Manufacturing companies face many inventory managements challenges that can affect every aspect of their business, from customer satisfaction to margin to ROI. Whether it’s a lack of real-time visibility across locations or manual processes that lead to wasted time and increased errors, most companies, sadly, face the difficulties of managing inventory.
Oracle NetSuite interviewed more than 165 organizations during a webinar to learn about their inventory management challenges. Here are the top inventory management weaknesses that these organizations reported:
1) Incomplete shipments or incorrect items from suppliers.
For 10% of the surveyed audience, vendor errors resulting in incomplete or incorrect items were reported as the biggest inventory management problem. Global supply chains change daily, putting a strain on planning and inventory management operations. In turn, manufacturers and wholesale distributors dictate when, where and how it is shipped, require flexibility, and offer unpredictable delivery times.
To ease this pain, continuously monitor and track supplier performance to avoid supply chain disruptions, reduce complexity, and streamline logistics. Pay close attention to supplier consistency and order accuracy to monitor performance. When possible, have a few backup providers that can be tested over a period of time to determine if they can be hired. Some inventory management systems also offer vendor management features that can help companies identify which vendors can and cannot be trusted.
2) Lack of visibility and responsiveness of the supply chain.
When your inventory is difficult to identify or locate in the warehouse, incomplete, inaccurate, or delayed shipments arise. For 22% of those surveyed, this was the biggest source of inventory management problems for their businesses. Receiving and finding the right stock is vital to efficient warehouse operations, and supply chain models that prioritize responsiveness help quickly adapt to change and deliver positive customer experiences.
A NetSuite implementation can provide complete inventory visibility, provide companies with information on stock levels, demand, and sales by channel and location, and link customer orders to items. Consider adding images with product descriptions to your inventory database to improve accuracy and prevent products from being lost.
3) Inaccuracies caused by disconnected systems.
The second most common challenge cited by companies is having multiple disparate systems where the data is not all-in sync in real time. According to one report, 43% of small businesses track inventory manually or not at all. It’s an all-too-common dilemma.
Consider tracking software that provides automated functions for reordering and purchasing. NetSuite is an inventory management platform whose centralized databases are located in the cloud, its inventory updates are automatic and accurate, and it maintains a real-time data backup.
4) Impacts of forecasting poor demand.
Another pain point reported by the audience was stockouts, lost sales, excess inventory, and other costs associated with forecasting poor demand. Determining the correct inventory levels can be difficult for many organizations, even during more predictable economic times. Underestimating demand leads to customer dissatisfaction and lost sales when items are not available. Demand overestimations can result in excess inventory that immobilizes cash and warehouse space.
Some inventory management platforms include demand forecasting tools. This feature integrates with sales and accounting data to help forecast demand and schedule orders based on changing customer preferences, material availability, or seasonal trends.
How to relieve pain points?
While these pain points are all too common for product-based businesses, you don’t have to suffer. If you are experiencing some of these points simultaneously, it may be time to consider upgrading your business systems.
NetSuite offers many tools and functionality to help alleviate them, including multi-location inventory tracking, safety inventory, cycle counting, demand planning, NetSuite mobile apps and distribution requirements planning.