Inventory discrepancies presented during eCommerce fulfillment can discard your demand forecast and lead to unpredicted out-of-stock items. Inconsistencies are typical and can seriously harm any company's operations. Unknown inventory discrepancies may lead to overstocking, wasted revenue, and poor customer support. This blog will discuss the reasons behind inventory discrepancies and inaccuracies that harm your company's bottom line.
Inventory Discrepancies
The very simple definition of inventory discrepancy is when the items present in your inventory management system don’t match with items in your hands. Let's discuss different types of inventory discrepancies and their impact on ecommerce businesses:
Types of Discrepancies:
Discrepancies in Tracking
When things are counted improperly, or data is entered into the inventory system erroneously, human error can result in counting discrepancies.
Theft
Workers, customers, or even suppliers may steal inventory.
Shrinkage
Inventory lost or missing for unidentified causes is shrinkage. A few potential causes are transpiration, breakage, and employee theft.
Errors in Paperwork
If a purchase order needs to be processed correctly into the inventory system, there may be a difference between the recorded and actual inventory quantities.
Outdated Technology
Outdated technology is harmful to businesses that are eager to expand rapidly in terms of decreasing inventory disparities.
Causes of Inventory Discrepancies
Few most common discrepancies:
- Human Error: This error includes incorrectly counting goods, entering data into the inventory system, or misplacing items.
- Theft: Inventory might be stolen by employees, customers, or even suppliers.
- Harm: Unsafe storage practices, natural calamities, and accidents can all cause damage to inventory.
- Lost Inventory: Items received into stock but then placed on the incorrect aisle, shelf, or bin result in misplaced inventory.
- Error by the Seller: The seller may make mistakes, such as sending the wrong quantity of commodities or faulty or damaged goods.
Impact of Inventory Discrepancies
Explore the consequences of inventory discrepancies on businesses:
1) Decreased profitability due to lost sales or excess inventory costs.
Overstock, stockouts, imprecise demand forecasting, and ineffective stock replenishment procedures plague many companies. These difficulties may result in lower profitability, surplus inventory, lost sales, and storage expenses.
2) We have reduced customer satisfaction from stock outs or delayed orders.
Product availability is a critical component of consumer pleasure. Customers may grow irate and choose to do business with another company if they cannot fulfill an order or are out of stock, as they expect businesses to have the things they need. Consumers anticipate receiving the requested items so mistakes may cause annoyance and discontent.
3) Operational inefficiencies and increased labor costs.
Operational inefficiencies arise when a company expands more resources—time, labor, or material items, for example—than required to sustain or enhance its output. It becomes apparent that there is an opportunity for improvement. In other words, excess is considered inefficient if something can be accomplished with less without compromising quality or output levels.
4) Damage to brand reputation and customer trust
Inaccuracies in the inventory may cause delays or skipped deliveries, which can harm a business's reputation and customer satisfaction.
Prevention Strategies
Implementing Robust Inventory Management Systems like MapMyChannel
Integrating inventory management software with barcode scanning and real-time tracking features will help you develop robust solutions like MapMyChannel. Install automatic restocking systems to prevent stockouts. Perform regular physical inventory counts and compare the results with system records to maintain accuracy. This all-inclusive strategy can improve inventory management procedures and expedite operations.
Enhancing Security Measures:
1) Set Up Entire Security Systems
While alarm systems and motion sensors can identify theft in progress, cameras placed in high-traffic areas can prevent theft before it occurs. Authorities can also obtain evidence from security systems in high-value robbery or shoplifting cases.
2) Conduct employee training on security protocols and ethical behavior
The idea of ethical management and training is that if an organization has preventive actions, it may avoid ethical issues that harm the company's reputation. A damaged reputation could result in a decline in customers, which would adversely influence the company's financial stability.
Optimizing Supply Chain Processes:
How good communication can help you set strong bonds with customers and suppliers?
- Recognize the sellers and suppliers.
- Make sure your expectations are reasonable and well-defined.
- Give helpful feedback regularly.
- Communicate quickly and proactively.
- Establish rapport and confidence.
Just-in-time inventory management ensures that stock arrives as it is needed for production or to meet consumer demand, but not shortly. The goal is to stop waste and increase the efficiency of your operations. Since the main objective is usually quality and not the lowest price, just-in-time requires long-term contracts with reliable suppliers.
Improving Data Accuracy and Visibility:
Any data-driven project must include data entry and validation, but these activities can be time-consuming and prone to mistakes. Set exact requirements and give data entry staff members extensive training to guarantee data accuracy throughout entry. Use error detection techniques and validation procedures to find and fix errors quickly—audit data entries regularly to spot inconsistencies and fix them immediately. The Inventory Management System from MapMyChannel streamlines backend operations so you can easily change stock levels across sales channels, precisely track item movements, reduce deadstock to maximize inventory efficiency, and much more!
Establishing Clear Policies and Procedures:
Your objectives, data, and input should regularly review and enhance your inventory control procedures. To benchmark and improve your performance, you should also track and measure your inventory control metrics, such as fill rate, accuracy, shrinkage, and inventory turnover. Organizations can find operational risks and weaknesses using regular audits and reviews.
Monitoring Improvement:
Businesses can reduce inventory costs by monitoring stock levels and placing orders when necessary. Correct inventory management helps companies minimize depreciation and overstocking, which in turn reduces inventory costs. It helps businesses avoid stockouts, which could lead to lower sales and angry customers. Companies may provide continued success and growth by continuously improving their products, services, and procedures and adapting to changing market conditions.
Conclusion
If you are a seller or wholesaler needing dependable inventory software, use NetSuite ERP, MapMyChannel, or Amazon FBA. By allowing you to automate advanced inventory management procedures, multi-channel fulfillment platforms like MapMyChannel and Amazon MCF relieve the burden of managing your inventory. You can get all the tools you need to accurately manage your inventory in one location by using NetSuite ERP with FBA, from powerful inventory stock takes and put away to real-time inventory modifications and efficient warehouse administration.
