Scroll down for more

15 mins read

5 Inventory Management Pain Points and How to Overcome Them

The lifeblood of any business is getting products to customers on time. And by tracking and efficiently managing inventory, you can meet demand and generate revenue. Learn about some of the most common inventory management challenges and how to overcome them.

What is inventory management?

Inventory is the goods or materials that a business intends to sell to its customers for profit. A key component of the supply chain is inventory management, which involves tracking inventory from manufacturers to warehouses and from their facilities to the point of sale.

The goal of inventory management is to have the right product in the right order at the right time. This requires inventory visibility. This means knowing when and how much to order, as well as where to store your inventory.

The basic steps for inventory management are:

Stock purchase: Ready-to-sell items are purchased and either delivered to a warehouse or delivered directly to the point of sale.

Store stock: Inventory is held until needed. Goods and materials are routed through our fulfillment network until they are ready for shipment.

Benefits of stock: It controls the number of products you sell. Finished products are drawn to fulfill orders. Products are shipped to customers.

Importance of managing inventory

Inventory can be a company's most important asset. All elements of the supply chain are incorporated into inventory management. Not having enough inventory when and where it's needed can lead to customer dissatisfaction.

However, large amounts of inventory come with their responsibilities, including storage and insurance costs, and the risk of spoilage, theft, and damage. Companies with complex supply chains and manufacturing processes must find the right balance between having too much or too little inventory.

Inventory Management Common Challenges

Companies that sell products have to deal with a lot of problems when it comes to managing their inventory. These problems can affect every part of their business, from customer satisfaction to gross margins to return on investment.

At some point, most organizations have to deal with the hassle of inventory management, whether it's the lack of real-time cross-site visibility or manual processes that waste time and increase errors.

Inaccurate inventory tracking

Inaccurate inventory levels are problematic as they can lead to incorrect customer orders, product shortages, theft, damage, and loss to the business, and even difficulty selling items before they become obsolete.

But there are also implications on the accounting side that can cause more problems for your business.

For example, inaccurate inventory can lead to inventory shrinkage, which is when the amount of inventory is less than what is written in the accounting record. This can make it hard to figure out how much inventory is worth at the end of the fiscal year or accounting period.

Inventory write-off is the removal or reduction of inventory or the value of inventory that can be used to correct worthless and inaccurate inventory from your accounting records.

Overstocking and understocking

In the world of inventory management, excess inventory goes by many different names, including B. Overstock, Overstock, and Overstock. Regardless of the term you use, "overstock" refers to a company that over orders inventory and has excess inventory. In contrast, inventory shortages occur when a company does not have enough inventory to keep up with demand.

Stock shortage risk

Understocking exposes you to several negative effects. From lost sales to lapsed discounts to undermining customer loyalty, inventory shortages can hurt your business. Before you can take action to minimize inventory shortages, you must first understand the negative effects of inventory shortages.

Risk of excess inventory

Excess inventory can cause various cost issues that affect a company's bottom line. When developing an inventory strategy, you need to know how to minimize excess inventory. To do this, we first need to be aware of the usual problems companies face when they overstock their products.

Lack of automation

Because companies can't automate everything, they have to rely on their employees to keep track of inventory and the sales, finances, and supply chain activities that go along with it. In such cases, employees must physically count items and monitor multiple data points.

This type of work can be overwhelming and time-consuming. Engaging in these activities leaves less time to strategize about your role. Automation can remove these barriers in various industries.

Poor warehouse organization

By automating inventory management in a strategic way, businesses can get a lot of benefits that boost revenue, give employees meaningful work, and give them a competitive edge. Also this:

  • More efficient order processing and customer delivery
  • Satisfy inventory demand
  • Access real-time inventory data in the warehouse
  • Tracking operations related to inventory management
  • Improve the accuracy of inventory movement records
  • Combine reports from multiple locations to gain visibility into your business
  • Allow flexibility to respond to ever-changing market variables
  • Eliminate manual processing and the resulting human error (such errors account for 5% of inventory inaccuracies).

Inefficient order fulfillment

By automating e-Commerce inventory management, businesses can accurately determine product availability and arrival times. Consumers expect this clarity as the biggest players in the space have emphasized these points. Buyers are more likely to purchase if they are confident that they will receive the item in time for their Christmas present, special occasion, or other time-sensitive needs.

What are the future benefits of implementing automation?

Automation has many advantages across the industry. The future of inventory automation includes real-time data and the ability to act on it to increase sales and reduce costs.

As automated inventory management gets better and more widely used, organizations can streamline processes from start to finish and make inventory operations more efficient. One of the main benefits of these automated workflows is that they give employees more meaningful work to do.

Using automation as in the above use case benefits operations and employees. Here's how automation can create more meaningful work for your employees.

Automation evens out process heterogeneity. These "bumps" are manual, repetitive tasks that need to be done, but don't always need human help. In these scenarios, RPA uses software robots to free employees from these tasks.

When you add AI to IPA, your employees will be able to make better decisions based on data because automation gives them insights and analytics. Instead of getting bogged down in mundane tasks, you can think critically about inventory management challenges and focus on continuous improvement.

All of this leads to more meaningful work, which is so important for today's workers. They embrace technology and understand how it can improve their work environment. As companies move toward automation, they can also find and keep new employees because the industry is becoming more modern and streamlined.

For example, manufacturing jobs today are not as physical and monotonous as they were decades ago. The industry is currently undergoing a digital transformation, embracing automation and other advanced technologies. These are far more attractive jobs.


The advantages of the automated inventory system mentioned above help increase productivity and efficiency. If you're using a manual inventory management system, get rid of it today, automate your inventory management operations, and see the results for yourself.

Read more in our blog

Project Management

Measuring Project Success: Evaluating Goal Achievement Beyond Deliverables

It's essential to evaluate goal achievement beyond the standard deliverables, understand key factors in comprehensive project evaluation.

15 mins read

Software Development

How to Choose the Right Pricing Model for Your IT Outsourcing Project

Learn how businesses can choose the best IT outsourcing pricing model to ensure project success and cost efficiency. Discover the pros and cons of different models and best practices for vendor negotiation.

15 mins read

Software Development

Dynamic Pricing Strategies for Software: Adapting to Market Changes

Discover how dynamic pricing strategies help software companies adapt to market changes and maximize revenue.

15 mins read