Stock discrepancies can cause many problems for your supply chain. Your website may show the wrong status of product availability, and customers may order a product that doesn’t exist in your stock.
Before getting into the solutions, you should know the factors that trigger these inaccuracies in the first place.
Undocumented inventory loss
Inventory loss, or inventory shrinkage, happens when there are fewer products in stock than in the recorded balance. There are many reasons for this, such as theft and accounting errors, or damages during delivery.
If you have a damaged item that can’t be sold, exclude it from your physical count and write it off in your software. Otherwise, if these losses are not documented, your physical count won’t align with your recorded stock.
The best way to avoid this type of discrepancy is by documenting the losses immediately as they occur. Hence, you can keep track of your stock and seek solutions for these losses.
Errors with order fulfillment from suppliers
When you make a purchase order (PO) from your vendor, any mistakes that arise during the fulfillment can cause inaccuracy for your inventory. For example, you may record your inventory before receiving the shipment. If there is a delay from the supplier, your customers cannot get the products on time, and you’re left to fix these costly errors.
Therefore, you should work with reputable suppliers that you can trust to take responsibility for their missteps. In addition, you can request an email for fulfillment confirmation to double-check for any errors before the vendor ships your PO out.
Many warehouses share the same problem of disorganization. When you have a large number of items, it’s easier to misplace them without an inventory management system for storage. A disorganized warehouse causes products to be lost or not tracked properly.
If an item is put in the wrong place or has incorrect labeling, it will create an inconsistency between your physical counts and your inventory records. This costs you sales because the products that cannot be found will sit on shelves and become obsolete.
Therefore, it’s crucial to organize your warehouses and pick locations. Arrange uniform bins and pallets, and set up an inventory labeling standard for your pickers and counting teams to follow.
Another challenge that creates inaccurate inventory is mismanaged returns. Returned goods may be coded incorrectly and cause false inventory records when it is restored in your warehouse. For example, a damaged product is wrongly marked as “available” and becomes a “ghost inventory”. It means your inventory system shows a specific good is available while it’s not.
To tackle mismanaged returns, you should apply a smoother return process, and automate tasks where possible to reduce human errors in your inventory records. Moreover, train your employees to handle returns properly: apply the correct codes before putting items back in stock.