April 5, 2024

5 Overlooked Inventory Management Challenges That Demand Immediate Attention

Managing inventory is fundamental to business operations and holds significant economic importance.


5 Overlooked Inventory Management Challenges That Demand Immediate Attention

Managing inventory is fundamental to business operations and holds significant economic importance. The combined value of inventory, accounts receivable, and accounts payable stands at $1.1 trillion in assets, which surpasses 7% of the United States' GDP. On a micro level, individual businesses maintain an average stock of $1.43 worth of merchandise for every dollar earned, along with a warehouse rate of $5.08 per square foot. Accounts receivable and accounts payable total $1.1 trillion in assets. The United States' GDP is about 7% of this amount. Nearly $5.08 per square foot is the going rate for warehouse space in the US. In the United States, stores keep approximately $1.43 worth of merchandise for every $1 brought in.

Efficient inventory management is imperative for companies to maintain stable product stock levels and ensure smooth delivery. Integrating modern technology effectively addresses the basic problems with an inventory management system. Investigating common inventory management problems and their solutions is crucial to comprehending them thoroughly.

This blog will focus on some of the most overlooked inventory management problems and how TADA can help you solve them.

Why do you need to move beyond ERPs to enhance Inventory Management to cater to Modern Challenges?

The modern business landscape presents a significant challenge to traditional inventory management systems. With the inventory portfolio constantly growing, it is crucial to keep an eye on the excesses and the shortages. The critical need for this balance requires transitioning to a comprehensive Inventory Control Tower solution. By leveraging advanced technologies and automation, such a control tower can dynamically monitor inventory levels, issue real-time alerts, provide intelligent recommendations, and seamlessly integrate actions back into your ERP system. This shift towards "Inventory Management in Auto-Pilot Mode" becomes all the more appealing in today's competitive market.

a. Stock Level Optimization

The Inventory Control Tower can help you determine the optimal stock levels, ensuring you never run out of products while still meeting demand.

b. Cost Savings

Inventory Control Tower helps keep costs down by preventing overstocking and stockouts. This not only reduces expenses related to hauling goods and storage but also has a significant impact on revenue by avoiding stockouts. Additionally, effective inventory management reduces the chance of obsolete inventory, further optimizing both costs and revenue.

c. Improved Accuracy

Thanks to Inventory Control Tower's real-time tracking, your stock levels will always be up-to-date, and self-improving, enhancing the accuracy of your inventory records.

d. Improved Productivity

Inventory Control Tower's automation lessens the need for human intervention and simplifies procedures like reordering, stock control, and order fulfillment.

e. Improved Visibility

With an ICT, you can view and manage all your data at a glance, improving your ability to prepare for future demands and address problems like supply shortages.

f. Improved Customer Satisfaction

Orders may be fulfilled quickly by keeping the right stock on hand, increasing customer satisfaction and loyalty.

5 overlooked challenges of inventory management

Challenge 1: Trapped capital due to excess inventory.  

To this day, 66% of all firms are overstocked. Holding onto surplus inventory reduces the available working capital, reducing your ability to reinvest in your firm. While your competitors keep expanding, you're too busy trying to sell off your excess inventory and free up working capital to seize time-sensitive supplier discounts or advertising chances.

Solution: Increased inventory tracking

You require an inventory system that enables end-to-end (E2E) inventory visibility via TADA. This system should seamlessly connect data from disparate sources, providing complete transparency into historical, current, and projected inventory levels to optimize and enhance your capital position. It should also enable visibility and provide key insights to stakeholders, offering alerts/notifications on exceptions and recommendations for auto-pilot operation with minimal manual intervention.

TADA's inventory management systems offer this unique capability, providing a holistic view of global operations. By integrating data from multiple sources into a single interface, TADA empowers you with real-time insights on inventory levels and global movement, facilitating efficient decision-making and streamlined operations.

Challenge 2: Misalignment between Sales and Inventory management

Many inventory management solutions approach sales and inventory as separate functions, resulting in costly errors and missed sales opportunities. Without considering essential elements such as seasonality and inventory constraints, you can quickly fall into the trap of lost sales, excess inventory, or overspending on marketing and promotion, reducing your sales and margins. It's crucial to emphasize that stockouts directly impact sales. Synchronizing supply and stock levels with demand is key, rather than focusing on misalignment between functions.

Solution: Collaborative Planning and Management

You must align all your teams to work towards a single goal. TADA's ability to provide complete visibility into inventory across several categories, including different product kinds, groups, and families, is a distinguishing aspect of its capabilities. It provides a holistic perspective of inventory by combining data from many sources and systems, bridging organizational silos and difficulties.

Challenge 3: Recognizing and dealing with obsolescence.

It is common for some items to become obsolete as demand falls considerably. Unfortunately, these commodities are frequently abandoned in warehouses and forgotten when a need arises. In such instances, inventory managers may end up ordering new products, leaving the old stock unused, thus incurring a loss. Obsolescence is an outcome of demand and supply misalignment, generally due to:

1. Demand dropping

2. Overforecasting

3. New products drying up demand for outgoing ones

4. Not turning off the old product supply on time while introducing new products.

Solution: Have a stock control system

This approach is beneficial for finding dead inventory and using it when necessary. Expiry management and stock rotation procedures such as 'First In First Out' (FIFO) or 'First Expiry First Out' (FEFO) ensure that older inventory is depleted before fresh inventory. This helps to prevent stockpile formation and guarantees that things are used in the sequence in which they were delivered. TADA offers powerful capabilities for effectively managing complexity through smart data-driven solutions. It allows organizations to make educated judgments and take pre-emptive measures.

Challenge 4: Understanding demand and volatility

Understanding demand and volatility is critical for e-commerce companies in today's volatile marketplaces. Demand for items can be unpredictable and depends on factors like season, geographic location, and market trends. The COVID-19 pandemic, for example, occurred due to volatile consumer behavior toward items. Market patterns also vary. This might result in a shortage of goods when demand rises or excess inventories when demand falls.

Solution: Enable PoS visibility, Collaboration-based Allocation and Replenishment

Modern inventory management software like ours, which includes comprehensive reports and an easy-to-use dashboard, can analyze real-time data. Businesses will be able to foresee demand more accurately. Access to up-to-date and accurate information enables firms to make informed decisions and quickly change their operations to suit shifting demand trends.

Challenge 5: Manual Procedures

Basic manual inventory tracking processes might lead to problems in handling commodities. Furthermore, manual picking, packing, and shipping operations might slow down order fulfillment, resulting in delayed delivery and decreased customer satisfaction.

Solution: Invest in cutting-edge solutions

To address this issue, firms should invest in the current technological solutions offered by TADA, such as its inventory management, warehouse management, and multichannel order processing capabilities. It provides your Inventory Management requirements with a co-pilot. Right from E2E data connectivity to pushing prescriptive recommendations to ERP automatically. Automating the operations will make it easier to track and report on product availability.


In summary, effective inventory management is crucial for businesses aiming to streamline operations and ensure profitability in today's dynamic markets. The challenges discussed, though often overlooked, underscore the critical need for strategic solutions. Issues such as excess inventory tying up capital and misalignment between sales and inventory departments present significant hurdles that require immediate attention. However, innovative approaches like TADA's integrated inventory management systems offer agility and precision in navigating these obstacles. By embracing technology-driven solutions like real-time tracking and comprehensive reporting, companies can optimize stock levels, boost productivity, and ultimately enhance customer satisfaction. As businesses evolve, it's essential to recognize the pivotal role of robust inventory management in fostering sustainable growth and resilience amid uncertainty.