What can be a consequence of poor inventory management?

The consequence of poor inventory management often results in higher operating costs and losses. When inventory is not managed effectively, businesses may face excessive stock levels or stockouts, both of which can create financial strain. Excess inventory ties up capital, incurs storage costs, and may lead to obsolescence if items become outdated or unusable. On the other hand, stockouts can result in missed sales opportunities and dissatisfied customers, which can harm a business's reputation and lead to additional fiscal losses.

By not maintaining an optimal balance of inventory, organizations can experience increased costs related to purchasing, warehousing, and logistics, ultimately undermining profitability. Effective inventory management is crucial to minimizing these risks and ensuring resources are utilized efficiently to support business operations.