by Sam Balagtas
2 years ago

The Effects of Poor Inventory Management

2 years ago   •   5 min read   •   Inventory Management

Inventory management is essential to every business because it deals with all your products, from tracking your supply purchase to selling your items. It allows you to determine how much and when to restock, ensuring you have enough to fulfill customer orders.

Having the right amount of stocks at the right time enables you to maximize your resources, keep your cash flow moving, and most importantly, satisfy customers with their favorite products.

However, it can all turn into a nightmare if not done correctly.

There are numerous reasons why businesses fail to grow, and it’s due to the effects of poor inventory management. The purpose of this article is to collect information on the trouble-causing factors that hinders inventory management from growth. The more you know about these enemies, the better your chances of beating them.


Poorly tracked inventory may cause you to understock your products. This can be such a turn-off, especially when you’re reaching the peak of the season and you suddenly run out of items to sell.

Customers tend to walk away from stores when they see empty shelves and scroll away to another shop when they see “out of stock.” It simply takes the opportunity away from you.

If your store frequently suffers from this, it will cost you your precious customers, lead to order cancellations, and leave you with negative customer feedback!

Dead Stocks

While you may think ordering a lot of supplies would avoid the problem of understocking. This next situation is now an issue formed by overstocking.

There should be a sense of balance when restocking products, you can beat these problems with reorder points and safety stocks. Using accurate reports regarding demand, you’ll identify the right amount of stocks to purchase or produce.

Without a proper strategy for replenishing your stocks, a pile of products may plague your stores to the point of having unsold items and wasted resources.

The Cost… Increase!

Believe it or not, this culprit can be difficult to spot because these are underlying costs that comes from mismanaged inventory. If an inventory is tracked poorly, then let alone your expenses.

Just think about split shipments due to out-of-stock items or needing extra storage because you still have those unsold items. You’ll be spending for these continuously if you can’t oversee and control your inventory.

Inaccurate Forecast

Inaccurate inventory updates would also lead to inaccurate reports. It would be regrettable to base important decisions regarding business using misleading data.

If you don’t have your A-Game in terms of tracking, then expect a visit from this traitor. It’ll have you going to war against a roaring shift of demands with your business empty-handed. Yikes!

A Messy Warehouse

Such an intimidating contender. Anyone trying to manage warehouse storage and layout may find this overwhelming as it continues to be one of the most common pain points for businesses. Due to the rush of your operations and with everything else that’s happening, it can’t be helped when things gets moved around. But if you leave your warehouse unorganized it will produce more problems moving forward.

Maintain your warehouse’s cleanliness and strategize its layout in such a way that would be convenient for your staff. For example, you may opt to move your top-selling products in area that’s easier for you to locate.

Inventory Shrinkage

Brought to you by the Messy Warehouse, these are the items missing in action when you need to order-pick them. Due to an unorganized warehouse, you’re prone to inventory shrinkage such as lost or stolen products. This causes a stressed staff with his or her time wasted, a business with lost sales, and upset customers.

The Outdated

Commonly known as manual processes. For growing businesses, they may have worked for you before, but now, they can be working against you. Beat them with an upgrade! Or else, you may face a curse of never-ending errors in your reports, sales, and transactions.

Poor inventory management is such a common problem that there’s not likely a one-size-fits-all solution to solving it. However, the first step any company can take toward better inventory management is to recognize that there are specific culprits in their process. Bad inventory management practices are often the result of process mishandling or a lack of adequate tools and resources.

The take-home message from this blog is that businesses will require inventory management software to streamline their processes, as opposed to manually recording shipments and stock in a notebook. With Zayls, you can consolidate all your inventory details, onto a single dashboard which helps them decide the most important of all matters; the bottom line. Software such as this is the need of the hour and is in great demand today.

Photo by Adrian Sulyok via Unsplash