Inventory Management Challenges for Small Businesses

8 min read

Starting a new production or retail business is exciting. There are so many investments businesses need in the early stage of operations. When inventory is the business’s key asset, there are always huge expenses associated with it, including material, labor, warehousing and maintenance, and other overhead costs. However, establishing well-designed inventory management processes will enormously benefit businesses from the very beginning of their operations. The most common inventory management challenges for small businesses include lot tracking, synchronization between manufacturing processes and inventory levels, remote coordination, unregular inventory inspections, lack of technology, strategies, and regular audits


Difficulties in lot tracking


supply chain for small businesses


Lot tracking is an integral part of the inventory management system. It refers to a business’s ability to follow product lots through supply chain processes. Under the lot’s long numbers and codes, there is indicated stock data, such as expiry dates, etc. 


Lot tracking can be a heavy task for small companies. Small businesses usually bypass economic and technological solutions and adapt spreadsheets as a tracking mechanism. It might seem tempting to open a spreadsheet quickly. However, it is essential to remember that worksheets do not provide competent, effective, and efficient working grounds in inventory management for small businesses.


Investing in a suitable inventory management software, such as eSwap, would be beneficial for a small business in many ways, including simplifying lot tracking. 



Inconsistency between inventory levels and manufacturing process


Small businesses conducting manufacturing activities face difficulties with inventory control processes when dealing with manufacturing and assembling processes, especially when it comes to inventory levels. Controlling becomes more complicated when products of different types and states get involved, such as raw materials, finished and semi-finished goods, and assembly lines operate continuously. 


Small businesses that choose to control the above-mentioned inventory processes manually have to deal with even more confusion when entering into international and multi-platform trading.


Setting fundamental control processes by implementing technologically advanced systems may be a costly investment and benefit the business in the long run. 


Poor coordination among distant supply chain units


Small businesses go for financially optimal solutions when choosing different locations for supply chain operations. When various departments and vendors are geographically distant, those small businesses find it hard to maintain seamless and uninterrupted business operations. Warehouse and supply chain management optimization becomes challenging when personnel have to travel through different business units to control stock.


A solution to that issue can be implementing stock management software to help small businesses manage multi-location inventory and distribution following demands. That system will ensure optimal inventory utilization, minimization of transaction and personnel costs, and better warehouse management. 


Delays in physical inventory inspections


eswap-store eswap-store-mobile


Inventory, Order & Shipping Management Software


Small business owners sometimes have so many functions to perform that inventory checkups become the last concern. Without an actual image of inventory levels, decision-making becomes highly uncertain.


A more practical solution is to categorize inventory into groups and perform inspections daily. It will reflect a more exact picture of actual inventory levels. 


Suppose it is impossible to conduct stock reviews every day, schedule and designate staff to the closest frequency of checkups. Continuous inventory counts will increase the sense of responsibility of warehouse managers or other people in charge. As a result, theft and error will decrease.


Not utilizing technology


Integration of technology is the key to success in almost every industry nowadays. When your business depends on data from different sources, which continuously changes and requires proper tracking and control, investing in software solutions becomes a must. However, usually, enthusiastic small business owners become eager to control and organize all processes by themselves. This can be an unrealistic goal when it comes to inventory management. 


When it comes to stock management, simplicity is the key. Modern and straightforward control processes can be utilized by investing in software systems. 


There is no need to spend a fortune designing custom-made software because there are many affordable options available in the market, such as eSwap. It provides inventory management features to simplify and synchronize tracking and control of multi-channel sales and variant products. 


Absence of inventory management strategies and audits


It is essential to adopt inventory management strategies to achieve a solid presence in today’s competitive market in line with technology. Small businesses will save time, make processes more efficient and productive by having solid stock management strategies. 


On the other hand, periodic audits should be conducted to ensure the continued effectiveness of those processes. Many businesses have no idea that there are ineffective internal controls and unproductive procedures and strategies. Internal audits bring issues into the light by reviewing the weak points of the company.




As long as a retail or production business operates, it will face inventory management challenges. The goal, however, is not to jump over challenges that arise. Businesses should prepare and be flexible for changes, implement the best possible practices and control mechanisms. By investing in solid fundamentals in the early stage of operations, small businesses will continue benefiting through the development cycle.