Skip to content
Inventory Management Mistakes

Inventory Management Mistakes: What Supply Chain Leaders and Managers Need to Know

Inventory management mistakes constitute a significant cost contributor in today’s supply chains. According to Rod Daugherty of, the costliest problem is due in large part to poor inventory visibility and planning. More than 60 percent of wholesalers routinely keep more than one month of inventory on-hand, and since 77 percent of businesses lose sales due to poor inventory management, such as not locating inventory close enough to consumers, the effects can be astounding. Of course, other factors contribute to mistakes, and shippers need to understand the most common mistakes and how to eliminate them at last.

What Are the Most Common Inventory Management Mistakes?

As noted by Logistics Bureau, the most common inventory management mistakes include:

  • Carrying excess inventory. Carrying too much inventory will result in higher carrying costs, demand for more warehousing space, and longer times between completing picks.
  • Failure to understand inventory needs. Not understanding inventory needs will result in over-ordering or under ordering, contributing to backorders and upset customers.
  • Lack of optimized picking paths. Optimizing picking paths results in more orders fulfilled, less stress for workers, improved transit times between picks, and more.
  • Using paper-based systems and processes. Deploying technology to track and apply data provides continuous improvement and eliminates the risk of human errors in paper-based systems.
  • Poor housekeeping. Even poor housekeeping can harm the health and safety of your employees, further reducing accuracy in order fulfillment and leading to more excess inventory.
  • Neglecting inbound processes. Inbound processes have a direct effect on inventory levels, and failure to streamline inbound management will result in poor visibility throughout your inventory.

Eliminating Errors Creates Value for Your Organization

Eliminating inventory management mistakes adds value to your organization by streamlining warehouse management and enhancing order accuracy for customers, allowing companies to maintain proper inventory levels and reduce unnecessary inventory. In other words, a better understanding of inventory needs translates into faster order fulfillment through optimized picking paths, application of data to understand inventory, and improved labor management.

Steps to Reducing the Incidence and Prevalence of Inventory Management Mistakes

Retailers should follow a few steps, according to Rod Daugherty of, to reduce inventory management mistakes, including:

  1. Optimize inventory by product.
  2. Create experiences tailored to customer needs and wants.
  3. Enact seasonal adjustments to inventory in both warehouses and brick-and-mortar locations.
  4. Think about external influencers.
  5. Optimize order frequency.
  6. Move products closer to consumers in urban and along major transportation routes, asserts Hattie Hayes of Sourcing Journal.
  7. Use technologies necessary to accommodate dock and yard needs, such as trailer tugs and lifts.
  8. Train staff properly.
  9. Create a safe environment.
  10. Track data to measure and improve performance. 

Eliminate Inventory Management Mistakes With the Right Systems and Partners

Depending on the scale of your organization, the simplest inventory management mistakes can have disastrous consequences. Instead of trying to put out fires with excessive inventory, supply chain leaders should take steps to streamline and optimize inventory to gain efficiency in the world of omnichannel and e-commerce. Find out how your organization can further reduce inventory management mistakes by scheduling your consultation with Veridian now.