BatchMaster Software Pvt. Ltd

Five Common Inventory Management Mistakes


Inventory is the biggest asset of manufacturing organizations. Inventory is one of their biggest investments too. Improper management of inventory could turn an asset to liability. Eventually leading CXOs of companies to shift their focus from the major business making opportunities to the ways to cope up with such profit-shrinking situations.

Managing inventory is challenging, no matter how big or small is the company. Failure in inventory management leads to chaotic situations manufacturing plant and warehouses associated with it which in turn disturbs the whole supply chain of the products.  These issues result in locking up of cash and add extra costs for an organization to handle inventory crisis. Let us look at the five mistakes which lead to such crisis.

Inaccurate Demand Forecasting

The forecast is an estimation of what the customers will purchase. A wrong estimation results in an imbalance of demand and supply resulting crisis. Projecting accurate forecast leads to the ordering of adequate amount of raw materials and scheduling material production in advance. A wrong forecast brings up one of the two situations – abundance or shortfall. Abundance leads to an excess of raw materials, finished products, and its associated costs; shortfall results in the inability to fill customer orders and lost sales.

A number of reasons affect the accuracy of your forecast. First and foremost- not acquiring a right, or rather, suitable method of determination.  Not able to identify what products are to be included in the forecast is another. For instance, the demand for sunscreen based creams/lotions is comparatively less during the winter season.  Not including actual forecasts (fixed percentage consumed in every forecast period), lack of appropriate past data to base the forecast on and inability to define a precise time frame for projection takes you away from the exact forecast.

Failure in depicting demand trend

Another on-going process that helps companies stay profitable and cut on inventory wastage is identifying demand trends. Properly assessing demand is crucial. Companies continuously invest in resources to identify current wants and needs of the customer. Not doing this or failing to do this leaves you with a non-selling stock or run out of stock which is being demanded. Consequently, recovering only a portion of your investments, uncovering the purchases made and adding up on space rents, handling costs, etc.

An in-depth trend analysis can also help businesses anticipate upcoming trends even before their competitors. Failure at your end to figure it out paves the way for the competitors to jump in and grab the opportunity.

Not having a common database

Not having a common database is surely a mistake that should be rectified at earliest.  A company where each department has its own database can be seen as a cart with multiple horses pulling it in different directions. Where you go? Certainly nowhere.  A disintegrated database creates room for errors and confusions. How much is in store, what is to be ordered, how much is to be ordered and when it is to be ordered? Answering these critical business questions become difficult and time-consuming, not just for a multi-location but even for a single-facility business.

Not adopting an ERP

Assume a carpenter working without a saw.  In the world of automation, managing inventory without an Inventory Management System is equivalent to such a carpenter.  Result: delayed output, data with errors and above all- depressing results.  Opting an ERP system is even better as it not only manages your inventory but brings together your various departments.  All share a common database making flow of information fast while boosting its accuracy. Updates from one department to other are shared in real-time making your process jet-fast compared to what it takes in traversing files between departments.  Availability of dashboards provides a unified view of what has been ordered, what’s in store, what is to be shipped and more, in both, single and multi-location environment.

Resistance to adopt new technologies

Present systems have additional benefits of being accessed from multiple places and are operational on multiple platforms. Use of handheld devices, barcode scanner, and RFIDs help managing your inventory on the move and execute the transaction right where they are happening.  Integration with EDI, Drop Shipping Automation, KPI analysis tools, SaaS supports help you to better analyze and manage inventory.  It even makes it easier to order inventory from multiple vendors, better utilize warehouse space as well as simplifies distributing it to various channels.  By staying away from embracing these trending technologies you are losing:

  • ease of performing operations
  • material and resource optimization
  • accuracy and quality
  • profitability


About us

BatchMaster Software is one of the market leaders in offering enterprise software solutions for the process manufacturing industries. With an in-depth industry analysis, gained through a vast industry experience with over 2000 implementations worldwide, we clearly understand the unique industry challenges. BatchMaster offers ERP solutions that are apt to support industry specific operations and handles critical processes of the micro-verticals. Process manufacturing companies around the globe have come to rely upon BatchMaster® to manage nearly every aspect of their manufacturing distribution, finance & accounting, Quality Control, Compliance and HR- related operations. With headquarter in Laguna Hills, BatchMaster has its offices in New Jersey, India and New Zealand.
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