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Top 6 Causes Of Inventory Discrepancy You Must Avoid


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Inventory is the life of an eCommerce business. Without proper monitoring of the supply chain, your venture will be doomed. Learn the causes of inventory discrepancy and save your eCommerce business from failing. 

Definition of Inventory Discrepancy

Inventory discrepancy happens when your inventory on hand does not tally with your current inventory records. Sometimes, a product gets lost, misplaced, or worse, stolen. 

Discrepancies are inevitable for most business owners. However, it is not something you must take for granted. An inventory discrepancy results to profit loss and damage your customer satisfaction. That’s why it is crucial that you apply an inventory system. It helps you easily track and record every item in and out of your warehouse. As a result, you’ll have an improved inventory reconciliation process. 

6 Reasons for Inventory Discrepancy

Often, inventory discrepancies come from flaws during inventory control or human error. 

1. Inventory Shrinkage.

Inventory shrinkage is the top cause of inventory discrepancy. It often involves the warehouse staff, like accounting errors, employee theft, and shoplifting. But it does not mean you have to blame your crew. Sometimes, shrinkage happens from supplier fraud. 

Fortunately, inventory shrinkage is manageable. You can prevent and reduce the risk by implementing loss prevention techniques. Start by conducting training for the employees. Also, you must have improved warehouse security. 

2. Misplaced Inventory.

Misplaced inventory happens when receipted items in your stock are placed in the wrong rack or aisle. The most typical cause is when an employee picks up the products and puts them on a different shelf. 

Avoid the inventory dilemma by placing readable labels or signages. This way, your staff will know where to arrange the incoming stocks. Also, orient all employees about the different aisles designated for each product. 

3. Mislabeled Items.

Sometimes, an inventory discrepancy occurs when a supply gets wrongly tagged. For example, suppliers will dispatch the wrong item to your customer if a product has the wrong label or SKU. As a result, it will not reflect the correct details in your invoice. 

You can save your business from the avoidable incidence. First, establish a meticulous warehouse receiving procedure. This way, you can clearly see all the items received and fulfilled. 

4. Mismanaged Returns.

Aside from strict monitoring of incoming inventory, reverse logistics are another incident to watch out for. Incorrectly coded returned items are shelved back into the inventory stock. However, it falls in the wrong product category. As a result, you receive an inaccurate return record. 

Furthermore, some returned items get damaged during transit. Worst, you must dispose of your product since it serves no use. When this happens, you must update the status of the returned items. This way, you can identify and reduce discrepancies remarkably. 

Avoid this inventory discrepancy by applying effective inventory control. It helps facilitate smoother product returns. Also, conduct proper employee training. Finally, it ensures your staff can correctly code every product placed back into stock. 

5. Multiple Warehouse Management.

Inventory grows as your business develops. So it’s no surprise when you manage multiple store locations. However, it comes with a challenge. It is difficult to monitor every incoming and outgoing stock if you have various warehouses in different places. You’ll most likely rely on your employees to observe proper inventory. 

Luckily, you can still get through this inventory discrepancy. First, overcome the dilemma by using a system that oversees all of your incoming shipments. Also, employ responsible staff to look over the storeroom. Plus, designate another employee to double-check the source of your inventory. 

In addition, apply the same strategy when it comes to outgoing transactions. Instruct an additional staff to supervise each inventory movement. It keeps them away from confusion and miscommunication. 

6. Outdated Inventory Management Software.

Automation is the key to fast, easy, and accurate task accomplishment. However, if you use outdated technology, it is useless. It won’t give you the proper stock inventory that you need. Instead of easing the burden on your staff, your employees will need to allow extra time to check the inventory record. 

You can get the best tools if you stay updated with the inventory system. For example, barcodes and inventory management software are really handy when counting stock. It makes tracking fast and efficient for both small and large supplies. In addition, inventory management reduces human error.  

Tracking the number of products that move into and out of your warehouse is a challenging responsibility. If you lack adequately trained employees and a high level of coordinated operation, you’ll have inventory discrepancies. However, now that you know its top causes, you have an idea of how to prevent it from happening again. 

What can Save you from Inventory Discrepancy?

Steer away your eCommerce business from its impending doom. Your decision on how to prevent inventory discrepancy from happening again is crucial. A reputable 3PL helps you manage products and handle inventory. It has a strict protocol that minimizes human error. 

The best example of 3PL is Red Stag Fulfillment. It is a top-notch fulfillment company with preventive steps to stock discrepancies. Here are its top 3 processes. 

Accurate inventory control processes.

Red Stag Fulfillment guarantees inbound shipments within two business days. In addition, the company moves the stocks from the dock immediately once received. As a result, it minimizes and lessens your worry about misplaced inventory. 

24/7 security.

Red Stag Fulfillment monitors every part of the warehouse round-the-clock. Video monitoring secures that all employees will behave appropriately. Thus, it prevents employee theft. Also, the 24/7 security helps you backtrack any possible human error. 

Zero shrinkage policy.

One of the best features offered by Red Stag Fulfillment is the zero shrinkage policy. The 3PL pays for the lost or damaged products in the warehouse. It means their inventory management is top tier since the company rarely pays for it. As a result, you don’t have to worry about profit margin loss. 

Any inventory discrepancy brings bad news. If it ever happens to you, trace the root cause and prevent it from happening again. End such a foreseeable dilemma by looking for a trusted 3PL service for your eCommerce business.

[Image credit: Tiger Lily]