Don't Let This Happen to You: Inventory Discrepancy

Learn more about inventory discrepancies, why they happen, and how to avoid them. Tips on how you can prevent this from happening in the future.

Don't Let This Happen to You: Inventory Discrepancy

These days inventory tracking is crucial, and maintaining accurate records is considered more critical. If you are facing any inventory discrepancies issues like lost inventory or inventory shrinkage, you need to determine the leading cause behind a discrepancy in the existing inventory. Also, you must know how to save yourself from losses by avoiding differences. 

What Is An Inventory Discrepancy, And Why Should You Care?

Inventory discrepancy is when the inventory amount varies from the accurate inventory records in your inventory management system or the warehouse management system (WMS). 

It is identified that inventory discrepancy can harm your customer satisfaction and cut your profit margins. Thus, an accurate inventory level is crucial to ensure a successful e-commerce operation. 

How Can You Prevent Inventory Discrepancies From Happening In Your Business?

First, a business owner should identify the causes of inventory discrepancies in their business. The main reasons for inventory discrepancies are inventory shrinkage, lost inventory, outdated technology, untrained employees, and faulty returns management. However, you can improve overall inventory control and reduce inventory discrepancies by doing some following activities in your business. 

  • You need to provide training to the staff to ensure the effective execution of processes and practices. In training, you can demonstrate the meaning of discrepancy and how it affects customer satisfaction. 
  • Make sure the locations are easy to get to and marked clearly. You must mention clear boundaries to identify the difference between various items in the exact location. 
  • Make sure to maintain consistency in the unit of measurement across the recorded and physical stock. 
  • You must focus on maintaining accurate inventory stock records.
  • It would help if you restricted entry into storage locations and warehouses to authorized personnel only.
  • You must maintain an accurate inventory control system in your business. You can invest in inventory management tools and software to optimize inventory operation.
  • It would help if you verified that the received goods match the quantities mentioned on the packing slip.
  • All the stock movements, like sold items or items used as a donation or sample stock, must be recorded. After that, you need to update the inventory system. 

Related : eCommerce Inventory Management Tips & Tricks

What Do You Do If An Inventory Discrepancy Does Occur In Your Business?

If an inventory discrepancy occurs in your business, you can do a few things to resolve the issue.

Check Your Records

First, check your records to see if there is any way to determine where the discrepancy occurred. This could include looking at sales records, purchase orders, or other documents showing what inventory should be on hand.

Do A Physical Count Of Your Inventory

Next, you will want to do a physical count of your inventory. This will help you determine precisely how much stock is on hand and where the discrepancy might be.

Investigate The Discrepancy

Once you have determined where the discrepancy occurred, you will need to investigate it further. This could involve talking to employees, checking security footage, or doing whatever else is necessary to determine what happened and how to prevent it from happening again.

Correct Your Records

Finally, you will need to correct your records. This could involve updating your inventory count, adjusting your sales records, or taking other steps to ensure that your documents are accurate. Correcting your records will help prevent future discrepancies and help you keep track of your inventory more accurately.

Related: How to Use a Perpetual Inventory System to Grow your eCommerce Business

Tips To Keep Your Inventory Accurate And Up-To-Date

Your product-based business must focus on inventory control and maximizing inventory accuracy. If you want to maintain and improve inventory accuracy, then you can follow the given tips.

Master Warehouse organization

Keep your inventory in an easily accessible place so you can count it regularly. Warehouse organization is essential for a smooth flow of fulfilling orders by receiving the orders. Thus, the organization must provide clear signage, display maps in common areas, and label empty shelves, categories, locations, etc. 

Label Everything

Clearly label all your inventory items so you can quickly and easily identify them. Clear inventory labeling for each category or item can benefit the storage space. 

Perform Regular Counts

It's essential to perform regular counts of your inventory. Aim to count your list at least once a month or more often. This will help you keep track of your stock levels and ensure you're always caught up with the supplies you need.

Invest In Inventory Software

Using software to help manage your inventory can make the counting process much easier and more accurate. An inventory management technology can enhance inventory accuracy through labeling, reporting, documenting, and analyzing data. 

Communicate With Your Team

Make sure everyone on your team knows the importance of accuracy regarding inventory counts and management. Define internal policies for all the staff relating to standard operating procedures, enforce guidelines for consistent labeling, establish damaged inventory procedures, etc.

Keep track of every movement: know what comes in and what goes out of the inventory keeping track of your inventory is crucial for any business. Knowing what comes in and goes out can help you make informed decisions about stock levels, pricing, and more.

Conduct Regular Physical Counts

Physical inventory counts help you keep track of every movement and ensure that what goes in and out of your inventory balances—conducting a count at least once a month allows you to compare against your sales and purchases to get a clear picture of your inventory.

Know The Causes Of Inventory Discrepancies

Be aware of the common causes of inventory discrepancies, such as employee theft or damage to the product. Keep track of every movement and know what comes in and goes out of your inventory. This way, you can more easily identify any potential issues and take steps to resolve them.

Related: How to Calculate Inventory Turnover?

The Consequences Of Not Having An Accurate Inventory

Before understanding the consequences, let's know - what inadequate inventory is called. A lousy stock means you can not sell your business product as it has less demand in the market or is no longer functional. This inadequate inventory may lead to the following consequences.

- Reduced customer satisfaction: If inventory levels are too low, customers will not be able to find the products they need. This can lead to frustration and dissatisfaction.

- Increased costs: If inventory levels are too high, it tie up working capital that could be used elsewhere. Inaccurate inventory can also lead to increased inventory carrying costs.

- Poor planning: Inaccurate inventory information can make it difficult to plan production or sales activities effectively. This can result in lost opportunities and inefficiencies.

- Regulatory problems: In some industries, inventory levels are closely regulated. Not complying with these regulations can result in significant penalties.

- Decrease employee productivity:  Inaccurate inventory can lead to employees spending time looking for products that are not actually in stock. This can decrease employee productivity and lead to frustration and dissatisfaction.

- Delayed item shipments:   If inventory levels are not accurately maintained, it can lead to delays in shipping items to customers. This can damage relationships with customers and result in lost business.

- Increased chances of stock-outs:  If inventory levels are too low, it increases the chances of stock-outs occurring. This can disrupt production activities and result in lost sales.

When you are more focused on addressing discrepancy meaning to all your staff, make sure to make them understand the consequences of not having an accurate inventory.

A reputed service provider always believes in the dock-to-stock definition to move inbound shipments within 2 to 3 business days. Thus, try to keep your inventory up-to-date and accurate from dock to stock to ensure the smooth running of your business. 


Although it may seem like a lot of extra work, keeping accurate records of your inventory is the best way to avoid discrepancies between what you have and what is on hand. If you are struggling to keep track of everything or need help fulfilling Amazon orders, get in touch with Simpl. We can help you take care of all your inventory needs so that you can focus on running your business.

Recommended: What Is Buffer Inventory & How It Affects Your Business

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