5 ways to prevent inventory errors

No matter how good your inventory management program is, inventory errors are as inevitable as death and taxes. From human error to scanning errors to mis-picks to misplaced items, mistakes will happen and cost you money.

Perfection is an ideal we all strive for, but none of us will ever hit. That doesn’t mean we shouldn’t keep trying, though.

Today, we’ll help you get one step closer to the ultimate goal by sharing five tips to help you prevent inventory errors.

1. Simplify processes wherever warehouse workers are involved

Human error lies at the heart of most preventable inventory issues in your warehouse.

One of the easiest ways to prevent inventory errors of the human variety is by using inventory management software. Modern software solutions utilize barcode scanning or RFID technology to track items as they move through your warehouse and inventory.

Scanning eliminates the need for manual data entry, an area where mistakes are prevalent.

Beyond that, inventory management software also helps create more accurate inventory counts by adding and removing inventory directly from the point of sale. This guarantees you’re more likely to have an accurate, up to the minute count of items in stock.

While technology is great, we don’t live in an age of full warehouse automation. Humans are still going to be involved in the inventory management process, and mistakes will happen.

Here are some ways you can minimize those risks:

• Analyze your current stock management approach

Take the time to break down your current inventory management system. How many steps are there? Are there exceptions for certain types of stock? Can this process be streamlined?

The simpler the process is, the less chance there is for human error. Streamline the process when possible.

• Reduce employee stress and fatigue

Tired, stressed workers often make mistakes. Are you providing enough breaks for your warehouse team? Are you keeping their stress levels low? If the answer is no, figure out how to resolve this issue.

• Reduce “multitasking”

Do you have a team that has clearly defined roles and job titles in the warehouse? If not, this could be part of the problem. 

Warehouses where employees “freelance” or “multitask” between a wide range of duties means they’re more likely to be distracted. Distracted employees make mistakes.

• Maintain proper staff levels

Are you running your warehouse with a skeleton crew? If so, you’re probably stressing and fatiguing your employees and forcing them to multitask.

The money you may be saving by paying fewer employees is often offset by the cost of the mistakes caused by running a skeleton crew in your warehouse. Keep staff at the appropriate level to reduce human error.

2. Clarify locations

Whether you run a huge company with warehouses around the globe or a small brick-and-mortar location with a stockroom in the back of your shop, maintaining an organized stock storage area can help prevent inventory errors.

Here are several benefits gained from running an organized warehouse:

• Optimized space and reduced operating expenses

An organized warehouse, where locations and processes are marked, can save you money by allowing you to optimize your space. This means you’ll generally need less space than you’re using.

Optimized space will not only save you money by allowing you to downsize on the amount of warehouse space you’re using, but it will help eliminate inventory errors by keeping products and materials organized.  This means no more products strewn about the stockroom or warehouse. Everything has a place, making finding and tracking items simpler.

• Better inventory visibility

Building on the previous point, you’ll also eliminate inventory errors by creating a warehouse where there’s a higher degree of visibility.

If you’re using barcode or RFID technology, you’ll be able to track products throughout your warehouse. This can reduce the number of lost, forgotten, or misplaced items hiding in your stock area. Beyond that, things in the wrong places will be more noticeable.

• Better shipping management

If you’re having issues with order accuracy rates or items lost before shipping, having a marked shipping area in your warehouse can prevent these issues. This is not only an inventory management win but a customer service win as well.

3. Keep locations organized

We touched on this in the last point, but it bears repeating: an organized and orderly warehouse can dramatically reduce inventory errors.

The old saying “a place for everything, and everything in its place” applies here. If items are placed randomly throughout your warehouse, there’s an increased likelihood they’ll be lost or misplaced at some point.

Beyond that, when you optimize your layout, it’s important to keep those new locations organized to prevent errors.

Here are some tips to keep your warehouse in order:

• Conduct regular inspections

Once you’ve optimized your warehouse, it’s easy to assume that your work is finished. This is incorrect.

You must inspect your warehouse at regular intervals to make sure things are remaining optimized. Regressing to the old way is not an option.

• Place inventory strategically

Make sure your best-selling items are closest to the shipping area. The further a product is from its final destination, the higher the risk of error.

• Use cycle counts

Instead of running one big yearly inventory, use cycle counts throughout the year to find small problems before they blossom into bigger problems.

A rotating schedule of cycle counts can save you time and money in the long run.

4. Label everything

Labeling all the items in your warehouse can dramatically reduce warehouse staff’s number of incorrect picks. Take the guesswork out of picking. If an item is in your warehouse, make sure it’s labeled with all relevant information.

What kind of information should go on the label? Try these for starters:

• Item name

This one seems obvious, but by adding the item name on a label, you can reduce errors. If you have multiple products with similar packaging, putting the item name front and center can prevent a picker from grabbing the wrong item.

• Item location

Another great bit of info to include is the item’s location in your warehouse or stock area.

This way, if an item is picked, but it’s the incorrect item or has to go back on the shelf for some reason, your employees will know exactly where it belongs.

Without this information, employees will often “guess” if they’re unsure, or even worse, just set the item aside. This can lead to lost inventory.

 5. Track all items by location

The most common approach to inventory management is to think about tracking items by product type. It makes sense. You’ll want to know how many of each type of product you have in stock at any given time.

However, if you want to prevent inventory errors in your warehouse, it’s advisable to add another layer to your tracking: you should track items by location as well.

We’ve talked about the organization and marked locations in your warehouse already, but this builds on those principles by guaranteeing you know exactly where things are across your company.

This tip is less useful for small companies without warehouses. Your entire inventory is in that one place.

Bigger companies with multiple warehouses can benefit from this kind of inventory management. Here’s how:

• Prioritizes shipping

By understanding how many products you have in your various locations, it becomes easier to decide the logistics of shipping those items to customers.

It’s smarter to ship from the closest location to the customer in most instances (again, eliminating extra steps in the process reduces the risk of error).

• Simplifies your supply chain management

Beyond errors that can occur in shipping to customers, tracking by location can also help eliminate inventory errors when examining stock levels across all of your locations.

If you have an accurate inventory of what products are in each of your locations, you can avoid transferring products between warehouses unnecessarily. This will save your company money as well.

Final thoughts

Mistakes are inevitable.

No matter how well we plan, inventory errors are going to occur. This is just part of doing business.

That doesn’t mean you should be complacent or accepting of inventory mistakes. By implementing some of the best practices outlined in this article, you can reduce the number of errors your team makes. You may not reach perfection, but with diligence and effort, you can get close.

The effort is worth it. Inventory mistakes cost companies money every year in f lost products, extra carrying costs, and disappointed customers. The worst part is that many of these errors are avoidable.

Are you doing everything in your power to prevent inventory errors at your business? If the answer is no, these tips are a great way to get started.

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