9 Common Inventory Control Problems—and Solutions | Mindover Software (2023)

Inventory control problems are a normal part of business, but it seems as if lately, many global issues are compounding them. NBC News reported in October 2021 that retailers are struggling due toinventory shortagesof common shipping and packaging materials: plastic, paper, cardboard. With many ports in the United States backed up due to labor shortages and global pandemic woes, retailers are finding shortages of popular items an all-too common phenomenon.

Although inventory shortages due to manufacturing shutdowns in various ports abroad cannot be helped, retailers, wholesalers, and others who rely upon these goods for commerce can take many steps to avert disastrous inventory control problems. Indeed, the following 9 inventory control problems can almost always be avoided with the right approach, including cloud ERP software.

9 Inventory Control Challenges

It is likely that merchants throughout time have had inventory control challenges. No matter how one plans for demand, supply may lag, demand may vanish, or both.

But given modern technology’s ability to predict, forecast, and see inventory levels, the right software can address many, if not all, of the following inventory control challenges.

  1. Supply chain complexity
  2. Changing demand
  3. Challenging stock
  4. Inaccurate data
  5. Manual stock taking and documentation
  6. Managing warehouse space
  7. Poor order management
  8. Lack of experienced staff
  9. Miscommunications

1. Supply chain complexity

We live in an interconnected world. A problem halfway around the world six months ago can lead to stock shortages now. Natural disasters, labor disputes and strikes, political unrest, and more can lead tosupply chain issues—so, too, can the complexity of the modern supply chain. Raw materials may come from one continent, ship to another for fabrication into parts, and then ship to a third destination for assembly into complex items. Items like computer motherboards and batteries require raw materials from several areas, complex manufacturing and fabrication facilities, packaging, and then shipping to their final destination.

Such a complex supply chain requires careful management and clear visibility. If one delay can have a domino effect months down the line, it makes sense to have a solution that offers excellent inventory control and supply chain visibility throughout the system.

2. Changing demand

Manufacturers try to predict demand several seasons out to ensure they produce adequate goods for shipment. Unfortunately, changing demand means that many must shift abruptly into new products—not so easily done when machinery needs to be reconfigured and new raw materials need to arrive.

Changing demand puts a lot of pressure on inventory control, too. When goods sell quickly, it’s natural to react by ordering more. But what if it’s only a temporary rise in demand? What if demand falls just as quickly as it rose?

When demand changes quickly, it’s more important than ever to have good inventory control measures in place. Such measures can prevent overstocks or frustrating shortages.

3. Challenging stock

Another area where good inventory control measures are essential is when a warehouse must manage challenging stock items. This is especially important in process industries, pharmaceutical, and food and beverage manufacturing and distribution where temperature control, stock rotation, and aging or dated stock must be managed carefully.

Inventory control in these industries doesn’t just mean keeping track of how many of each item is in stock. It also means recording and monitoring things like temperature, expiration date, and other conditions that can affect the quality and safety of the goods sold. Records kept for these industries must be accurate, timely, and easily viewed to satisfy customers and regulators.

4. Inaccurate data

Disconnected systems, manual stock taking, and outdated software can all lead to inaccurate warehouse data as can poorly managed warehouses. If returns back up or receiving isn’t handled promptly, inventory control data can become outdated. All of this leads to frustrated staff, angry customers, and wasted time and money.

5. Manual stock taking and documentation

Are you still counting your inventory and documenting stock counts using printed lists? The old clipboard and count method was outdated 20 years ago, never mind today. One of the worst mistakes you can make with your inventory control is to rely on manual documentation of stock counts. Newer barcode scanning software that works in conjunction with any handheld device (like your smartphone or tablet) makes automated stock counts a breeze. Another advantage is that the data from barcode scanners automatically flows into ERP systems. If you’re using cloud ERP, that data can also flow throughout the company’s systems, including the website.

6. Managing warehouse space

Managing warehouse space is integral to effective inventory control. A well-designed warehouse offers easy access to popular items to reduce picking and packing times. Good lighting, well-organized bins and shelves, and automating as much of the warehouse as possible leads to better inventory control and faster processing of orders.

7. Poor order management

Poor order management is a problem that often hides behind complaints—complaints from customers that orders are late and complaints from sales that items are out of stock. Keeping items in stock to keep pace with orders is an artform, but one made much easier with software and systems that facilitate inventory control.

8. Lack of experienced staff

Inventory control isn’t something you can delegate to an inexperienced temp. Good inventory specialists are worth their weight in gold. If your company lacks experienced inventory managers, it’s time to start the search for the right candidate. Having someone with experience at the helm can make a huge difference in all aspects of inventory and warehouse management. An experienced inventory manager keeps the orders shipping, knows the importance of preventing a backup at the receiving area, and ensures accurate and timely data. They can improve customer service and satisfaction and make a big difference to your company’s bottom line.

9. Miscommunication

“But the warehouse manager said we have plenty of widgets in stock and I just accepted an order for 10,000. How can we be out of them?”

Along with accurate and timely data, nothing is more important for inventory control and management than clear communication. Miscommunication can lead to dissatisfaction, over orders, and a host of easily prevented problems.

One way to avoid miscommunication is to automate as much as possible. Instead of relying on someone’s interpretation of a situation, you can rely on the data provided by the warehouse system and ERP to ensure clear, accurate communication regarding inventory levels, shipping, stock, and more.

ERP Software Prevents Many Common Inventory Control Challenges

Most, if not all, of the common challenges listed above can be solved with the right inventory control methods, experienced personnel, and cloud ERP software. Cloud ERP software, along with warehouse management systems, offers exceptional visibility into all aspects of warehouse and inventory management.

With the right cloud ERP system, you can:

  1. Receive immediate, real-time information on inventory levels from all warehouse locations
  2. Deliver accurate information to sales personnel, whether they are in the office or working remotely, traveling, or visiting customers
  3. Provide up-to-the minute order status and stock information through your website with integrated e-commerce and ERP systems
  4. Create and build sales projections using historical data to better manage and control inventory levels
  5. Find customer and order information, delivery information, and supply chain updates from an interconnected web of cloud-based systems
  6. View stock counts and inventory levels in real time
  7. Improve ordering accuracy and shipping times
  8. Offer customers better service and information about their orders
  9. Manage warehouses more efficiently

But how do you choose the best cloud ERP system for your inventory control and warehouse management needs?

First, download Mindover’s free white paper,Better Inventory Management, to learn more about best practices for inventory management, control, and warehouse management. Read our popular blog,5 Tips for Improving Your Supply Chain Management.

Next, explore cloud-based ERP on our website. Acumatica offers flexible cloud ERP systems that integrate seamlessly with barcode scanning software such asdistribution and warehouse management systemsande-commerce solutions.

With the unprecedented disruptions to the global supply chain that companies have experienced recently, it makes sense to ensure the best systems are in place. Cloud-based ERP and inventory control systems offer a way to improve service, deliverability, transparency, and profitability for any company involved in the sales and distribution of goods. Rise above the challenges, use the best software available, and overcome these problems.


9 Common Inventory Control Problems—and Solutions | Mindover Software? ›

Four major inventory management methods include just-in-time management (JIT), materials requirement planning (MRP), economic order quantity (EOQ) , and days sales of inventory (DSI).

What are the 9 types of inventory? ›

Different Types of Inventory
  • Raw Materials. Raw materials are the initial supplies used by manufacturers to produce components or finished products. ...
  • Work-In-Process. ...
  • Finished Products. ...
  • Transit Inventory. ...
  • Buffer Inventory. ...
  • Anticipation Inventory. ...
  • Decoupling Inventory. ...
  • Cycle Inventory.
Sep 3, 2020

What are the four 4 systems that can be used in inventory management? ›

Four major inventory management methods include just-in-time management (JIT), materials requirement planning (MRP), economic order quantity (EOQ) , and days sales of inventory (DSI).

What are the two main problems of inventory controller? ›

The problems are: 1. The Classification Problem 2. The Order Quantity Problem 3. The Order Point Problem 4.

What are the toughest inventory management problems to solve? ›

Challenges in Inventory Management
  • Inability to locate the inventory stocks. ...
  • Choosing a manual inventory process. ...
  • Outdated products. ...
  • Analyzing the market demand. ...
  • Overstocking problems. ...
  • Inability to manage inventory waste and defects. ...
  • Lack of a centralized inventory hub. ...
  • Expanding product range.
May 6, 2022

What are the 8 functions of inventory? ›

Functions of Inventory
  • Transit stock / pipeline inventory.
  • Cycle stock.
  • Safety stock (buffer inventory)
  • Anticipation inventory.
  • Others. Smoothing inventories.
Jan 28, 2011

What is the ABC of inventory? ›

What Is ABC Analysis in Inventory Management? ABC analysis is an inventory management technique that determines the value of inventory items based on their importance to the business. ABC ranks items on demand, cost and risk data, and inventory mangers group items into classes based on those criteria.

What are the 3 important types of inventories? ›

Raw materials, semi-finished goods, and finished goods are the three main categories of inventory that are accounted for in a company's financial accounts.

What are the 3 major inventory management techniques? ›

In this article we'll dive into the three most common inventory management strategies that most manufacturers operate by: the pull strategy, the push strategy, and the just in time (JIT) strategy.

What are the 5 steps to effective inventory systems? ›

5 Steps to Get Control of Your Inventory Management
  • Know your stock from your stuff. ...
  • Liquidate Your Stuff. ...
  • Organize Your Inventory: Location, location, location. ...
  • Get your inventory straight. ...
  • Make cycle counts…count.
Jul 11, 2022

What is the most common inventory control system? ›

Three of the most popular inventory control models are Economic Order Quantity (EOQ), Inventory Production Quantity, and ABC Analysis. Each inventory model has a different approach to help you know how much inventory you should have in stock.

What are the key points of inventory controller? ›

Inventory Controller Duties:
  • Identify, implement, and maintain inventory control procedures for all company property.
  • Maintain accurate inventory records and data.
  • Maintain detailed records of inventory transactions.
  • Maintain accurate inventory reports.
  • Assist in preparing for audits.
Oct 7, 2022

What makes a good inventory controller? ›

To ensure success as an inventory controller, you should be highly organized and have detailed knowledge of supply chain management software and practices. A top-notch inventory controller will be able to accurately forecast inventory requirements and possess excellent logistical abilities.

What is the major risk in inventory system? ›

One of the biggest risks associated with inventory control is theft, especially when it comes to high-value inventory stock. Companies spend millions of dollars annually on security measures to safeguard inventory and prevent theft, however it still occurs on a regular basis.

What is ABC analysis of inventory problems? ›

ABC analysis is an inventory classification strategy that categorizes the goods into three categories, A, B, and C, based on their revenue. 'A' in ABC analysis signifies the most important goods, 'B' indicates moderately necessary goods, and 'C' indicates the least essential inventory.

What is the most effective method for controlling inventory? ›

FIFO — first in, first out

FIFO is one of the most common Inventory management techniques used in manufacturing. This system helps ensure that the oldest products are used first and reduces the chance of spoilage or obsolescence.

What is the simplest way to manage an inventory? ›

Here are some of the techniques that many small businesses use to manage inventory:
  1. Fine-tune your forecasting. ...
  2. Use the FIFO approach (first in, first out). ...
  3. Identify low-turn stock. ...
  4. Audit your stock. ...
  5. Use cloud-based inventory management software. ...
  6. Track your stock levels at all times. ...
  7. Reduce equipment repair times.

What are inventory control techniques? ›

Inventory Control Techniques. Inventory control involves various techniques for monitoring how stocks move in a warehouse. Four popular inventory control methods include ABC analysis; Last In, First Out (LIFO) and First In, First Out (FIFO); batch tracking; and safety stock.

What is a major tool used to set inventory levels? ›

The most common ABC analysis (also called Pareto analysis) method is to rank all inventory items according to the total value of each on an annual basis (annual “usage” or movement times unit cost). Typically, the top 20 percent of items represent 80 percent of the annual value through the warehouse (80/20 rule).

What are the 5 types of inventory? ›

Depending on the business, inventory can include raw materials, component parts, work in progress, finished goods, or any packaging.
  • Raw materials inventory. ...
  • Maintenance, Repair, and Operating (MRO) inventory. ...
  • Decoupling inventory. ...
  • Work In Progress (WIP) inventory. ...
  • Finished goods inventory.
Dec 3, 2021

What is XYZ analysis in inventory management? ›

What is an XYZ analysis? An XYZ analysis divides items into three categories. X items have the lowest demand variability. Y items have a moderate amount of demand variability, usually because of a known factor. Z items have the highest demand variability and are therefore the hardest to forecast.

What is JIT technique? ›

JIT techniques work to level production, spreading production evenly over time to foster a smooth flow between processes. Varying the mix of products produced on a single line, sometimes referred to as "shish-kebab production", provides an effective means for producing the desired production mix in a smooth manner.

What are the 4 components of inventory? ›

The four types of inventory are raw materials, work-in-progress (WIP), finished goods, and maintenance, repair, and overhaul (MRO) inventory.

What is MRO inventory? ›

MRO inventory refers to supplies, spare parts and other materials needed for routine maintenance, repair and operations (or MRO). This inventory is critical for the smooth running of a business. However, unlike raw materials, this inventory does not become a part of finished goods offered to customers.

What is an inventory buffer? ›

An inventory buffer is additional inventory kept on-hand in case of emergencies, transportation delays or surges in demand. Buffer inventory takes up additional space and can be costly, especially with inventory that has a shelf-life.

What is the 80 20 rule in inventory management? ›

What Is the 80/20 Inventory Management Rule? The 80/20 rule states that 80% of results come from 20% of efforts, customers or another unit of measurement. When applied to inventory, the rule suggests that companies earn roughly 80% of their profits from 20% of their products.

How do you monitor inventory? ›

Here are four tips that every business should follow to monitor their inventory.
  1. Label and organize inventory items. It's helpful to clearly label or tag items in your inventory so you can find them easily. ...
  2. Create an inventory recording system. ...
  3. Review your inventory. ...
  4. Track metrics.

How can I improve my inventory system? ›

Tips for managing your inventory
  1. Prioritize your inventory. ...
  2. Track all product information. ...
  3. Audit your inventory. ...
  4. Analyze supplier performance. ...
  5. Practice the 80/20 inventory rule. ...
  6. Be consistent in how you receive stock. ...
  7. Track sales. ...
  8. Order restocks yourself.
Feb 21, 2023

How do I keep track of inventory in Excel? ›

How to Create An Excel Inventory Management System
  1. Create a spreadsheet. To manage your inventory in Microsoft Excel, begin by creating a new spreadsheet. ...
  2. Add any necessary product categories as columns. ...
  3. Add each product that you carry to the spreadsheet. ...
  4. Adjust the quantities as you make sales.
Mar 23, 2021

How can you improve stock control? ›

Set up a stock control policy
  1. Identify stock you always need and make sure you have sufficient supply.
  2. Tighten the process of buying stock – knowing the volume sales per stock item will help you buy the right amount.
  3. Keep accurate stock records and match them to a regular physical count, at least once a year.
Sep 21, 2022

What are the two main inventory control models? ›

Types of Inventory Control Systems

The two main systems are periodic and perpetual tracking systems.

What are the two main inventory systems? ›

Two types of inventory are periodic and perpetual inventory. Both are accounting methods that businesses use to track the number of products they have available.

What are the two major system of inventory management? ›

There are two main ways in which companies manage inventory: periodic systems and perpetual systems.

What is a hard skill for inventory control? ›

Some popular Inventory Control Manager hard skills are Inventory Control, Inventory Management, Supply Chain Management, Warehouse Operations, Warehouse Management Systems, Purchasing, Logistics Management and Operations Management.

What are the hard skills for a stock controller? ›

The most common hard skill for a stock controller is customer service. 26.1% stock controllers have this skill on their resume. The second most common hard skill for a stock controller is inventory management appearing on 12.4% of resumes. The third most common is stock control on 11.8% of resumes.

What is one of the main concerns of inventory management? ›

Ans: Inventory management has two main concerns. One is the level of customer service, that is, to have the right goods, in sufficient quantities, in the right place, at the right time. The other is the costs of ordering and carrying inventories.

What are two common inventory management strategies? ›

The three most popular inventory management techniques are the push technique, the pull technique, and the just-in-time technique. These strategies offer businesses different pathways to meeting customer demand.

What is the most important thing in inventory management? ›

Demand planning is an important part of successful inventory management. It is the process of determining how much of each item you anticipate selling, and when. Once demand is determined, inventory management follows the flow of goods from the supplier through production and ultimately fulfilling customer orders.

What are the three key aspects to successful inventory management? ›

The following three aspects serve as a basis to effective and successful inventory management.
  • Must have #1: Forecast analytics for optimal demand planning: ...
  • Must have #2: Optimized Procurement: ...
  • Must have #3: Inventory controlling: ...
  • Closing word.
Jul 8, 2013

What is an efficient inventory control system? ›

An effective inventory management system allows you to react quickly to market demands and ensures you don't have too much or too little stock – both highly undesirable scenarios. Strategic inventory management makes your whole organization more efficient, but it's an ongoing challenge for most companies.

What are the three primary types of inventory control systems? ›

What is Inventory Control and Why is it so Important?
  • Periodic Inventory. Most companies will start out counting their entire stock either weekly or monthly. ...
  • Perpetual Inventory and Cycle Counting. ...
  • ABC Counting. ...
  • Just-In-Time Inventory.

What are two of the most popular inventory control models? ›

Three of the most popular inventory control models are Economic Order Quantity (EOQ), Inventory Production Quantity, and ABC Analysis. Each inventory model has a different approach to help you know how much inventory you should have in stock.

How do I become a good inventory controller? ›

To ensure success as an inventory controller, you should be highly organized and have detailed knowledge of supply chain management software and practices. A top-notch inventory controller will be able to accurately forecast inventory requirements and possess excellent logistical abilities.

What are factors affecting inventory control system? ›

Certain key factors, such as the type of product handled, product cost and lead time for distribution, can determine the best types of inventory strategies needed for optimal inventory control.

What is the ABC analysis of inventory? ›

ABC analysis is an inventory classification strategy that categorizes the goods into three categories, A, B, and C, based on their revenue. 'A' in ABC analysis signifies the most important goods, 'B' indicates moderately necessary goods, and 'C' indicates the least essential inventory.

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