Overstocking hurts the entire supply chain. Here’s why:

Oct 27, 2022

In response to crippling shortages, many distribution centers and retailers choose to store surplus inventory; however, as inflation rates remain high, demand for products has stifled over the last months, resulting in overstocked warehouses. When paired with rising operational and storage costs, overstocking ultimately damages the bottom line. Studies indicate that reducing overstocks and stock-outs can lower your overall inventory costs by 10%. Furthermore, it is estimated that the worldwide cost of inventory distortion (including stock-outs, overstocks, and shrinkage) is anywhere close to $1.1 trillion.



Without active steps to reduce overstocks and stockouts, inventory can go to waste and costs can be incredibly high. More businesses are addressing inefficiencies in the inventory management process and incorporating best practices like:


  1. Tracking demand surges - When you integrate RFID technology, your workers gain supply chain visibility that can anticipate when demands could shift and prepare for it. Stores and warehouses that suffer from incomplete visibility cannot prevent stockouts and overstocking because they don’t know how much inventory they really have. Real-time tracking with RFID solutions can help distributors and retailers take the right steps to achieve complete visibility and accurate inventory management.
  2. Incorporating proper SKU counting - RFID solutions also empower location-aware data capture and fast locationing. Fast barcode scanning with dependable data capture capabilities helps streamline SKU management for consistent inventory tracking.
  3. Fostering workforce collaboration - Unconnected workers lead to incomplete visibility and inconsistent fulfillment, even sometimes with the right devices. An experienced engineering team can boost wireless connectivity to establish consistent fulfillment and complete visibility across your supply chain. When workflows are more consistent, it helps workers pinpoint misplaced items and manage inventory.
  4. Securing proactive adaptability - Between new RFID mandates and government-issued compliance, distributors require agile flexibility to meet new requirements. Digitized data capture enables quick retrieval and transparent traceability to keep your operations ahead of change and downtime.


How to Know it’s Time to Optimize Visibility

Proper inventory management, real-time visibility, and fostered communication can help manage the risks of overstocking and stockouts. Studies show that 75% of companies felt negative impacts on their business due to supply chain disruption. If your business suffers from these challenges and disruptions, it could be time to start learning the best practices to control fulfillment:

  • Lack of visibility about inventory
  • Manual inventory systems
  • Lack of data access
  • Choosing the wrong systems
  • Lack of inventory management


Overall, RFID technology and wireless solutions that simplify visibility and efficiency can eliminate overstocking and stockouts. Find out which solutions can help your business manage inventory and assemble a plan against future challenges.