Common Inventory Problems and Solutions
Most small business inventory problems trace back to inconsistent counting: shrinkage, dead stock, stockouts, and over-ordering all compound when counts happen too infrequently to catch issues early.
What are the most common inventory problems small businesses face?
| Problem | Common Cause | Solution |
|---|---|---|
| Shrinkage (1.4-1.6% of sales, industry avg.) | Theft, spoilage, admin error, going undetected between counts | Weekly counting catches discrepancies within days, not weeks |
| Dead stock | Over-ordering, no visibility into slow movers | Track turnover ratio by item, flag low performers for markdown |
| Stockouts | No consistent par level tracking | Automatic par level flags based on rolling average usage |
| Over-ordering | Guessing instead of using usage data | Order against actual 3-week average usage, not instinct |
| Spreadsheet chaos across locations | Separate files, no single source of truth | Single multi-location dashboard with role-based access |
Why do these problems compound over time instead of staying small?
A small discrepancy caught within a week is a quick fix, recount, note the cause, move on. The same discrepancy left unnoticed for a month has usually multiplied, more product has gone missing, more orders have been placed on bad data, and it's much harder to trace back to a single root cause. That's the core reason counting frequency matters more than counting precision.