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The success of your business hinges upon your ability to effectively manage your inventory.Unfortunately, many businesses are plagued by a host of inventory control problems that can limit their success.

Failure to address these issues can negatively impact your bottom line and customer satisfaction. Below are four common inventory control problems along with solutions to help you prevent them from disrupting your business.

Problem #1: Lack of access to real-time inventory

Of all of the inventory problems that may arise, a lack of access to real-time inventory data is one of the most frustrating and destructive. Poor access to real-time inventory causes problems throughout the supply chain and is an underlying factor in client dissatisfaction.

For example, the problem cycle begins when a salesperson tells a customer that a product is available when it is actually no longer in stock. Procurement managers who lack access to real-time inventory data then fail to contact vendors to replenish stock, perpetuating delays. Finally, customer dissatisfaction results when orders are not delivered on time.

Solution: Install cloud-based software to provide real-time inventory tracking. Cloud-based software systems offer a host of advantages to employees in multiple departments. Here are some ways that cloud-based software can help sales representatives, purchasing managers, and product specialists perform their jobs more efficiently:

  • Purchasing managers can immediately see when stock is running low and replenish inventory
  • Sales reps close more sales because they can view real-time inventory from any location or device
  • Product specialists can track purchasing trends and focus product development efforts accordingly
  • Customer satisfaction increases because they are less likely to receive inaccurate information about stock

Problem #2: Failure to monitor inventory shrinkage

“There are four major sources of inventory shrinkage in retail: Employee theft, shoplifting, paperwork errors, and supplier fraud. And there’s also a fifth category of shrinkage, which encompasses all the unknown reasons for loss. This is simply the bucket for all of the other ‘mysterious’ reasons you have shrinkage that may not be identifiable.”

Matthew Hudson

Ph. D. andident of @hudsonhead Pres

Inventory loss, commonly referred to as inventory shrinkage, is a costly problem for most businesses that store inventory. With inventory shrinkage costing businesses nearly $50 million in 2016, generating strategies to eliminate shrinkage should be a top priority.

Solution: Track inventory depletion to identify trends in slippage.  The reasons for inventory shrinkage are diverse, making it one of the most difficult problems to control. The key to eliminating inventory shrinkage is to monitor your inventory depletion and train staff to recognize the difference between regular inventory depletion and depletion due to inventory slippage.

For example, if a manufacturer sells bath towels that use 12 square feet of material per bath towel, normal inventory depletion would reduce material by 120 square feet with the sale of ten bath towels. With inventory shrinkage, on the other hand, a manufacturer may notice that 150 square feet of material is missing when only 10 bath towels were sold. Tracking these trends is essential to minimizing shrinkage.

Problem #3: Insufficient inventory

There are many reasons why back orders occur. Most of the time, back orders are the result of insufficient inventory to meet customer demands. In some cases, a product may be in stock but reserved for another order. In other cases, a company can take orders for items that they believe are in stock but which have been allocated to orders on hold or in a pending state.

Solution: Invest in a predictive analytics program.  As outlined below by data scientist Matt Dancho, introducing a predictive analytics program is a winning solution for businesses and customers alike. By identifying products that are most apt to result in back orders, a predictive analytics program enables businesses to bolster sales by maintaining a healthy stock of their most popular products. Customers, on the other hand, are able to enjoy the products they seek without delay.

“A predictive analytics program can identify which products are most likely to experience back orders giving the organization information and time to adjust Machine learning can identity patterns related to back orders before customers order. Production can then adjust to minimize delays while customer service can provide accurate dates to keep customers informed and happy.”

Matt Dancho

Director of Product Engineering 8 Market Development, Bonney Forge

Problem #4: Inefficient warehouse operations

Inefficient warehouse operations lead to inventory damage and order processing delays. Both of these problems are costly and frustrating to business owners. Examples of inventory damage include forklift damage, water damage, and damage due to improper inventory storage. A variety of factors can increase the risk of inventory damage, including the following:

  • Crowded warehouse shelves with overstacked boxes can lead to crushed inventory
  • Cluttered warehouse aisles can interfere with the safe storage of products
  • Poor lighting can contribute to improper storage or movement of inventory

Poorly designed workstations and poor utilization of warehouse space are at the top of the list of variables that contribute to delays in order processing. When employees do not employ strategic methods for order picking or equipment storage, processing delays and mistakes can impede order accuracy.

Solution: Overhaul your warehouse.  Reducing or preventing damaged inventory is often as simple as improving your warehouse management and introducing a warehouse management system. Here are some specific warehouse management strategies that can help you prevent inventory damage:

  • Improve your current pallet racking system to ensure that pallets are not overloaded
  • Replace your existing warehouse lighting with LED lighting to illuminate inventory
  • Assign specific staff with the task of decluttering warehouse aisles
  • Make sure that you properly maintain your forklifts and other warehouse equipment
  • Create a designated space in your warehouse for small and fragile items


“A warehouse management system (WMS) or an ERP system with a strong WMS module can improve efficiency by suggesting the best routes and methods for picking or put-away In addition, the system provides automated pick lists that can be sent to mobile readers and devices to help eliminate mistakes and reduce wasted time and paper. Your warehouse will be neater and greener.”

Denny Hammack

President, Patterson Pope

What is the best way to prevent inventory control problems?

Inventory control problems can hinder your company’s growth and lead to dissatisfied customers. The surest path to preventing these problems from hindering your productivity is to enlist the guidance of an industry expert who can introduce you to the many ways that cost-effective software can enhance your operations.

By working with an experienced professional to introduce order management software to your organization, you can enhance your brand and enjoy a healthier bottom line.

These ideas, along with Orderwave by your side, will help you grow your ecommerce business and get ahead of the competition.  Contact us to learn how to manage all of the orders you’ll now be receiving.