Beating the supply chain game: 10 inventory management challenges
Think of inventory management as a fast-paced game that involves juggling products, dodging supply chain disruptions, and navigating market trends. Your equipment? Predictive tools and unbeatable strategies. Your goal? Streamlining processes and optimizing costs. Your challenges? Many.
The good news is that there are solutions and workarounds that can help you advance and reach your end goals sooner, safer, and more profitable. All you have to do is make sure you master them.
So, if you want to win the game of inventory management, here are some of the main challenges you need to get accustomed to and the keys to beating every level.
1. Forecasting demand
Correct predictions are the spidey senses that give you the upper hand. Demand forecasting is essential to avoid manufacturing delays and cost overruns. It’s basically the key to ensuring supply and demand balance.
If done inaccurately, these miscalculations can affect sales and scheduling, ending up in a financial loss. In other words, if “the math ain’t mathing,” you’ll waste a lot of resources.
The solution — Advanced forecasting tools is where it’s at.
Some inventory management platforms integrate with accounting and sales data to help you predict demand. This way, you can schedule orders based on changing consumer preferences, material availability, or seasonal trends. Plus, forecasts can also be updated using historical data for course correction.
2. Handling obsolete inventory
Understanding this particular inventory management challenge boils down to one essential life lesson — too much of a good thing is not necessarily good.
Essentially, keeping too much could result in obsolete inventory you’re unable to sell. So, you might see your storage space taken over by outdated goods you can’t get rid of in a profitable way. Needless to say, keeping too little could leave you unable to respect orders.
The solution — Inventory needs to be reviewed and updated regularly.
To continue with our game analogy, it always helps to identify needless, slow-moving, or obsolete items that can hinder your progress, even if those items helped you get where you are now. To clear obsolete inventory, go for proactive strategies such as discounts, promotions, or liquidation sales.
3. Inconsistent inventory tracking
Players sometimes realize the importance of keeping track somewhere along the game.
As they make progress, businesses will find themselves playing inventory hide-and-seek when dealing with missing or stolen goods, as well as unexplainably lost or vanishing items.
One main obstacle in reliable tracking is doing it manually. Many businesses rely on outdated methods like spreadsheets or outdated software — or, in the worst case, paper — which leads to human error and inaccuracies. The challenge here is to keep track of current stock levels while also tracking what’s sold across multiple platforms.
The solution — Embrace technology to track, locate, and monitor the movement of inventory across every step of the supply chain.
When it comes to inventory management challenges, you’re most likely losing the race if you haven’t yet said goodbye to manual documentation and upgraded to automated tools.
Using paper or spreadsheets to trace stock is like relying on a horse-drawn carriage when everyone else has upgraded to turbocharged engines. It’s always a good idea to opt for a centralized stock tracking system with accounting features.
4. Disorganized warehouse space
Ever feel like you’re playing Warehouse Tetris, trying to fit products into the available space?
This game amps up when, as your enterprise grows alongside the demand for your products, you add multiple warehouses to house the increasing number of goods available for consumers.
The challenge here is optimizing storage and preventing the storage space from turning into a Jenga session gone wrong.
The solution — Implement smart storage solutions and warehouse-focused inventory systems.
For instance, vertical stacking, adjustable shelving, and storage categorization can make the most of your warehouse space. Plus, workflow automation can help streamline processes like order picking, packing, and shipping.
5. Multi-channel mishaps
Omnichannel inventory management, when selling across multiple channels, is like solving a puzzle with missing pieces. And a few random moving ones.
With the addition of channels where customers can purchase items available for sale, it can be difficult to keep everything straight. The challenge here is synchronizing inventory levels and orders across various platforms.
The solution — When dealing with multiple channels, it’s vital to track orders and remaining available stock levels.
Step your game up by implementing automated order processing, as well as an online inventory management system that connects all your sales channels. In order to piece together the multichannel selling puzzle, it’s crucial that you also reconcile inventory levels to avoid discrepancies.
6. The dread of customer returns
From overlooked details in an individual order to faulty policies or system errors, dealing with customer returns can sometimes feel like playing whack-a-mole.
The challenge here is to approach returns as a part of the customer experience and manage them efficiently without letting it become a never-ending game of frustration.
It’s up to you to find uses for this challenge of inventory management and make it an opportunity for growth and customer loyalty.
The solution — Streamline your returns process and provide clear return policies.
Use the data acquired from returns to increase product quality and customer satisfaction. If handled innovatively and efficiently, the returns process can actually enhance your brand image and customer satisfaction.
7. Sustainable packaging
It’s essential to effectively reduce waste, which can be achieved through the use of eco-friendly products, intelligent warehouse design and storage, and thoughtful packaging.
But the twist in the game of inventory management challenges is to move beyond simply checking off sustainable practices.
The solution — Go green every step of the way.
Drive sustainable growth by joining forces with suppliers who share the same green values. Implement green packaging solutions (like compostable packaging or removing packaging completely, where possible) to reduce waste. Don’t forget to market your commitment to sustainability since it may attract consumers who value environmental consciousness.
8. Supply chain intricacies
Navigating the supply chain maze is more than just pushing some buttons on your console and hoping for the best.
The challenge here is to dodge local and global supply chain disruptions by monitoring supplier performance and streamlining logistics.
The solution — Diverse suppliers, high-tech tracking, and communication, communication, communication.
Stay ahead of the game by conducting proper inventory planning, and always keep safety stock to offset supply chain disruptions.
9. Deficient supplier relationship
In inventory management, like in most businesses, teamwork makes the dream work
The truth is that strong relationships with suppliers are the foundation of successful gameplay. The challenge here is to ensure a communication flow as smooth as the flow of goods.
The solution — Communicate regularly and negotiate mutually beneficial terms.
Consider collaborative initiatives to strengthen the supplier partnership, and never underestimate long-term relationships with reliable suppliers. Sometimes, small things like quick calls or messages just to touch base make all the difference.
10. Increasing competition
Last but not least, what’s any game without some competition?
Competition is what keeps you on your toes and makes you play harder in order to stay ahead. Good strategies and thinking ahead are what ultimately sets your business apart.
In inventory management, constant competition is a dynamic element that requires foresight and adaptability. The challenge is to offer competitive options without letting it become a wild, unpredictable adventure for your customers.
The solution — Effective supply chain management is the backbone of your gameplay.
Nothing like robust supply chain management strategies to provide a competitive marketplace advantage for businesses. Incorporating innovative technology solutions optimizes inventory processes and heightens the competitive edge.
How to handle inventory management challenges with Katana
Tackling the above challenges and dilemmas is not just a quest but an ongoing adventure filled with twists, turns, and oh so many triumphs.
The inventory management race can be tough to beat, but Katana is here to help unleash your inner inventory management hero.
Katana’s cloud inventory platform equips you with everything you need to boost your performance and conserve your resources. Katana offers features from inventory management to cost tracking and sales management.
Armed with strategic solutions, Katana is your ally in beating every level of the inventory management game.
Are you ready to gain the edge to tackle these challenges head-on and unlock your inventory management potential? Reach out to our sales team to book a demo.
May the odds be ever in your favor!
