Key Material and Inventory Challenges for SMBs


Small and medium sized manufacturers, for which material and inventory management is a concern, operate at a relative disadvantage to their larger counterparts. SMBs generally have fewer resources including personnel, technology, budget, and time, so they must optimize their resources in order to focus on addressing the inventory management challenges that plague many SMBs.

The following material and inventory management challenges are concerning to SMBs because they can tie up cash and lead to bookkeeping problems, poor customer experience, employee theft, and out-of-control warehouse labor costs:

1. Inventory Record Inaccuracies: Manual processes involving physical counts and disconnected, disparate spreadsheets and data systems cannot be trusted. Companies relying on such processes find themselves in a dilemma. Are missing items the result of employee negligence, fraud, or double shipments? Is there a logistics problem tracking the flow of inventory from purchasing to the warehouse, to shipping? Important questions go unanswered with systemic record inaccuracies.

2. Inefficient Storage and Receipt Processes: Fewer financial, personnel, and time resources make this a particularly frustrating challenge for many SMBs. Inefficient storage and receipt processes are often the root cause of costly mistakes, including difficulty accessing merchandise, over-ordering, and delays in manufacturing production. Mistakes in this area can often be the cause of unsolved and persistent accounting problems.

3. Excess Inventory: Holding excess stock, reordering materials too early, and reordering materials too late are each among the biggest overhead cost drivers for SMBs. Inefficient inventory control leads to wasteful spending. Efficient control means that cash isn’t tied up in excess inventory, and this requires real-time transparency into stock levels.

4. Stocking and Ordering of Raw Materials and Product Components: For manufacturers, keeping level quantities of all raw materials and product components prevents equipment downtime and lost productivity. It’s essential to manufacturing production schedules. Technological solutions to automate “backflushing” of materials and components are an absolute must in these environments.

5. Time-consuming, expensive physical inventory counts: Without efficient storage and receipt processes and accurate inventory recordkeeping, expensive physical inventory counts must be performed more often and are less reliable than ongoing electronic monitoring and updating.

6. Stock disorganization, poor labeling and picking: Inventory management problems often occur when inventory is stocked in different areas throughout a facility without a centralized and systematized organization. At the very least, SMMs should keep raw materials in one area, goods in production in another, and finished goods in yet another.

7. Poor regulatory and compliance records: Accessible documentation is key to meeting compliance and regulatory requirements when you’re managing pipeline inventory. A digital solution would be a key component to centralizing inventory information and make it available to users within your organization.



Interested in learning more about improving your material and inventory management practices and overcoming costly problems?

Download and share our material and inventory management whitepaper, Avoid these 7 Pitfalls in Manufacturing Materials and Inventory Management.


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