Common Problems of an Inventory System System Analysis - Design

Common Problems of an Inventory System: System Analysis & Design.

A well-designed inventory system accounts for and avoids common problems. Related Articles. 1 Advantages & Disadvantages to a Manual Inventory Control System 2 Advantages & Disadvantages of a Computerized Inventory Management System 3 Scope & Limitations in Inventory Systems 4 Common Problems in Management Information Systems. An effective inventory management system starts with analysis and design. The more thorough the analysis and the more care you take in developing the design, the fewer problems you’ll have running and managing a new inventory system. Before getting started, it can be helpful to review common problems of an inventory design. Keeping these in mind as you go about developing your system can help you create an inventory system that functions as it should from the start. Inaccurate Needs Analysis. Identifying and evaluating what your business needs from an inventory system is a vital step in the process. If an inventory system is already in place, a needs analysis should focus on identifying gaps between what the system currently is and what the system should be. In a new inventory system, a needs analysis should identify, fully evaluate and prioritize system needs. Common problems in this area involve conducting an analysis that is too narrow in its scope or basing a needs analysis on a flawed or unrealistic business plan. For example, a needs analysis that doesn’t fully consider all the possibilities can result in a system design that regularly causes either inventory shortages or inventory stockpiling. Decentralized Design. An inventory system that stands on its own significantly increases the chances it will be inaccurate. While a decentralized design might initially be a less costly option for a small business on a tight budget, it can prove to be more costly over the long run. For example, designing an inventory system that integrates with point-of-sale software provides options for perpetual, real-time inventory management that increases not only ordering accuracy but also the timing of inventory purchasing.

In contrast, a decentralized system -- whether it’s a manual or computerized system -- not only relies on timely and accurate data entry to determine inventory levels but is also more likely to cause bottlenecks in purchasing that may delay critical purchases. Lack of System Optimization. Lack of optimization is a common design problem that makes it more difficult to accurately plan and forecast future inventory needs. A well-designed inventory system must capture the right data at the right time to avoid ordering mistakes that result in inaccurate inventory levels. Optimization is especially important as a cost-control measure in a manufacturing business, because it functions both to reduce waste and improve serviceability. For example, an optimized inventory system not only provides information on quantities of raw materials used in production but can also identify and account for raw materials that become scrap or waste during production. This data not only can assist in maintaining accurate inventory levels but also signal when it might be time to look for another supplier due to inferior raw material quality. Misplaced Inventory Items. A common problem with an inventory system design is a failure to include methods for cross-referencing the locations of inventory items. Just as it’s vital for a system to show what’s in stock, it’s also vital for a system to identify locations. Misplaced, lost or stolen inventory items can lead to increased labor and inventory costs and reduced profitability. A design solution can be to incorporate clearly written standard operating procedures for checking in and storing inventory items, bar coding technology that identifies an item’s location and instituting periodic physical inventory counts. References (5) About the Author. Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.