Automation has taken every industry by storm. Automation means improving the efficiency of work done by humans and difficult parts to be done by machines. It aims at increasing the accuracy, quality, and quantity of output along with cost-saving. Inventory Management is one area where there are problems of accuracy, speed and are needed to be solved. It is obvious that in order to thrive in this market scenario inventory managers have to keep updated with the latest innovations.

According to Infoholic research, ‘India Inventory Management Software” market is expected to grow at a CAGR of 14.5% during the forecast period 2017–2023.’

With the entry of leading global retail chains like Walmart and Ikea in the Indian e-commerce industry; there is an urgent need for Indian retail and e-tailing companies to innovate and increase their efficiency.

There has been a constant need for an efficient inventory management system to digitize the supply chain and keep track of all the goods. This led to the sudden boom of inventory management software companies. A lot of warehouses have been focusing on replacing their manual method of monitoring inventory with software.

Let’s take a step into understanding what is inventory and then taking a look at why is it so important to understand its challenges and next look at ways to fix them.

According to Investopedia (a website dedicated to investing and finance education) – “Inventory is the total goods available with a company ready to be sold in the market. They state that there are 3 types of inventory:- raw materials, work-in-progress, and finished goods.”

Now that we understand inventory it’s time to understand its importance.
To make sure we have enough ready/raw/w.i.p. materials to meet market demands.
To save costs by placing bulk orders.
To protect the goods by storing them in a safe and suitable environment.
To have an entry of all transactions in the company accounts.
To be ready for any sudden PESTEL (Political, Economic, Social, Technological, Environmental and Legal) changes in the market.
To save on the delivery charges.
Not only these, but inventories also have their role in obtaining financial assistance by being a substitute as a collateral to get loans from the banks and the market.

By now, we know that an inventory is a list of tangible goods that are needed to ensure the smooth and continuous functioning of any business.

Here is a simple excel sheet of a restaurant’s Inventory management.

We hope the term inventory is clear and so is its importance. We shall now start to understand the challenges faced in inventory management and look at ways to fix these problems.

Inventory constitutes a chief element of working capital so an efficient inventory management system is necessary to run any business efficiently and profitably. The success or failure of businesses depends on how well the inventory is managed. To understand that there are underlying challenge symptoms inventory problems should be identified.

Here are a few symptoms, faced by businesses with weak inventory management:
1. Higher inventory cost

2. Mishandling of goods leading to breakage and loss.

3. Mismatch of inward and outward entries.

4. Breaking of supply chain system because of the unavailability of stored goods.

5. Complaints from customers about delayed delivery, broken goods, wrong shipment, etc.

6. Reduction in Working capital.

These are a few symptoms that a businessman can look out for while running the business. Now we will discuss the challenges and solutions to arrest it. Efficient management and control of inventory not only solves the problem of liquidity but also increases the profitability of any organization.

A recent example of the downfall of an entire industry due to change in PESTAL factors (introduction of RERA) is the Real Estate sector and it has directly hit their inventory. Across India, there are over 12.76 lakh houses lying unsold in India’s top 30 cities and the demand doesn’t seem to increase.

Listed below are 6 common inventory problems along with the solutions:


Excess Inventory

A large volume of inventory means a large amount of working capital stuck and less of liquidity. 20-40% of working capital is tied up in inventories, if the forecasting is not done properly, while it is important to have adequate stock it is wise to analyze the sales data and market trends with the help of EOQ to order an optimized quantity of stock.

The solution: Inventory Management Software
Practical and easy-to-use inventory management systems are no longer a herculean task. Apart from managing all your data under one roof, they also offer valuable time-saving automation that can restructure business processes. A highly efficient Inventory Management Software is all you need to streamline all your inventory woes.


Error-prone and Inaccurate Data

Research shows that even a proficient data entry operator will make one error for every 300 characters and this inaccuracy can really add up. If your employees are still using an Excel sheet to record data, this manual work adds up to countless man-hours wasted over re-entering the details into a digitized system and must be stopped right now.

The solution: Automation
Automation will enable each item to be traced and tracked in every step of the transportation and transition process. Automation also helps to utilize the employee’s time for some other work.

In today’s world where automation is changing the way of operations in the industry, automated inventory is an essential factor to save time and money. Use a label-reading tool such as Saara which leverages machine learning to fetch data directly into your system using pictures, so that you don’t have to take extra time out to note down each and every product detail.


Hiring the Inexperienced

Employees are the biggest intangible asset and inventory is the biggest tangible asset of the company. The relation between both is directly proportional to the profitability of the company. Hiring employees with inadequate experience of inventory management might prove fatal to your companies’ inventory management no matter how good your system is.

The solution: Hire Right People for Right Job
Hire the right people as your company’s money is invested in inventory. Professional inventory managers will do the job easy for you. Explain your goals to them and try to indulge them in every inventory activity.

Train them efficiently in inventory software so that they will perfectly do their job. You will see the change once they get better at their job.


Lack of Market Knowledge

Frequent market research to know the sales trends, customer satisfaction, analyze sales reports, inventory turnover, complete sales targets should be in the DNA of the company. Failing to which the company will be unable to deliver the demands of the market.

The solution: Hire a Market Research Company or set up an RnD Team
If you have the budget to hire a research team who will do market research and forecast the trend so that the inventory can be made ready for the market. If not, there are enough and able Market Research companies who can do the job for you.


Auditing System

Irrespective of using the best-automated inventory management system they may have a few errors such as pilferage, returns or exchanges that are not entered. Therefore, scheduling frequent stock audits is a must for all companies dealing with inventory.

The solution: Scheduled Audits
Make frequent audits for each section on a regular basis, while the automation is pretty close to the actual numbers; scheduled audits coupled with barcode scans are effective enough to keep the inventories in check.


Complex Supply Chain

Expansion in product portfolio might lead to an expansion in the supplier list and hence having multiple lead times, unaccountability of stocks

The Solution: Pre decided the lead time
Lead time (the amount of time it takes to fulfill an order) is crucial so pre deciding your vendors’ lead time will significantly help in reducing the chaos and help in anticipating other possible delays because of the roadblock, holidays, etc.



Thus, proper management of inventory is important to maintain the well-being of any organization. The efficient management of inventories will improve the profitability of the organization. To compete in the industry, you need to pay special attention to fixing inventory problems. If you are planning to start now, do some research beforehand so that you don’t end up in the loop of inventory mismanagement. Go with the trends, automation is the key if you want to survive now. It is advised to take help from the experts, as they will help you in inventory management solutions.

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