5 Inventory Management Challenges in 2021 and Their Potential Solutions

Even with the effects of the pandemic, the retail industry remains stronger than ever.

In fact, according to “Retail Global Market Report 2021: COVID-19 Impact and Recovery to 2030” from ResearchAndMarkets.com, the industry will see continuous growth through the next decade even amidst shopping restrictions and limitations posed by the health crisis.

Of course, these numbers represent the bigger picture. You’ll need to do your part and stay on top of your inventory to help your company earn a good share of this predicted development.

Managing your inventory well is vital for your business growth. It doesn’t matter if you’re running a personal care e-commerce website or a brick-and-mortar beauty store; you’ll need to figure out a solution for each of the following five inventory management challenges to give your business a boost in the coming decade:

Challenge #1: Stock Visibility

When you’re selling products, you’ll need to know exactly how many items you have at any given moment. A once-a-year manual inventory count will no longer work, so you’ll need to figure out a new approach.

Many companies still control their stock using outdated methods that don’t offer complete stock visibility or an in-depth understanding of their inventory. The thing is, both of them are crucial in making smart supply decisions.

And this is not limited to brick-and-mortar stores, either. It also applies to e-commerce companies.

While it’s true that running an online business does make viewing and tracking data faster, the speed of the entire process can make it more challenging to stay updated on current inventory. Most of the time, you won’t have the chance to sift through a multitude of data before you make a stock decision, leaving you more prone to overstocking or overselling.


Never underestimate the power of inventory management platforms like Vend. Besides removing human error from the equation, this tablet-based POS system automatically updates the master inventory for both brick-and-mortar and e-commerce sales.

With a real-time inventory management system in your arsenal, you will not only be able to locate items on demand but also complete the entire stock confirmation process with 100 percent accuracy. All this put together leads to better customer satisfaction.

Challenge #2: Inefficient Inventory Management

Supply chain disruptions have become commonplace in light of the pandemic. This could cause your inventory management team to become overwhelmed.

In addition to focusing on staying on top of customer expectations, they also need to deal with these operational challenges. If your company still follows manual processes in forecasting demand and restocking products, your people are bound to struggle to include stock management aspects in their workload.

How can you manage a huge inventory if you’re still stuck with manual procedures? Instead of growing with the demand, inefficient inventory management can cause your shop to yield dismal results even as the sales volume soars.


Ditch those spreadsheets and manual processes you’ve grown to have a love-hate relationship with. These tools and methods for analyzing data and predicting market trends are now obsolete, especially with the arrival of IoT-enabled inventory management systems.

Such technologies are tailored to help warehouse staff become more efficient in managing and tracking stocks from the moment they arrive until they are released to your customers. This type of system streamlines the process and offers real-time data you can use to improve your inventory as you go along.

Challenge #3: Pinpointing Defective Equipment and Supplies

Besides warehouse location and stock availability, another challenge companies in retail might face is identifying and managing defective supplies and equipment.

Checking these machines is crucial in maintaining a healthy inventory and ultimately ensuring customer satisfaction.

A general setup involves members of the workforce manually checking each piece of equipment every day. And as you can expect, this consumes a lot of precious time, not to mention remains prone to human error.


Implementing a preventative maintenance system is recommended. This makes it easier to identify which equipment will require repairs and have to be put out of commission before they get further damage or have detrimental effects on the company’s operations.

Doing so can also help track condition-based, time-based, and usage-based data on demand to avoid unexpected downtimes and unnecessary costs.

Challenge #4: Rapidly Changing Consumer Demand

What customers want changes constantly. Besides dynamic customer behavior, you also still need to watch out for factors that can make consumer demand even more erratic. This includes political, social, economic, and other factors that can cause peaks or troughs of retail sales.

Take the COVID-19 pandemic, for example. As health safety protocols force countries to go on lockdown, some industries experience a steep drop while the demand for other products skyrockets.

If you end up on the lower end of the spectrum, your company may struggle to get back up again.


First, make sure your inventory has a healthy balance of stocks – not too much that could result in obsolete inventory, but not too little to the point that you won’t be able to fulfill customer orders.

Next, come up with an order strategy and an inventory plan to compensate for the ever-changing demand. Look for methods that will help you forecast demands more accurately, such as:

  • Active demand forecasting – considers external data on marketing campaigns, market research, market sector growth projections, and economic outlook.
  • Passive demand forecasting – uses internal sales data to predict future demands.
  • Short-term projections – predictions are adjusted according to real-time data; useful for just-in-time supplies.
  • External macro forecasting – takes into account industry trends and how they will affect your business goals.

An accurate forecast is invaluable in ensuring that your company can adapt to the market despite demand volatility, thereby preventing wasteful overstocking.

Challenge #5: Overstocking and Overselling

Overstocking is having too many stocks. Overselling is selling the last of an item to more than one client.

Overstocking is a result of inaccurate forecasts and inefficient inventory management while overselling is rooted in the lack of stock visibility. While they have slightly different causes, both can be detrimental to inventory in both e-commerce and physical stores.

While overselling has a more significant effect on your customers, overstocking puts your bottom line at a higher risk since storing products that can no longer be sold costs more money.


The solution to these problems depends on what caused them.

If you overstocked due to inaccurate demand forecasts, you need to look for a better way to predict consumer behavior. If you oversold some items, you should consider investing in better inventory management software.

Keep a Healthy Inventory

Keeping a healthy inventory is a combination of several factors – from consumer behavior and demand to better management and tracking. Solve the most significant challenges retailers face using the solutions provided in this article and you’re off to a good start.


Ross Smith is the Managing Partner at iPad POS Middle East. Based in Dubai, covering the whole of the Middle East, the company is passionate about helping restaurateurs and retailers alike find the most suitable point of sale system to meet the needs of their business. They specialize in iPad-based point of sales systems and are resellers of Revel and Vend.

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