What Happens When Supply Chain Links Break

Inventory management errors increase as supply chains grow more complex. These days, given the pandemic and worldwide instabilities, supply chains are particularly fragile. Complexity plus fragility greatly increases the potential for highly costly inventory management errors across your supply chain.

Let’s take a look at some common inventory management mistakes made by supply chains and how to address them:

  • Insufficient and poorly trained staffing
  • Inaccurate product catalog
  • Unorganized storage
  • Improper stocking
  • Inaccurate forecasting
  • Failure to track metrics
  • Manual inventory management
  • Poor logistics management

One possible overall solution for Amazon sellers: Fulfillment by Amazon (FBA). But even FBA makes mistakes that you can at least get reimbursement for when they occur, as long as you know they occurred and know how to file claims for reimbursement.

failure to properly train employees

Insufficient and Poorly Trained Staff

A political consultant’s famous advice during the 1992 presidential campaign, went, “It’s the economy, stupid.” A similar observation applies to supply chain companies that think nothing of investing in sophisticated inventory management systems but fail to invest in the people who use them.

The pressure on supply chain companies is equally felt by the people who work for them. People who aren’t properly trained at understaffed companies with unrealistic workloads are going to make mistakes. A lot of mistakes. 

In contrast, a properly trained staff is better equipped to adapt to changing conditions and develop positive solutions to high-risk challenges. Investment in staffing is an investment that pays off in fewer costly inventory management mistakes.

Inaccurate Product Catalog

A product catalog tracks and updates the active, new, and unavailable products in inventory. A product catalog that isn’t updated on at least a weekly or monthly basis, preferably daily, leads to a high percentage of inventory management errors. Orders aren’t efficiently filled and backorders irritate customers.

A properly updated product catalog helps prevent inventory management errors.

Unorganized Storage

Easy access to faster-moving items improves inventory management efficiency. But when inventory management staff isn’t sure where items are stocked, or the logic of where they are stocked or need to travel across multiple locations to fill an order, such unorganized storage results in order fulfillment slowdown.

There are strategic reasons to stock in multiple locations, primarily to reduce shipping times and expenses by being closer to customer geographic locations. However, spreading stock across multiple warehouses can lead to unnecessary overstocking. In addition, time is wasted retrieving stock from multiple locations to fulfill large orders. 

Effective inventory management organizes fast-moving items in the same accessible location and slower-moving items elsewhere in the warehouse when they can be easily found as needed based on projected demand. 

Improper Stocking 

Speaking of demand projection, stocking too much or too little product causes inventory management nightmares. In the case of too little stock, orders go unfulfilled, customer dissatisfaction increases, and you aren’t making money. When you have too much stock, the product you paid for is sitting in the warehouse, it isn’t generating revenue from sales, and it’s costing you warehouse fees to sit there gathering dust in the warehouse.

All too many companies still perform physical inventory management accounting on a yearly basis. This is time- and labor-consuming and often imprecise. A better practice is regular periodic inventory checks of rotating product categories to ensure accurate inventory management and avoid operational shutdown to perform a yearly physical inventory count. 

demand and supply

Inaccurate Forecasting

Failure to anticipate customer demand results in either insufficient stock or too much. Accurate forecasting ensures stock levels are, as Goldilocks said of her porridge, “just right.”

Forecasting is easier with computer models, but demand planning still requires careful analysis of historical trends combined with the identification of emerging patterns likely to affect demand, regardless of previous trends.  

Failure to Track Metrics

If the inventory management system isn’t tracking key metrics such as customer order cycle time, stock coverage, turnover, and other key performance indicators (KPIs), the supply chain is likely to encounter disruptions. Proper performance measurements are essential to evaluate proper inventory management practices and strategies.

Manual Inventory Management

In this day and age, there really is no excuse for taking inventory manually. Barcode tracking systems and RFID (radio frequency Identification) systems provide real-time data on exactly where products are in inventory and the supply chain. Automated systems reduce if not eliminate human error and greatly improve productivity. In addition, automated inventory management can easily scale as the business grows.

Poor Logistics Management

Effective logistics management is crucial to effective inventory management. Otherwise, inefficient movement of stock across the supply chain causes inefficiencies that lose money and impair business profitability.

FBA

The success of Amazon as a global eCommerce company is a direct result of its effective worldwide inventory management and order fulfillment systems. Particularly for small Amazon sellers, FBA takes a great deal of the inventory management and supply chain management burden off their shoulders.

This is not to say FBA is a “set it and forget it” proposition. While it is less of a headache than managing an entire supply chain on your own, every Amazon seller needs to stay on top of FBA errors in handling inventory management and order fulfillment on your behalf. Such errors could represent anywhere from 1% to 3% of your yearly revenues that Amazon doesn’t automatically reimburse.

Fortunately, detecting FBA errors and filing claims for FBA reimbursement also isn’t much of a headache if you use GETIDA

GETIDA FBA Reimbursement

GETIDA (GET Intelligent Data Analytics) is a powerful software tool that examines the previous 18 months of inventory management transactions to flag errors eligible for FBA reimbursement. It is free to run the report. 

It’s also free for a GETIDA team composed of former experienced Amazon employees to file and follow up on reimbursement claims on your behalf. The only charge is a percentage of claims that are approved. And the first $400 of FBA reimbursement is free without charge.

Given the time and effort, GETIDA saves you so you can focus on running your business, it’s a small price to pay to recover potentially substantial reimbursement of FBA errors likely to occur while handling your inventory management.