Inventory Management: 5 Common Pitfalls to Avoid for Success
A lot of inventory management advice will set you up for failure.
Here are 5 things you should ignore if you are getting started
𝗠𝗶𝘀𝗰𝗼𝗻𝗰𝗲𝗽𝘁𝗶𝗼𝗻 𝟭.
Always maintain high levels of safety stock to avoid stockouts.
𝗗𝗼 𝘁𝗵𝗶𝘀 𝗶𝗻𝘀𝘁𝗲𝗮𝗱:
Safety stock is important.
But maintaining high levels of it can actually lead to excess inventory. Plus increased carrying costs.
Instead, consider implementing inventory strategies to cut excess inventory and improve efficiency.
𝗠𝗶𝘀𝗰𝗼𝗻𝗰𝗲𝗽𝘁𝗶𝗼𝗻 𝟮.
Keep a wide range of products in stock to please customer demand.
𝗗𝗼 𝘁𝗵𝗶𝘀 𝗶𝗻𝘀𝘁𝗲𝗮𝗱:
It’s important to offer a variety of products.
But, maintaining a wide range of stock can actually lead to
– excess inventory and
– decreased efficiency.
Consider identifying and
– focusing on “head” products that drive the majority of sales, and
– phase out slow-moving “tail” products.
𝗠𝗶𝘀𝗰𝗼𝗻𝗰𝗲𝗽𝘁𝗶𝗼𝗻 𝟯.
Always accept large volume discounts from suppliers.
𝗗𝗼 𝘁𝗵𝗶𝘀 𝗶𝗻𝘀𝘁𝗲𝗮𝗱:
Volume discounts can be tempting.
But accepting large discounts can actually lead to
– overstocking and
– decreased profitability.
Consider
– negotiating smaller volume discounts and
– implementing inventory strategies to cut excess inventory and improve efficiency.
𝗠𝗶𝘀𝗰𝗼𝗻𝗰𝗲𝗽𝘁𝗶𝗼𝗻 𝟰.
Always maintain the same level of safety stock for all products.
𝗗𝗼 𝘁𝗵𝗶𝘀 𝗶𝗻𝘀𝘁𝗲𝗮𝗱:
Base Safety stock levels on specific characteristics of each product, such as
– demand variability and
– lead time.
Maintaining the same level of safety stock for all products can lead to
– excess inventory and
– decreased efficiency.
Consider using tools to
– react to demand signals and
– determine appropriate safety stock levels for each product.
𝗠𝗶𝘀𝗰𝗼𝗻𝗰𝗲𝗽𝘁𝗶𝗼𝗻 𝟱.
Make sure to have all the necessary inventory in place before the launch.
𝗗𝗼 𝘁𝗵𝗶𝘀 𝗶𝗻𝘀𝘁𝗲𝗮𝗱:
It’s important to have enough inventory to meet demand.
But, having too much inventory can tie up valuable resources and increase the risk of waste.
It’s better to have a plan in place to
– replenish any inventory that runs low, rather than
– trying to expect every possible demand scenario and stock.
This will help you avoid the risk of overstocking and allow you to be more agile in response to changing demand.