10 Biggest Inventory Management Mistakes and How to Avoid Them

As we come to the end of 2011, it comes time to audit our inventory. Many companies are just now thinking about their inventory management solution or lack thereof. All of us on the team at Dynamic Systems Inc. want to help. We put our heads together and came up with what we believe are the top 10 mistakes businesses make in regards to inventory management.

1. Overlooking the overall operational costs.

Many assume that inventory management software is primarily for reducing shrinkage. The truth is, you still need to measure the cost of managing your inventory and the total time spent utilizing a manual inventory management process.

2. Custom engineering rather than re-engineering.

Dynamic Systems Inc. gladly custom develops customized software for a number of companies each year but the best software has been pre-engineered to streamline your operations.

3. Not getting user buy-in prior to implementation.

Your employees’ willingness to adopt change could be your greatest weakness. Get your users involved by asking for input and feedback. Finally, communicate your plans as they are developed.

4. Foregoing training to save money.

80% of installs fail due to poor or no end user training. When considering where to cut costs, be sure to invest in long term-success to foster high user adoption.

5. Not using barcodes to manage your inventory.

Barcoding increases accuracy to virtually 100% and productivity by as much as 80%.

6. Selecting the wrong enterprise mobility devices.

Using consumer technology for inventory management (smart phones, tablets, etc.) is usually a bad idea. These devices are not designed to withstand the abuse of a warehouse, retail floor, stockroom or plant floor.

7. Not setting accurate min/max levels.

A good inventory system has min/max reporting functionality that helps you to avoid shortages and to maintain less on-hand inventory. It is important not to tie up money with overstock or, on the flip side, to lose a sale due to insufficient stock.

8. An inefficient and poorly optimized warehouse floor plan.

Well designed inventory management software allows you to store items by location so it’s easy to place the highest turn items closest to the shipping dock or manufacturing floor and the lowest turn inventory in the back warehouse.

9. Performing unnecessary inventory counts.

You don’t need to do a full inventory count every quarter if you are performing monthly cycle counts section by section in your warehouse.

10. Focusing entirely on process metrics.

There are a lot of inventory metrics that need to be measured. At the end of the day, if a solution does not result in increased revenue, reduced costs or decreased cycle time then it’s not the right solution.

Free Guide: How Mobile Printers Benefit

image credit: FindYourSearch