According to a study by the National Retail Federation (NRF), inventory inaccuracies can result in an average of 8.7% loss in sales for retailers, with 43% of those losses attributed to out-of-stock situations. Most enterprises are still using legacy inventory management systems which cause some serious inventory mistakes. Inefficient inventory management is a sad reality. Here are five critical errors legacy systems cause:
1. Data Inaccuracy: Legacy systems do not have real-time data integration capabilities as they rely on manual data entry. Delays and human errors in data entry lead to data inaccuracies. Due to the inaccuracies, inventory managers often face challenges like stockouts and overstock situations. These challenges disrupt operations and result in financial losses. The National Retail Federation (NRF) survey reported that data inaccuracies in inventory management caused an average stockout rate of 8% and an overstock rate of 10%.
2. Inefficient Reordering: Demand forecasting is challenging using legacy systems. These systems do not have replenishment algorithms that help you follow efficient reordering practices. This can lead to stockouts or overstocks, negatively impacting customer satisfaction and tying up capital in excess inventory or lost sales opportunities.
3. Inadequate Reporting and Analysis: Legacy systems have limited or outdated reporting capabilities. So, it is difficult to generate accurate and timely inventory reports for decision-making. You cannot get comprehensive visibility into inventory levels, turnover rates, and other key metrics, hindering effective inventory management strategies. Gartner estimates that businesses are losing about $15 million every year due to poor data quality.
4. Lack of Integration: Legacy systems do not integrate well with other modern systems, such as e-commerce platforms, transportation management systems, or warehouse management systems. As a result, your data is siloed. You rely on manual data transfer and inefficient communication, leading to errors and delays in inventory management processes.
5. Security Risks: Legacy systems lack modern security features, making them vulnerable to cybersecurity threats, data breaches, and other security risks. This can compromise the integrity and confidentiality of inventory data, leading to potential errors, discrepancies, and losses. According to a report by Ponemon Institute, 80% of IT professionals surveyed believed that legacy systems are more vulnerable to cyberattacks compared to modern systems.
How to make your inventory management more effective?
You should use a mobile inventory management solution that connects your warehouse staff to the back-end systems such as Oracle SCM Cloud in real time. Connecting your frontline staff with the cloud will eliminate redundancy in work, manual tasks, human errors and inaccuracies in your inventory processes. You can view the movement of your goods in real-time and make informed decisions.
You might be thinking if providing your frontline workers with access to the cloud is a good decision. You can use best-in-class mobile inventory management solutions like PropelApps’ Mobile Supply Chain. This solution gives controlled access to the cloud. So, you can decide who can access which modules of the cloud and the kind of operations they can perform.
What benefits you can achieve with a mobile inventory management solution:
Using PropelApps’ best-in-class mobile inventory management solution, you can achieve:
- 100% data accuracy with data validations
- Reduced operating costs by 40% with the serverless architecture of the solution
- Reduced IT support costs
- Uninterrupted supply chain operations
Want to learn more about our mobile solutions that can connect your frontline workers directly with the Oracle and SAP cloud? You can reach out to us here or call +1 800 303 4678.