail tactics do away with the necessity for huge distribution warehouses. These tactics make expanding inventory and diversifying product portfolios easier, but they necessitate the use of technology and resources for purchasing, shipping, and tracking.

  1. Overstocking:

Having too much inventory on hands might be just as bads as having too little. Overstock has a negative influence on a company’s cash flow and can lead to inventory-related issues like storage and loss.

15. Inventory Depletion

A supply chain issue might include inventory loss due to spoilage, damage, or theft. It necessitates the identification, tracking, and measurement of problem regions.

16. Ineffective Production Planning

Production planning is vital for preventing production delays and cost overruns. It can have an influence on sales predictions and project scheduling if done incorrectly.

17. Expertise Deficit

Finding experienced inventory managers who are up to date on technology and can improve inventory management might be difficult. Adding a slew of new features to your inventory management platform isn’t enough. You’ll require capable management.

18. Ineffective communication

Collaboration and communication are essential. It’s considerably more difficult to discover inventory trends and find ways to improve when departments are apathetic about exchanging information.

19. Ineffective Procedures

When inventory is small and there is only one warehouse site to manage, low-tech, manual inventory management processes don’t appear like a big challenge. However, inefficient, labor-intensive, and low-tech standard operating procedures become difficult to scale as sales volume and inventory grow.

20. Insufficient Software

Inventory management software must interface with your existing business process platforms in order to expand to accommodate complicated logistics. Choosing from hundreds of inventory management solutions and understanding a host of features that necessitate training and continuous assistance is a difficult undertaking.

See how having accurate inventory boosts profits and allows for more exact forecasting.

20 solutions to Help You overcome Inventory Management challenges

Inventory management is a difficult task. Here are some solutions to the above-mentioned inventory management challenges.

1. Tracking from a central location

Upgrade to tracking software that includes automated re-ordering and procurement features. Inventory management platforms offer centralised, cloud-based databases that allow for accurate, automatic inventory changes as well as real-time data backup.

2. Transparent Results

To overcome warehouse inefficiencies, measure and report warehouse performance measures such as inventory turnover, customer satisfaction, and order processing time. Share this data with your staff and vendors.

Auditing of Stocks

Stock auditing techniques that occur often, such as daily cycle counting, reduce human error and give more accurate, up-to-date inventory data for cash flow management. For more accurate financial data, organise audits by category and cycle count smaller inventory samples on a regular basis.

4. Demand Prediction

Demand forecasting tools are available on several inventory management platforms. This feature combines accounting and sales data to help you forecast demand and plan orders based on changing consumer preferences, material availability, and seasonal trends.

5. Include visuals

Improve your purchasing and receiving operations, increase accuracy, and avoid misplaced inventory by including photos with product descriptions in your inventory database.

6. Eliminate Paper

Give staff the inventory tools they need to do their jobs. They require software to replace manual inventory records, as well as paperless invoicing and purchase orders.

7. Preventive Measures

To manage problem inventory, such as perishable stock, fragile equipment, or obsolete materials, implement stock control systems. If the manufacturer specifies, perform routine preventative maintenance on machinery and equipment in storage. To keep track of shelf life and avoid waste, keep track of data on issue stock locations, costs, and quantities.

8. Establish Service Levels

Supplier data, such as shipment problems, damaged or defective products, and missed delivery appointments, should be monitored and tracked. To discover and fix supply chain problems, decrease complexity, and streamline logistics, track your supplier’s performance.

9. Make the Most of Your Space

To optimise storage space and inventory flow, employ inventory management systems with warehouse management features. Automate order picking, packing, and shipping workflows by categorising inventory storage by shelf, bin, and compartment.

Reorders should be automated if possible.

Backordered inventory causes delays in production and poor customer service. To avoid overselling, use inventory management software to define automated reorder points based on preset stock levels and current availability.

11. Back-up Stock

Maintain a reserve of safety stock to help manage rising lead times as a result of shifting worldwide competition for raw resources. Inventory planning allows businesses to respond to changing global supply chains.

12. Sort your inventory into categories

To manage shifting trends, such as packaging measures to reduce plastic waste, create inventory classes. Sort stock into categories based on the kind of packaging, dimensions, and product. Use this information to better control shipping costs and storage locations.

13. Warehousing in Multiple Locations

To track and control rising inventories, use multi-location warehouse management features. Automated inventory tracking alerts and scheduling features keep track of warehouse location and in-transit inventory, allowing you to take advantage of receiving and put-away schedules.

14. Lead Times for Leverage


When placing orders for high-demand stock, keep lead times in mind. Using cycle counting data to determine automatic reorder points and average lead time to avoid stockouts, track and manage your high-demand inventory.

15. Minimize Human Error

To avoid human mistake, inventory manipulation, and shrinkage due to theft or negligence, use inventory control techniques such as blind receiving with barcodes and mobile scanners.

16. Demand Forecasting

To prioritise your top inventory, use an inventory management system with powerful demand forecasting and reporting features. Consider the availability of the top 20% of your inventory, which accounts for 80% of your consumer demand. Read our fundamental guide to inventory planning to learn more about inventory planning and demand forecasts.

17. Expertise in Subcontracting

Consider hiring an inventory management specialist. To assist staff in following best practises for working with technical inventory management software features, contract in-person training and provide online support.

Collaboration on the Dashboard

Introduce dashboards with user-friendly interfaces that display inventory data in real time. With everything on one screen, communication barriers between accounting, sales, and warehouse operations are reduced.

19. Productivity Instruments

You can carry all of the information you need about your inventory in your pocket. You can control inventory and improve warehouse productivity from anywhere in the globe with mobile solutions and cloud-based software.

20. Platforms should be updated

Upgrading to a cloud-based inventory management software unlocks a slew of new features. While the advantage is being implemented, you can benefit from the vendor’s knowledge and training

Challenges and Solutions in Inventory Management

Review common inventory management challenges and tips for how to overcome them with this quick-reference graphic.

Management of Inventory


Challenges Solution

Tracking that isn’t constant

Using a cloud-based inventory management solution with real-time data backup and automated inventory updates, you may centralise your tracking data.

Warehouse Productivity

To improve warehouse inefficiencies, track and report warehouse performance measures like inventory turnover, customer happiness, and order processing time.

Data that is incorrect

Plan regular stock audits, such as daily cycle counting of various stock categories in small, manageable batches.

Changing Consumer Demand

To identify necessary inventory, combine inventory management software and demand forecasting features with your accounting and sales data.

Inventory Visibility

To improve accuracy and prevent misplaced inventory, include photos with product descriptions in your inventory database.

Documentation by hand

Software that provides paperless records and automates data input can be used to replace manual inventory documentation, invoice, and purchase order operations.

Data regarding problem stock, such as location, cost, and quantity, can be found in the Problem Stock Catalog. This will allows you to keep track of the shelf life and save waste.

Complexity of the Supply Chain

Monitor and track supplier performance to avoid supply chain disruptions, simplify logistics, and minimise complexity

Space in the Warehouse

Automate order picking, packing, and shipping workflows by categorising inventory storage by shelf, bin, and compartment

Inadequate Order Management

To avoid overselling, use inventory management software to define automatic inventory reorder points based on preset stock levels and current availability

Global Competition is Growing

Maintain a reserve of safety stock to compensate for supply chain interruptions and manage longer lead times as a result of shifting global competition for raw resources.

Packaging that is Changing

Make inventory categories to organise stock by type of packaging, dimensions, and product. Control shipping costs and storage location by using this information.

Product Portfolio Expansion

With automatic inventory tracking notifications and scheduling features that maintain track of warehouse location and in-transit inventory, you may improve receiving and putaway schedules.


Using cycle counting data to generate automatic reorder points and optimise shipments by average lead time, track and manage your high-demand inventory.

Inventory loss

To avoid human mistake, inventory manipulation, and shrinkage due to theft or negligence, use inventory control techniques such as blind receiving with barcodes and mobile scanners.

Production Planning Errors

Using an inventory management system with extensive demand forecasting and reporting features, track and manage the availability of the top 20% of inventory that creates 80% of demand.

Inadequate knowledge

Outsource inventory management to a professional. Employees can learn best practises for working with particular inventory management software features through in-person training and online support contracts.

Communication Issues

To communicate and manage workflows across accounting, sales, and warehouse operations, provide integrated dashboards with real-time inventory data and a clear user interface.

Processes that are inefficient

Increase warehouse productivity and inventory control efficiency by utilising product location scanning and barcode technology (or RFID tagging), mobile devices, and cloud-based software.

Insufficient Software

Utilize vendor knowledge and training services while implementing an integrated, cloud-based inventory management systems.

Using Inventory Management Software to Overcome challenges

The correct inventory management platform can help you automate procedures, improve inventory management, and improve customer satisfaction. To help overcome some of the most difficult inventory management challenges, NetSuite provides a set of native inventory management and control features. Track inventory across various locations, manage reorder points automatically, estimate demand, and plan manufacturing and delivery.

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