Inventory Management Challenges and Solutions for SMBs

For SMB owners and operators, effective inventory management is the critical component to your company’s success. Inventory issues can impact everything from fulfilling customer orders to managing cash flow effectively. In this article, we’ll explore some of the most common inventory challenges faced by SMBs and provide practical solutions to help you overcome them. Let’s get to it!

Inconsistent Tracking

NO surprise, one of the biggest challenges SMBs often face is inconsistent inventory tracking methods. Many businesses still rely on manual processes like spreadsheets or paper-based systems, which are prone to errors, redundancies, and wasted time. These inconsistencies can lead to inaccurate data, stockouts, and dissatisfied customers.

To address this challenge, SMBs should consider implementing a centralized, inventory management system. Such a system automates tracking across all locations, providing real-time visibility into stock levels and movements. This not only improves accuracy but also saves time and reduces the risk of human error. Our number one recommendation is Fishbowl for its ability to be customized to the needs of a wide range of industries and businesses.

Warehouse Inefficiencies

For SMBs with physical warehouses, managing processes like receiving, putaway, picking, packing, and shipping can be labor-intensive and inefficient without the right systems in place. Disorganized warehouse operations can lead to delayed shipments, incorrect orders, and increased labor costs.

To streamline warehouse operations, SMBs should leverage the Mobile Warehouse Management tool within their inventory management software. These tools allow you to optimize warehouse layout, automate workflows, and maximize space utilization. This tool will also allow a business to properly implement 2D barcode scanning that will further improve accuracy and efficiency during tasks like putaway, order picking, and even pallet management.

Inaccurate Data

Accurate inventory data is essential for SMBs to make informed decisions about purchasing, production, and sales, because without a clear understanding of what inventory you have on hand, it’s nearly impossible to effectively manage stock levels and meet customer demand.

Regular cycle counting, where you audit a portion of your inventory on a predetermined schedule, is a critical process for maintaining accurate data. Many inventory management systems include cycle counting features to simplify this task. Frequent cycle counts, combined with real-time updates from your software, ensure you have a reliable picture of your inventory at all times.

For businesses that need a digital storefront or Sales Portal, a proper solution will not only provide customers with online order access, but also integrate with your inventory solution to keep counts accurate and cut back on time lost to manual data entry.

Changing Demand

Customer demand is constantly fluctuating, making it challenging for SMBs to maintain optimal stock levels. Overstocking can tie up valuable capital and lead to obsolete inventory, while understocking can result in lost sales and dissatisfied customers.

To address this challenge, SMBs should take advantage of the demand forecasting tools offered by many inventory management systems. These tools analyze sales data and trends to predict future demand, allowing you to adjust stock levels accordingly. Additionally, setting appropriate reorder points and safety stock levels can help ensure you have enough inventory to meet customer needs without overstocking.

An additional–and oft overlooked–resource is utilizing your historical data to generate reports to fit your industry and business specific needs. These reports can range from customer histories, stock level reports, or even Custom Third-Party Reports.

Limited Visibility

When inventory is difficult to locate within a warehouse, it can cause delays, incomplete shipments, and poor customer experiences. Limited visibility into inventory locations and movements is a common issue for SMBs, particularly those with larger or multiple warehouse facilities.

Implementing a robust inventory management system with multi-location tracking capabilities is essential for SMBs in this situation, hence our Fishbowl recommendation. These systems allow you to track inventory down to the bin or shelf level, providing real-time visibility into stock locations and movements. Additionally, this is where your Mobile Warehouse toolset can provide barcode scanning to further improve visibility and accuracy during warehouse operations.

Preventive Control for Special Inventory

Some types of inventory, such as perishable goods, fragile equipment, or high-value items, require special handling and storage conditions. Without proper preventive control measures in place, SMBs risk inventory loss, damage, or obsolescence.

To manage these types of inventory, SMBs should implement stock control systems within their inventory management software. These systems allow you to categorize and track special inventory, set alerts for expiration dates or maintenance schedules, and implement specific storage and handling procedures. Additionally, regular audits and cycle counts are essential for monitoring and preventing issues with these inventory types.

Supply Chain Disruptions

We all operate in a global economy, and supply chain disruptions are becoming increasingly common. Factors such as natural disasters, geopolitical events, or material shortages can impact the availability and lead times of inventory for SMBs.

To mitigate the impact of supply chain disruptions, SMBs should closely monitor supplier performance metrics like shipment errors, damaged goods, and missed delivery appointments. This data can help identify potential issues and inform decisions about diversifying suppliers, adjusting safety stock levels, or implementing contingency plans.

Multi-Location Inventory Management

As SMBs grow and expand, managing inventory across multiple warehouses or locations becomes increasingly challenging. Without a centralized system, it’s easy for stock levels and movements to become disjointed, leading to inefficiencies and potential stockouts.

Implementing an inventory management system with robust multi-location tracking capabilities is essential for SMBs in this situation. These systems provide a centralized view of inventory across all locations, allowing you to easily transfer stock, manage replenishment, and maintain accurate data. Additionally, many systems offer advanced features like warehouse transfer management and inter-branch logistics support.

Outsourcing Expertise

Implementing and maintaining an effective inventory management system can be a complex undertaking, particularly for SMBs with limited resources or technical expertise. Attempting to navigate these systems without proper training or support can lead to frustration, inefficiencies, and underutilization of critical features.

To address this challenge, SMBs should consider outsourcing to an Inventory Management Expert. These professionals can guide your implementation, provide hands-on training for staff, and offer ongoing support to ensure you’re following best practices and fully leveraging your system’s capabilities.


By addressing these common inventory management challenges, SMBs can improve operational efficiency, reduce costs, and ultimately provide better service to their customers. Investing in the right inventory management strategies and technology solutions is essential for staying competitive and positioning your business for long-term success.