Top Inventory Management Challenges and What You Can Do to Overcome Them

In an ideal world, where demand is well known and suppliers are able to maintain a steady stream of supply whenever needed, there would be no need to hold any form of inventory. But that is far from what is going on in the real world. Supply interruptions and demand fluctuations are almost always happening.

Inventory management is a systematic approach to sourcing, storing, and using a company’s non-capital assets, which include both raw materials and finished products. This requires balancing the risks of inventory shortages as well as inventory gluts. It may require effort to get it right. However, once a company has established an effective inventory control system that works for them, ongoing management will be much easier. What cause inventory fluctuations?

Supply chain complexity

Globalization has increased the complexity of supply chain networks across e-commerce and brick-and-mortar businesses. Many organizations now work with a vast network of manufacturers, distributors, and retailers to obtain, distribute, and sell their products.

A lack of visibility into inventory streams

According to a survey conducted by IBM, 79% of supply chain leaders report that limited visibility has a significant impact on inventory chains. While a decentralized design might initially seem like a less costly option, it’s proven to be otherwise over the long run. With companies opting to store data in different systems, reconciling information into a central dashboard will be close to impossible. This results in limited visibility into business performance, including inventory flows.

Customer Demand

Surges in customer demand are the number one factor of inventory fluctuations. The needs and demands of customers are constantly changing, and these can occasionally leave businesses without enough stock. Unfortunately, customers are looking up to businesses to be more flexible with their inventory. Failing to meet demands can potentially risk a business’ image. Additionally, there is a need to keep up with competitors that can attract your share of the market as a result of these inventory hiccups. So how do companies stay in control of inventory during the highs and lows of customer demands?

Service Portfolio Management

Supply chain management

This is integrated into a company’s supply chain management and demand management. Demand management is the process of forecasting, planning, and managing all demands for goods and services. Supply chain management, on the other hand, is the management of the flow of goods, including all processes that move materials from the point of origin to the point of consumption.

For instance, companies can use ServiceNow service portfolio management systems to manage all aspects of services that they offer. This covers almost all processes, from evaluating performance, identifying opportunities, to optimizing resource allocation for better inventory decisions and strategies. These systems can help establish an effective inventory control to meet demand changes, even during holiday seasons and peak periods.

Inventory management can be a complex process, especially for a business that is expanding. A variety of methods to keep good track of the products through the process have been introduced into the market. Service portfolio management now ties all those up into one process so that businesses can make more informed decisions.

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