What Are The Problems Associated With Inventory Management

What Are The Problems Associated With Inventory Management

Stock management unites all the operations to be carried out to determine the frequency of supply and the quantities to be purchased.

It will then have to put in place a good organization and a strategy adapted to the needs of the company to respond effectively to the expectations of the customers, but especially to avoid the losses related to a concern of storage. But what can these problems be related to storage and inventory management?

Over-storage problems

One of the problems of inventory management that can lead to numerous economic and financial losses for the company is undoubtedly over-storage. It usually corresponds to too many goods in stock.

Most of the time, this problem is caused by a lack of stock turnover, but mostly by poor management of replenishment.

Over-storage is a concern that can lead to significant financial charges and heavy storage costs, particularly in terms of fixed charges (premises, handling, and storage space) and variable charges (salary, maintenance, rent, electricity, goods. deteriorated or expired).

Over-storage can also have an impact on cash flow since the storage of goods immobilizes capital.

Under-storage problems

Unlike over-storage, under-storage corresponds to too small a quantity of stocks concerning demand. This situation can have important consequences, which can be more negative than over-stocking since it considerably increases the risks of out-of-stock, a problem indicating a bigger problem for the company.

Since you will no longer be able to meet the demand of your customers, they will be unhappy and turn to the competitors.

You, therefore, lose part of your customers, the order, and the money. Under-storage will also completely unbalance your production line or disrupt the system, which can even cause production to stop.

How to avoid stock management problems?

Most often, over-storage is due to a lack of stock rotation, but above all to a poor replenishment strategy. To avoid the over-storage situation, you will therefore have to find a good balance between these two elements.

By consulting CAC’s best inventory management service, you will be able to significantly reduce the risk.

To avoid stock shortage or under-storage, it is essential to follow the movements of your stocks to optimize the performance and profitability of the company.

An expert of CAC can also perform this task in complete autonomy and alert you as soon as the level of stocks requires replenishment.

Poor inventory management wastes the fleet’s time and money in many ways. With the increasing cost of mechanical repairs, implementing inventory management practices can save you unnecessary additional expenses.

Ineffective inventory management can eat up your capital that could have been spent more usefully in other areas of your operations.

Poor inventory management can also increase the downtime of your assets and thus reduce your productivity, which will harm customer service and satisfaction levels.

Inventory management is not only a question of costs, but it is also a question of productivity. Eliminating bad inventory management procedures with an effective strategy will always have a positive impact on the bottom line of your operations.

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