How to avoid the most common mistakes and bad practices in inventory management


Any Supply Chain director or Retail leader will recognize that optimizing inventory management and demand forecasting is currently their main challenge. 

Bad supply management directly impacts the brand’s image as well as the company’s financial performance. In fact, inadequate and badly controlled stock management leads to significant immediate financial losses.

This article will present you how to identify and resolve issues related to inventory management, as well as implementing effective practices and measures to ensure the financial health of the company.

Supply Chain Gestion des approvisionnement Retail

Common mistakes and bad practices of inventory management

The mistakes and bad Supply Chain practices can cause severe consequences on the sustainability of a company: financial losses, bad cash management, delivery delays, and quality issues. 

Many companies have lost thousands of euros due to inefficient inventory management, resulting in too frequent stockouts. 

It is important to identify the causes that can affect stock control. 

Here are a few reasons that need to be taken into account :

  • Failure of computer systems : When improperly configured or faulty, computer systems can result in errors in stock management and therefore errors in supply control processes.
  • Lack of monitoring and management : Trust does not exclude control, as it seems, and a lack of proper monitoring and management systems can lead to counting errors and inconsistencies in inventory reports. Regular and accurate updating of stock data is essential to avoid stockouts.
  • Ineffective communication between different departments : Ineffective communication between production, procurement, and logistics can lead to delays in the delivery of raw materials, overproduction or underproduction, and significant storage issues.
  • Lack of planning : Without organization or planning in stock management, incorrect orders can accumulate, creating imbalances in supply and demand.
  • Outdated and inadequate Supply Chain solutions : The use of obsolete or inappropriate IT systems can lead to data entry errors, inconsistencies, and difficulties in tracking inventory flows.
Incohérences et Mauvaises Pratiques de Gestion des Stocks

Best practices for Supply Chain

To avoid inconsistencies and errors in Supply Chain processes, it is essential to optimize its management. Several strategies and methods can be implemented to ensure stock reliability and prevent bad management practices.

Maintain an organized inventory in your warehouses

Ensure that your warehouse is always organized. 

The importance is two-fold: 

Not only can items be easily identified to shorten customer order fulfillment time, but incoming products can also be received, cataloged, and stored more efficiently.

If warehouse personnel are unable to quickly locate items to fulfill an order, or for example, a new shipment of parts cannot be properly stored because the inventory has not been organized rigorously, valuable time will be lost and it will affect customer delivery.

Establish agreements with suppliers

The faster agreements are established with suppliers regarding shipping and payment schedules, the sooner it will be possible to organize the Supply Chain. For instance, after placing an order, the supplier should commit to an estimated processing time in order to plan its handling in the warehouse.

Occasionally, it may be observed that a product X experiences low demand or does not sell at all. Such a situation is clearly a disadvantage as the costs associated with these products will continue to be incurred as long as they remain in stock. It may actually be more cost-effective to return them to the supplier, but this will also require the prior establishment of a return agreement.

Using Demand Forecasting

Having the right tools in place to identify demand forecasting helps make better decisions regarding supply management.

To maximize this forecasting, the most important data is related to historical orders, providing information on sales trends, seasonality, regional distribution, and more. With this type of data, decision-making becomes easier.

Forecasting stock levels can also help make decisions on the timing of promotions, hiring staff, or renting additional storage space.

As a company’s catalog and product repository expand, it becomes increasingly challenging to forecast demand for each item.

Best practices for preventing errors

This section aims to provide valuable guidance to ensure effective stock management and avoid consistency issues. Its goal is to help you minimize errors, reduce financial losses, and maintain accurate control of your stocks while improving customer satisfaction and optimizing your supply chain.

  • Clearly define inventory management procedures: Procedures should be documented and accessible to all employees.


  • Implement return and replacement policies to manage defective products or customer returns.


  • Monitor key performance indicators (KPIs) to assess the effectiveness of supply management.


  • Establish a stock control schedule: stocks should be regularly checked to ensure they are up-to-date and accurate.


  • Utilize advanced solutions like scanners and RFID tags to track supplies at every stage of the process.


  • Invest in a demand forecasting solution and train employees on best practices in inventory management.


  • Regularly evaluate inventory management processes to ensure they are efficient.


By implementing these best practices, the main risks will be significantly reduced.

Les Bonnes Pratiques pour Prévenir les Incohérences

Optimix XFR: The key to your success !

Optimix offers a demand forecasting module, XFR – Forecast and Replenishment, which relies on the correction of sales history to obtain an accurate sales forecast. The solution allows for evaluating the impacts related to stockouts, promotions, exceptional sales, and specific events in order to predict normal demand.

This approach provides valuable information for effectively developing one’s presence in new sales channels, expanding the customer base, and seizing new business opportunities.

To avoid inconsistencies and bad procurement management practices, it is essential to establish processes, foster communication with suppliers, and utilize appropriate technological tools.

Our supply chain experts are available to assist you in optimizing your procurement and avoiding potential issues.

Contact us today to learn more about how we can support you in this endeavor.

Editeur de logiciels de Pricing et Supply chain
Pricing and Supply chain software Editor

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