Measuring and tracking inventory accurately is essential to a well-oiled operation. Not only do accurate inventory counts reduce the cost of carrying goods, they also help create satisfied customers by ensuring ordered goods are on-hand and properly stocked. Accurate and true inventory data also contributes to visibility, allowing managers to understand data trends and forecast future demand.
In 2017, Wasp Barcode reported that 43 percent of small business do not track their materials or are still using manual inventory management processes. This is a risky practice that cuts into your bottom line and can create significant issues, especially as your business grows.
Some of these risks include:
Inventory records that are updated and accurate can inform you when you need to order new items. If you are under-stocked, you may not have enough products to send to clients. Meanwhile, if you overstock, your warehouse might be overcrowded, leading to disorganization. In some cases, overstocking perishable items can lead to waste.
Failure to properly track inventory could eliminate any earnings your business would have made from this business transaction. Analyzing inventory records over a length of time can help you track trends to predict what items typically sell faster than others.
Lack of Trust from Clients
Lack of organization and accuracy in your store and warehouse setting can create chaos, which may create a snowball effect on client orders. Customers expect a certain level of service when they place an order. If you fail to meet clients' expectations or do not have enough inventory to deliver on an order, your relationship with consumers could be negatively affected. This may cause them to pull future orders with you, lose trust in your capabilities and speak negatively about your business' efficiency with their peers.
Last-Minute Shipping Costs
Warehouses that do not maintain accurate inventories might not be able to deliver products until the deadline is in close sight. When the warehouse staff has to ship products quickly to meet deadlines, they might have to pay for expedited shipping, which can come at steep costs and cut into profits. It is normal for this to happen from time to time as a result of human error, but when it becomes a regular habit, your business could lose significant amounts of money.
If warehouse staff cannot find certain items, they might order more inventory. To meet deadlines, they might pay high last-minute shipping fees to deliver it to the warehouse and then to the client. They might find these misplaced products after sending replacements out to the client. Losing items due to lack of inventory management could result in surplus products in the warehouse. It also means paying for expedited shipping, which they might later find is not necessary after all.
Inaccurate Accounting Reporting
Businesses that do not update their Balance Sheets, Profit and Loss and Cost of Sales reports may fall behind in reporting their financial operations. Having outdated inventory information can allow your business to fall behind on its accounting, which can result in incorrect stock cost values and inaccurate profit reporting.
How to Prevent Inaccurate Inventory Management
Ensuring that your business' inventory is accurate and updated might involve adapting your tracking practices. For a convenient, efficient way to record warehouse inventory, consider mobile data collection technology. Using barcode scanners, tablets and smartphones to track items allows warehouse workers instant access to critical information that transact against your ERP system in real-time.