5 Risks arising from poor inventory control

1 .- Theft due to poor inventory control

One of the first consequences of poor inventory control is theft. Indeed, in any company, this is one of the most significant risks if it is not organised and thoroughly controlled. These thefts may be due to external factors in case the company has staff or customers visiting it directly or internal, from its own employees. Either way, it is an extremely important consideration, especially in the case of high-value goods.

It is extremely important to establish effective inventory control as theft occurs on a regular and almost constant basis. In establishing good inventory control, we can reduce them as much as possible or be able to identify them as early as possible, when they take place.

2 .- Inventory damage

Another consequence of poor inventory control is damage to the goods themselves. These are usually produced simply by the daily activity of a company. For the same reason, a series of measures should be established to minimise as far as possible the impacts on the product the company works with.

Thus, a lack of comprehensive inventory control can have a negative impact on the infrastructure needed, for example, when storing or managing orders. This information is equally relevant in order to have all the necessary information to be able to make the correct provision of the additional components that are needed to handle the objects.

3 .- Losses due to bad inventory control

Another negative side of poor inventory control is the losses that are caused. After all, they have a similar effect to theft and, in essence, involve the disappearance of the goods from which a profit is supposed to be made. These losses may in themselves be recurring in the case of some objects. In others, they may be occasional but steady over time.

Just like what happens with theft, it must be understood that, to a greater or lesser extent, they are "inevitable". However: This does not mean that proper inventory control and efficient inventory management cannot help to reduce inventory as much as possible.

At this point, it may be understood that proper company inventory is a tool that, in essence, helps to avoid losses. It can be understood in this way as a balance sheet with the company's own assets and, therefore, it must scrupulously reflect the value of the company through its inventories.

This means that, by the same token, the moment there is a loss, there is a derecognition of its assets. With software from companies such as SEIDOR, this loss can be prevented to a large extent.

4 .- Negative consequences on product life cycle

Another of the basic points that poor inventory control affects is the life cycle of products. These have certain phases they go through which, in some cases, can be highly volatile as they are perishable products. As we have said, the goods of any company are its assets: Not having good inventory control over them means risking the product's life cycle.

Indeed, when it enters the so-called decline phase, it starts to lose value. We can say that this applies to the vast majority of products. The difference only consists in the fact that in some cases this life cycle is longer and, in others, shorter. At the same time, it must be remembered that this inventory management must be made compatible with the time the product must remain in the company's value chain.

This time must be, on the one hand, sufficient to be able to meet the demand successfully and, on the other hand, it must be fast enough so that the product itself does not deteriorate too much. Poor inventory control can be disastrous in this regard.

5 .- Product shelf life

Arguably, shelf life is the tangible side of the product's life cycle. Poor inventory management also has negative consequences on the value that the company itself manages. As we have said, both the life cycle and the shelf life of a product can be seen in the catering sector or, in general, in the consumption of perishable products. Good inventory control is therefore particularly important.

In the event of these being spoiled, part of the capital would be lost. Normally, a business's stock has a shelf life of between one month and one year on average. Thus, notions such as LIFO or FIFO or, directly, efficient management systems that can be implemented through tools such as ERP based on JIT (just in time) must also be introduced in inventory management.

SEIDOR helps you to manage your inventory in a simple and useful way. It is focused on offering an efficient solution to any type of company, regardless of its sector. We offer these solutions based on our many years of experience. For this reason, we recommend that you try out all its advantages for yourself.