Inventory errors are almost always caused by some sort of human error, usually during regular warehousing operations such as receiving<\/a>, counting, storage<\/a>, and fulfilment. As such, discrepancies due to theft do not count as inventory errors.\u00a0\u00a0<\/p>\n\n\n\n There are several types of inventory errors that can create issues in your ecommerce operations. Here\u2019s a breakdown of the most common errors, so you can get a better idea of how to prevent or mitigate them. <\/p>\n\n\n\n An overstocking<\/a> error is when you actually have more of a particular SKU than you had listed in your records. <\/p>\n\n\n\n This can inflate your holding costs, and may result in obsoletion<\/a> or dead stock<\/a> if there isn\u2019t enough demand to sell the extra stock.\u00a0\u00a0<\/p>\n\n\n\n Alternatively, an understocking error is when you have less in-stock inventory than you list in your records. <\/p>\n\n\n\n This often happens when inventory is lost or misplaced, received incorrectly, or if your inventory system fails to keep track of sales across various channels. <\/p>\n\n\n\n Mis-picks are one of the most common types of inventory errors, resulting from issues or mistakes in the warehouse order picking<\/a> process. <\/p>\n\n\n\n A mis-pick occurs when a warehouse associate picks the wrong inventory item(s) or the incorrect number of units for a customer order. This not only means that your recorded inventory counts for two different SKUs<\/a> are incorrect, but also results in fulfilment errors that disappoint customers.\u00a0\u00a0<\/p>\n\n\n\n The technology employed by ShipBob guarantees accurate deliveries to our customers. ShipBob’s warehouse management system is equipped with numerous checks and balances, minimising the possibility of incorrect items being shipped by warehouse associates.<\/em><\/p>\n\n\n\n Ali Shahid, COO of Our Place<\/a><\/p>\n<\/blockquote>\n\n\n\n When your brand records more or less inventory than you actually have, it means that your inventory\u2019s value<\/a> will be higher or lower than it actually is. This is because the amount of inventory you have directly impacts beginning inventory<\/a>, ending inventory<\/a>, and cost of goods sold (COGS<\/a>) \u2013 all of which are used to determine inventory value. <\/p>\n\n\n\n Overstatement or understatement of inventory value will cause a number of financial reporting and accounting issues. Regardless of which inventory valuation method you use (such as LIFO<\/a>, FIFO<\/a>, or weighted average inventory<\/a>), inventory value is a key factor on financial statements such as balance sheets, and misrepresenting your current assets (of which inventory is one) can have huge legal ramifications for your business. <\/p>\n\n\n\n Mistakes in the warehouse receiving<\/a> process can also lead to inventory errors. This may be a result of receiving the wrong inventory, miscounting inventory, or making a clerical error in recording incoming inventory.\u00a0<\/p>\n\n\n\n For businesses that deal in consignment inventory, there\u2019s a risk of errors resulting from oversight. Whether you\u2019re the consignor or consignee, if you\u2019re not maintaining accurate records, you may not be able to get an accurate understanding of product flow, which will create errors further down the line. <\/p>\n\n\n\n Inventory purchases and sales impact your cash flow and your inventory balance, making it crucial to accurately record them. <\/p>\n\n\n\n Failing to record a purchase may lead you to understate your inventory, which can lead you to overspend on overhead without realizing it or reorder stock too soon (leading to a lot of surplus inventory<\/a>). <\/p>\n\n\n\n When you fail to record a sale, you may accidentally assume you have more inventory than you actually do, and oversell products as a result. This can cause backorders<\/a>, which are costly and negatively impact the customer experience.\u00a0\u00a0<\/p>\n\n\n\n Inventory errors do not benefit a business; in fact, they can have some very negative effects on your brand. Here are some of the ways that inventory errors harm your brand (and some red flags that may indicate you\u2019re dealing with one you haven\u2019t caught yet). <\/p>\n\n\n\n While inventory management may seem far removed from customer satisfaction, the former can hugely impact the latter. Inventory errors of all kinds have the potential to hurt the customer experience, such as when: <\/p>\n\n\n\n Any one of these errors can damage customer satisfaction, which can come back to bite your brand later. <\/p>\n\n\n\n Inventory errors aren\u2019t just inconvenient; they\u2019re costly, too. <\/p>\n\n\n\n There are tangible costs to consider, such as increased holding costs<\/a> and expensive reshipments<\/a> to correct mis-picked orders, which eat away at your bottom line.\u00a0\u00a0<\/p>\n\n\n\n There are also opportunity costs. Inventory errors slow the efficiency of your whole warehouse by: <\/p>\n\n\n\n If you\u2019re constantly sending out the wrong items, stocking out, putting customers on backorder, or delaying fulfilment due to inventory errors, it will eventually have an impact on your reputation. Customers will come to associate your brand with unreliability and inaccuracy, and may even stop buying from you \u2013 or worse yet, discourage others from buying from you, too. <\/p>\n\n\n\n The good news? Inventory errors aren\u2019t inevitable. With the right strategies in place, your brand can minimise and even avoid inventory errors altogether. <\/p>\n\n\n\n Here are a few best practices to for mitigating and preventing inventory errors in your ecommerce business. <\/p>\n\n\n\n Periodic inventory audits<\/a> are a crucial part of catching and fixing inventory errors before they snowball into a bigger problem. Counting your inventory and comparing the result to your records allows you to detect inventory mismatches<\/a>. The sooner you identify a discrepancy, the sooner you can pinpoint the cause and adjust records<\/a> and financial statements accordingly. <\/p>\n\n\n\n Lots of inventory issues are the result of human error in operations. Detailed training upfront and continued training refreshes sets your team up for success, and helps ensure that your warehousing staff handles inventory correctly. <\/p>\n\n\n\n Make sure to train your staff on: <\/p>\n\n\n\n Organising the warehouse<\/a> effectively is the first step to creating a streamlined operation.Make sure your warehouse setup<\/a> is optimised for safety, ease of movement, quick storage, and efficient retrieval. Warehouse staff should be able to seamlessly move between different shelves and areas of the warehouse in a logical flow. Reducing the back-and-forth will minimise confusion, which will reduce the risk of errors. Similarly, your staff can easily identify and retrieve the correct items, which minimises the risk of mis-picks. <\/p>\n\n\n\n Adding barcoding and scanning technology to your inventory management process builds in checks and balances every time a piece of inventory is moved. This makes it less likely that inventory will end up in the wrong place, or that pickers will pick the wrong item. <\/p>\n\n\n\n An inventory scanner<\/a> that feeds back to a unified tracking system also lets your update inventory levels the moment inventory moves, so that inventory doesn\u2019t get lost or misplaced in transition. If items are scanned correctly, you will be able to follow it throughout your supply chain and get an accurate understanding of what inventory is in which stage, helping you minimise inventory errors. <\/p>\n\n\n\n Being able to track and manage your inventory in real-time is one of the best ways to prevent inventory errors. Invest in inventory management software<\/a> that will sync with your ecommerce platform<\/a> and update your inventory records in real-time, as this helps you prevent your inventory data from being out of sync with your physical count. <\/p>\n\n\n\n A real-time inventory management<\/a> system allows you to see your most up-to-date inventory levels, providing you with better internal insight and control<\/a>. You can easily see when you\u2019re running low on a specific product, and plan your replenishment accordingly.\u00a0<\/p>\n\n\n\n Right before ShipBob, we worked with a small 3PL out of Leicester, UK. After we\u2019d already partnered with the fulfilment company, we found out that they didn\u2019t use barcodes to input inventory into the warehouse. Instead they just manually counted each one. <\/p>\n\n\n\n As you can imagine, this caused numerous issues. We often had situations where products would go missing or customers would tell us they received the wrong product. With ShipBob, that\u2019s not an issue. All of those problems are in the past.<\/p>\n\n\n\n Will Kerr, Apparel Lead at Quadrant<\/a>\u00a0<\/p>\n<\/blockquote>\n\n\n\n With superior inventory management technology and outsourced fulfilment services, ShipBob helps you tackle inventory errors head-on. You can take advantage of ShipBob\u2019s software to optimise your inventory management process or even outsource the entire fulfilment process to the experts. <\/p>\n\n\n\n It can be hard to track and manage inventory correctly when you\u2019re juggling multiple technology solutions. ShipBob integrates directly with dozens of major ecommerce platforms and tools<\/a>, so you can view inventory levels across locations and channels through a single dashboard. <\/p>\n\n\n\n ShipBob\u2019s software delivers real-time inventory visibility,<\/a> so you are always working with the most up-to-date and accurate data. Leveraging your ShipBob dashboard, you can track exactly how many units you have left at various stages of fulfilment. This will allow you to plan your procurement and replenishment strategy to avoid issues such as stockouts and overstocking. <\/p>\n\n\n ShipBob\u2019s software also\u00a0offers comprehensive analytics dashboard<\/a> that you can leverage to monitor inventory turnover<\/a>, individual SKU performance, average fulfilment and shipping costs, and more. These on-hand insights make it easier and faster to identify errors and nip them in the bud for minimal impact on your operations. \u00a0<\/p>\n\n\n ShipBob\u2019s network of fulfilment centres helps you effectively scale your operations without inventory errors or confusion. You can store inventory across multiple of ShipBob’s dozens of global fulfilment centres to minimise shipping costs and times, while still maintaining control and visibility of your inventory through your dashboard. <\/p>\n\n\n\n Brands can even leverage our Ideal Inventory Distribution tool<\/a> to calculate the most strategic split of inventory across ShipBob\u2019s locations that will put your inventory closer to more customers while achieving optimal cost-savings. \u00a0<\/p>\n\n\n By outsourcing your entire fulfilment process to ShipBob, you put your operations in the hands of experts. Our combination of resources, best practices, and technology delivers a 99.96% accuracy rate, and can minimise the risk of receiving, picking, and packing errors<\/a> for your brand. With ShipBob as your partner, your business can boost your OTIF<\/a> rate and transform fulfilment from a cost centre into a competitive advantage. <\/p>\n\n\n\n Fulfilment is hard, so there\u2019s always going to be mistakes \u2013 and with our previous 3PL, we were used to having about a half of a percent error rate (meaning 0.5%-1% of the DTC orders that we shipped out were wrong in some way). <\/em><\/p>\n\n\n\n With ShipBob, I feel like our error rate is a hundred times less. I\u2019m just stunned by how accurate our orders are, and our error rate is just vanishingly small now. <\/em><\/p>\n\n\n\n Honestly, it’s been a game-changer for us, because we\u2019re experiencing way fewer customer service issues than before, while growing 4x.<\/em><\/p>\n\n\n\n Matt Crane, Co-Founder and Chief Science Officer at Semaine Health<\/a><\/p>\n<\/blockquote>\n\n\n\n For more information on how ShipBob can reduce your inventory errors, click the button below. <\/p>\n\n\n\n7 common types of inventory errors <\/h2>\n\n\n\n
Overstocking <\/h3>\n\n\n\n
Understocking <\/h3>\n\n\n\n
Mis-picks <\/h3>\n\n\n\n
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Valuation mistakes <\/h3>\n\n\n\n
Receiving errors <\/h3>\n\n\n\n
Consignment inventory oversight <\/h3>\n\n\n\n
Failure to record purchases or sales <\/h3>\n\n\n\n
The effects of inventory errors on ecommerce businesses <\/h2>\n\n\n\n
Customer satisfaction dips <\/h3>\n\n\n\n
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Operational cost spikes <\/h3>\n\n\n\n
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Business reputation damage <\/h3>\n\n\n\n
Preventative strategies and how to mitigate inventory errors <\/h2>\n\n\n\n
Conduct regular inventory audits <\/h3>\n\n\n\n
Train your warehousing staff to manage inventory effectively <\/h3>\n\n\n\n
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Optimise your inventory layout <\/h3>\n\n\n\n
Implement barcoding and scanning tech <\/h3>\n\n\n\n
Invest in real-time inventory management software <\/h3>\n\n\n\n
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Leave inventory errors in the past with ShipBob <\/h2>\n\n\n\n
Seamlessly integrate your ecommerce platform <\/h3>\n\n\n\n
Real-time inventory tracking and analytics <\/h3>\n\n\n\n
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<\/figure>\n<\/div>\n\n\nDistributed fulfilment centres for widespread growth <\/h3>\n\n\n\n
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<\/figure>\n<\/div>\n\n\nUnmatched outsourced fulfilment accuracy <\/h3>\n\n\n\n
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