Most business owners are reluctant to incur many business expenses. This is understandable, as it is this trait of frugality that many successful entrepreneurs and managers consider to be one of the primary drivers of their success. There are several areas of a business, though, where informed and deliberate expenses are necessary for the long-term success of a business; excessive frugality in these areas can stifle the long-term growth of a business. One such area in which expenses can be good investments is inventory management. Despite the widely-accepted importance of inventory management, it is still neglected often by those in the business world. Worse yet, many businesses commit crucial errors when it comes to managing their inventory. The mistakes are made so commonly that business observers have been able to identify and even predict them with impressive accuracy. Here is a look at three common inventory management mistakes.

Staff

One common mistake made by businesses relative to their inventory management systems involves the staff and employees of the business who deal with inventory. Specifically, there is frequently a lack of training provided to these staff members. It is important for employers to remember that it is important to ensure that each staff member who deals with the inventory knows how to use the inventory management system, whether the inventory data is stored on local computers or via a cloud-based system. Frequently, there will be one employee who is proficient in the inventory management system; this employee will be used as a crutch and relied upon to shoulder the load of the data entry and management. When this person is unavailable for any reason, the efficiency of the inventory system can break down. Upgrading to a cloud-based system is the beginning of a solution to this problem, as they are becoming increasingly user-friendly.

Equipment

There have also been great strides made in the types of inventory management equipment available that can help make the process more efficient. A common mistake plaguing businesses with inventory is a lack of automation in the management process. Manual tracking, such as typing inventory data into Excel or another spreadsheet program, has gone the way of the dinosaur. Businesses can save time and money by implementing an automated software or cloud-based system that automatically keeps track of data. These can easily export the data into Excel or another spreadsheet program. There is also more advanced pieces of hardware available like barcode scanners that work in conjunction with the software system. Many providers of barcode equipment offer their products on a trial basis, so try out a rental inventory scanner if you feel your business may benefit from automating the inventory management process.

Supply/Demand

Inventory management issues are all related. Any inefficiency in the inventory management system, whether it stems from personnel, equipment or another facet of the process, ultimately leads to the biggest inventory problem—the wrong quantity. Too little or too much inventory can cause a problem for the business as a whole. This may be the result of a system inefficiency, or it may simply be the result of a strategic failure. It is important to maintain an accurate perception of demand for your inventory and be flexible and focused enough to make adjustments as needed. Supply and demand is the first thing you learn in economics class for a reason, and inventory is the living embodiment of the principle.