Inventory Management – Expectation vs. Reality

Inventory management is an essential part of running a successful business. Streamlining inventory management processes can boost profitability and improve efficiency. But, it is often easy to have unrealistic expectations about what inventory management can do for you. Here, we will explore the differences between expectation and reality regarding inventory management.

Expectation: With inventory management, you can easily track and manage all your inventory in one place.

inventory management expectation vs. reality


While it is true that inventory management can make it easier to keep track of your inventory, it is not as easy as it sounds. For accurate tracking to be possible, it is necessary to organize your warehouse effectively. Furthermore, adding images to similar products is helpful in reducing inventory levels and order errors. Additionally, tracking systems must be integrated and updated in real-time if your business utilizes multiple distribution centers. Selecting the type of inventory management system will also determine how easy it will be to track and manage. There is no question that an inventory management system will help streamline the process and improve inventory efficiency. That being said, gaining clear visibility into your inventory requires a lot of organization and attention to detail.

Expectation: Inventory management will make it easier to keep your costs down.

inventory management expectation vs. reality


Inventory management can help you keep your costs down, but it is not a magic solution. You will still need to be aware of market trends and purchase items at the right time to get the best prices. Furthermore, you will need to be able to forecast your future needs and keep a close eye on your inventory levels. Here are some additional considerations when managing inventory that will help you keep costs low.

  • Strengthen Supplier Relationships: Ensuring open and consistent communication with suppliers will improve efficiencies, speed up product deliveries, and reduce warehousing requirements.
  • Conduct Regular FSN Audits: Fast-moving, slow-moving, non-moving? Determining which products are performing well will allow you to liquidate slow or non-moving products and promote fast-moving items.
  • Diversify Suppliers: By working with several suppliers, you can ensure adequate product levels and encourage healthy competition from your vendors.

Expectation: Inventory management will save you time.

inventory management expectation vs. reality


Inventory management helps you save time, but it requires proper setup to reap the most benefit. Initially, setting up a new inventory management process takes a significant amount of time. Here are just a few of the tasks required to launch a time-saving inventory management process effectively:

  • Each product SKU must be added to the inventory management system.
  • Link all inventory systems with all sales channels.
  • Test product levels and sales tracking accuracy.
  • Ensure product labels, bar codes, and delivery tracking are functioning correctly.
  • Set a cycle count schedule (including physical inventory counts).
  • Set reorder thresholds for optimal stock levels.
  • Automate as much of the process as possible.

You will still need to spend time tracking and managing your inventory. If you are not careful, you could end up sacrificing more time trying to manage your inventory than you would have if you hadn’t implemented inventory management in the first place. Once an inventory management system is in place and adequately tested, it will save you time and money. But, it can take some trial and error to optimize the process.

Expectation: Inventory management makes it easy to identify potential problems.

inventory management expectation vs. reality


Inventory management can help you identify potential problems, but it is not a crystal ball. Systems will only show you what they have been programmed to track. You will still need to regularly review inventory levels and be able to identify any issues that could arise. These include watching purchasing trends to mitigate overstocking due to lower demand. Another common problem would be running out of products because purchase thresholds were too low for manufacturer timelines. These nuances require trial and error or an individual who can analyze the data effectively to avoid inefficiencies or mistakes. Additionally, some problems with inventory management have less to do with the processes and systems and more to do with market fluctuations. Another way to save time, money, and the headaches of inventory management is to outsource it to a 3PL.

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Inventory management can be a powerful tool for any business, but it is important to have realistic expectations about what it can do for you. With the right processes in place, inventory management can help you keep your costs down, save time, and identify potential problems. Align your inventory management expectations with reality for a winning solution.

If you have outgrown your inventory management process or feel overwhelmed by it, let Falcon Fulfillment help. We have been successfully partnering with business owners for years; talk to one of our agents today.

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