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4 Signs Inventory Management System is Hurting Your Business

4 Signs Your Inventory Management System is Hurting Your Business

Is your inventory management system helping you or hurting your business? The purpose of inventory management is to have what you need when you need it. Customers placing an order will have the order fulfilled by going through an inventory management system that processes and ships the order.

inventory management system

To start a new production run, a robust inventory management system will ensure that you have sufficient raw materials to start the run without delay. The same is true when your maintenance team needs a replacement part to get your manufacturing facility up and running. In manufacturing, the term Just-In-Time manufacturing or Lean Manufacturing is a well-known methodology aimed to optimise flow time between the production system, between suppliers and to customers. When your inventory management system is sub-par, the effects are felt across your company in several ways.

Four Effects of Poor Inventory Management System

Poor Cash Flow

Having too much cash tied up in the wrong inventory, such as slow-moving items or outdated items, will leave you with fewer resources for your fast-moving inventory. When you are stocking up slow-moving inventory, it means that you do not have optimized inventory levels. You will end up having over-stocking or under-stocking issues all the time. Using an integrated business solution will enable you to have a better insight into your inventory movement. You will be able to have a better inventory forecast, which can help in your purchasing process – to have optimal inventory.

The Need to Physically Verify Inventory

When your sales or customer service people have to physically verify that there’s enough inventory to take an order because they don’t trust their spreadsheets, then you know that your inventory management system is failing. The need to physically count your inventory is making your employees less efficient and will affect the overall operations of your organisation. Using an inventory management solution will eliminate this challenge because your team will have real-time information on the availability of inventory at all times.

Constantly Backordering

Those customers willing to wait for back ordered items because you’ve stocked out, don’t have infinite patience. If any of these people are repeat customers, their loss will be costly. The cost of getting a new customer is more than the cost to keep an existing customer. Any business does not want to lose a customer due to a poor inventory management system.

Lack of Operational Direction

It is a challenge to develop an operational strategy if you don’t have accurate numbers you can trust. Without useful analytics, sufficient and accurate data, and forecasting, you will not be able to make good business decisions. All these will affect budget planning, forecasting, and revenue projections, which is vital for business planning.

If any of the above problems seem familiar to you, consider retiring your current inventory management system for something better. To learn more about a better way of doing things with a robust and reliable inventory management system, please contact us..

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