Inventory management

10 Common Errors with Inventory Management and How to Avoid Them

A whopping 43% of small businesses admitted that they don’t track their inventory. This is never a good idea. Business managers who do this can end up ordering too much, ordering too little, selling products they don’t have, and more.


Having an ironclad inventory management strategy is an essential part of running a successful business. If you don’t have one, you must make one.

If you don’t know where to start, read on. This article will describe ten common errors with inventory management. Learn which ones you’re making and build your inventory management strategy from there.

  1. Storage Inefficiencies

Inventory management is not all data and numbers. You have to manage physical products and spaces as well. This keeps the product flowing in and out efficiently.

Clean the Warehouse

Keep the floors of your warehouse clear and clean. Doing so gives your workers easy access to everything. This will make it easier for them to access your inventory so they can move and track it.

Have Fewer Storage Sites

The more storage sites you have, the harder it is for employees to see the full extent of your inventory. You can end up unnecessarily increasing your stock because you’re unsure if you have enough of certain products. Keep as much stock as you can in one storage area.

Organize the Warehouse

Things get lost in an unorganized warehouse. When this happens, you may buy more of a product that you already have. Your workers may also be unable to find products when customers order them.

Try to use some of the following warehouse organization methods.

Organizing By Category and Product

Give every product category a designated area. In these areas, you should label every product clearly. Also, make sure that your employees maintain this level of organization.

Organizing By Fast and Slow-Selling Stock

You should know which parts of your stock will sell fast or slowly. Put the fast-selling stock in a highly accessible area. Put the slow-selling stock in the least accessible area.

  1. Managing Product Catalogs Poorly

Even the best inventory management software on the planet can’t help you get the perfect catalog. You need to make sure that your product catalog is properly organized. It should also have all the necessary information about the product.

Some examples of information that you need are in the list below.

Basic Product Information

Things such as the products, name, price, photo, and category are highly important to customers. They help customers know for certain what they’re getting. This clarity breeds trust and makes a customer more likely to buy a product.

If you lose this information, you’ll lose that trust and possible sales.

Product Statistics

It’s important to keep track of how much a product has sold in the past. This will help you predict how much you should sell in the future.

You should also keep track of how well you’ve balanced the average stock amount. You’ll see if you’ve been stocking too much or too little. You can then learn from these mistakes and get your orders more on target.

  1. Poor Management of Product Variations


Many products will have several variations. Consider clothing as an example. You will likely have several colors and sizes of shirts, pants, shoes, etc.

However, it can quickly become impossible to manage all these product variations. You need to get these variations under control before this happens.

Don’t Have Too Many Variations

A large number of items are more difficult to manage than a small amount. Even with the best organizational system, the rate of lost items goes up as stock increases.

Beyond that, you probably won’t sell out of all your variations. The more variations you have, the more likely you’ll have loads of products sitting in storage. Therefore, you should limit the number of variations to a few.

Order Different Amounts of Each Variation

Some variations will sell more than others. You need to keep track of this data. Then you should order more of the popular products and less of the unpopular products.

  1. Not Managing Employees Properly

Your employees will be involved in inventory management. If they manage the inventory poorly, it can undo a lot of the work that you’ve done. Therefore, it’s important to hire the right employees and give them the tools that they need to survive.

Hire the Right Employees

If you can, hire employees for your inventory management team that have clear inventory management skills. If you can’t make sure that you at least carefully choose reliable candidates. You can train these employees in inventory management.

Provide Employees With Adequate Training

Operating inventory management software isn’t as easy as riding a bike. It will take a lot of training before your employees know how to use it. It will also take good quality training.

Make sure that you get the best training that your business’s budget can buy. Also, make it accessible. Give your employees options to take the training courses in person or virtually.

This way, you’ll get far more reliable inventory management. Your employees should have your inventory management software running like a well-oiled machine.

  1. Using Spreadsheets to Track Inventory

You’ll notice in the article linked in the intro that 24% of small business owners use QuickBooks to track their inventory. This used to not be a bad thing. Spreadsheets used to be a reliable way to record inventory numbers.

Management Software Is Better

However, it’s the 2020s now. Your business must switch to using a simple business inventory software program if it hasn’t already. It’s far more convenient and reliable than spreadsheets.

Your Competitors Are Likely Using Software

Odds are that your competitors have already visited their choice of an inventory software provider. If so, they could leave you behind soon. Switching to an inventory management program may be the only way to stay competitive.

To Err Is Human

People aren’t perfect. Your inventory managers can enter inventory numbers into spreadsheets incorrectly. Software isn’t perfect either, but it shouldn’t make the same mistakes as humans.

  1. Not Paying Attention to Different Inventory Costs

The price tag isn’t the only price that a business pays. Businesses can pay lower amounts for a product, but then pay more when the product is revealed as low quality. For this reason, you need to keep track of all of the costs of a product.

Supplier Metrics

A supplier might offer you a good deal but be very hard to work with. Their products may arrive at varying times. They may not be flexible.

If the supplier becomes too unreliable, you should drop them. Great deals aren’t always worth poor service.

Product Metrics

Is the price of the product a good deal but the quality low? For example, maybe the product doesn’t last long enough. If so, consider ordering another product.

  1. Too Many Inventory Management Tools

Some businesses may have inventory software tools but use them incorrectly. They may have several different software tools that manage different aspects of their inventory management strategy. This is not a good idea.

Spreading out information in this way results in poor data management issues. You can easily lose information, get conflicting information, and accumulate redundant information.

Use As Few Inventory Management Tools as Possible

Try to use as few inventory software tools as possible. At best, you should get a software tool that handles everything. However, it’s understandable if you can’t find such a technological solution.

  1. Warehouses Are Too Far Away From Work


Most successful companies have workstations close to their warehouses. This way they can see their inventory.

Yes, data can help these companies know what’s in stock. However, this data isn’t perfect. One employee may find a large amount of a product that was hidden from the data.

It’s best to have both. If you can’t work right next to your warehouses, work close to them. You should also visit your warehouses frequently.

  1. Letting Suppliers Manage Your Reorders

Some suppliers may offer to automatically reorder items for you. Don’t let this happen. Your suppliers can’t see your inventory numbers and may order your business more inventory than necessary.

Keep the reordering process in your own hands. This way, you’ll only get as much as you need each time.

  1. Ordering Too Much

This seems obvious, but many businesses make this mistake. They may want to save money by bulk ordering, etc. Unfortunately, this can lead to a business throwing a lot of its stock away.

Carefully measure how much stock you need. Only order that amount.

This Errors With Inventory Management Article Is Just the Beginning

Keep in mind that this list is in no way exhaustive. There are still many other errors with inventory management that you can make. Be vigilant and do your best to solve all the problems that pop up.

Also, if you liked this article, you don’t have to stop at the end of this page. Our website is full of hundreds more articles that you’re bound to enjoy. Check out our pieces now for useful information on business, technology, and more.


I am a committed and seasoned content creator with expertise in the realms of technology, marketing, and WordPress. My initial foray into the world of WordPress occurred during my time at WebFactory Ltd, and my involvement in this field continues to grow. Armed with a solid background in electrical engineering and IT, coupled with a fervor for making technology accessible to the masses, my goal is to connect intricate technical ideas with approachable and captivating content.

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