What is phantom inventory and how can you avoid it?

What is phantom inventory and how can you avoid it?
Photo by Cova Software / Unsplash

Do you have registered products in stock but not in warehouse? Find out why this happens and how to avoid it so that your POS is not affected.

There are many situations that can negatively affect your POS, causing reputational damage, monetary loss and more. One of those is the phantom inventory; and because we don't want you to suffer a situation like this because of it, today we explain what it is and how you can avoid it.

What is phantom inventory?

Many times we have seen ourselves in the situation (as customers) in which we place an order based on the data provided by the stock of a store or warehouse, the order is accepted and in the end they contact us to explain that they cannot process the sale because they do not have the requested merchandise. At this point, we get upset and don't understand the reason for this as the store is not able to meet our needs and we develop distrust towards this supplier. This is a clear example of phantom inventory problems.

Phantom inventory refers to the situation in which there is stock registered in the warehouse management system that is not actually (physically) available on the shelves for sale, which may be due to data entry errors, in merchandise, expired products, theft, etc.

Ghost inventory will also affect resupply...

In automated inventory control systems where purchase orders are generated when merchandise falls below a certain stock level, phantom inventory indicating that there is more stock than is actually available will cause such purchase orders not to be generated and, therefore, not only will the merchandise not be available for sale, but orders to suppliers for its replacement will be frozen. Now that we know what ghost inventory is all about, let's see what causes it and how we can avoid it.

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Why do we have a phantom inventory?

The most probable causes for the appearance of the phantom inventory could be:

  • A bad count when receiving merchandise from our suppliers. This usually has to do with human error that occurs when data is entered into the system.
  • Theft, loss or theft.
  • Errors at the time of dispatch.
  • Failure in the control processes of returns and/or damaged goods.
  • Guarantee replacements not registered in the system.
  • Units "loaned" to companies in the same industry.
  • Wrong physical count at the time of manual inventory.
  • Typing errors in billing.

How to avoid phantom inventories?

The best way to avoid this situation is automation. Manual work is subject to constant errors and automated systems significantly minimize the possibility of mistakes.

With QuartzSales you will not only be able to manage and see the status of your stock in real time, but you will also have complete control of your sales team and you will be able to organize your processes through a friendly and intuitive platform. Schedule a demo with us and discover all the benefits we have for you www.quartzsales.com

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Until next time! ;)