What Are the Advantages and Disadvantages of Inventory Management?

Some advantages of inventory management include ensuring that a business does not spend money on unnecessary product orders and tracking which products are selling and which are not. Some disadvantages are that it can be time consuming and that small businesses with limited products may not need an inventory system.

Another advantage with inventory management is that a comprehensive inventory system keeps the operation of the business streamlined. A computerized system makes taking inventory even easier by shortening the amount of time that inventory is taken. It can track specific serial numbers for products accurately and digitally tallies stock by any time increment the business owner or manager prefers. For businesses with manual systems, one advantage is that whoever is taking stock has the opportunity to handle the merchandise, ensuring that it is not damaged or missing parts. Either type of system makes it easy for the business to reference and document the growth of the business.

Another disadvantage to inventory management is that it requires constant attention, as products continuously need to be updated, restocked and reordered. If a business is running a computerized program, it carries the risk of someone hacking into the software or a dishonest employee manipulating outgoing payments for personal gain. One common disadvantage of inventory management is that it is subject to human error when employees enter incorrect information by mistake.