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Inventory Management Challenges

Rhonda Adams of USA Today says, “Inventory is money sitting around in another form.”

Inventory is the heart of your business, and successful inventory management is critical for making a profit.

But it’s more than that. Inventory management has many moving parts, including forecasting, overseeing purchases from suppliers, maintaining stock storage, controlling the amount of stock to sell, and order fulfillment.

Proper inventory management also affects loss prevention, financial audits, and—perhaps most importantly—customer satisfaction.

Even if your business has only one warehouse, inventory management will become tricky when your sales increase and you stock additional products.

Here are four common inventory management challenges and how technology can overcome them.

Excess Inventory

“Deadstock” sits on warehouse shelves for various reasons. For example, your customers may not like the price, or the product has fallen out of fashion.

You end up with too much inventory when you don’t know how sales and forecasting align. You must know which products aren’t selling so you can get them off your shelves and use that much-needed space for more popular products.

Inadequate Inventory

Stock shortages can come from relying on just-in-time (JIT) inventory. This form of inventory management involves working closely with suppliers so goods arrive exactly when they’re needed. It was a big manufacturing trend for years—until supply chain disruptions caused by the pandemic gummed up the works.

Some businesses are resuming JIT inventory, which can work well and be a financial benefit if you clearly understand demand.


Shrinkage is the difference between recorded inventory and actual inventory. There are many causes, including miscounting, spoilage, breakage, theft, and supplier fraud. Numbers must be adjusted in the accounting system, which takes time. And lost inventory leads to lost profits.

A Data Disconnect

If you use disconnected applications and spreadsheets—or worse, paper-based processes—to manage inventory, you’re destroying productivity and making mistakes. Without a centralized, real-time view of inventory, you don’t have visibility into what’s available.

It’s also difficult to share information across departments, identify trends, and improve operations. And customer service doesn’t have answers about fulfillment errors or delayed shipments.

How Technology Helps

The best way to solve these challenges (and several more) is to adopt a robust enterprise resource planning (ERP) solution with built-in inventory management capabilities.

ERP solutions automate the processes that control your inventory receipt, reordering, and rotation.

Accurate, real-time inventory and past demand reports empower you to make solid decisions about future purchasing.

An ERP solution—whether it’s deployed on-premises or in the cloud—benefits your entire business, not just warehouse operations. The accounting department can monitor inventory value and create ideal purchasing budgets. Salespeople and customer service representatives can quickly check product availability, move more valuable products, and land more big sales, whether they’re in the office or on the road.

Learn More

Download our free 11-page eBook, Inventory Management in a Changed Marketplace, to explore more inventory management challenges and how the right technology makes inventory management a breeze.

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