5 Tips for Reducing Lost Warehouse Inventory

A well-managed warehouse is a powerhouse for the entire business. But managing a warehouse that holds tons of inventory worth millions of dollars on a daily basis is not a simple task. There are inherent challenges that make the lives of warehouse managers difficult.

One of the biggest challenges is lost warehouse inventory. In the process of moving and organizing space, it’s inevitable for some stock to be damaged, lost or wrongly accounted for. Unfortunately, this can increase per unit cost of inventory, thereby increasing the total cost of goods. Ultimately, the price inflation affects the competitiveness of the business itself. Also, it can possibly hurt the chances of attaining 100% order fulfillment.

Retailers like Amazon and Target are able to stay clear of such competitive disadvantage by setting clear-cut policies to keep lost warehouse inventory levels at a bare minimum. If you are struggling to keep your warehouse inventory under proper check, here are some tips that will help keep your lost warehouse inventory levels too at the lowest level possible.

1. Plan for Capacity

Each warehouse will have a dedicated space for storing pallets. Depending on the size of the pallet you choose, the capacity of the warehouse to hold inventory will also increase or decrease.

For instance, if your pallet size is 80 cubic ft, then an 80,000 cubic ft warehouse can hold 1,000 full pallets. You can allocate a specific number of pallets for each product category for better space planning.

Planning for capacity is important because it helps prevent instances of ordering too much stock. Excess inventory in the warehouse is a recipe for damage, pilferage and stock variances. Also, when there is a physical verification of stock, the stock that could be lying somewhere else other than the designated location could be missed, leading to lost warehouse inventory.

2. Keep Planograms Updated

A planogram is a diagrammatic representation or map of the warehouse space showing the exact locations of each product to facilitate quick retrieval. Planograms are equally important in warehouses and in retail stores since they help direct staff visually for ideal placement of inventory.

Planograms consistent placement of inventory, especially best sellers and fast moving goods. A planogram informs the warehouse staff where to store specific stocks and where to look for specific goods. A planogram also helps follow the bin card system effectively, thus bringing down the risk of lost inventory considerably.

3. Use Visible Product Labeling

With hundreds of products, many of which look alike, there is always the opportunity for products to get mixed up or misplaced. This leads to stock count discrepancies which are ultimately written off as lost inventory.

An ideal way to prevent such loss of stock is visible product labeling. Use big, visible and code-based product labels that warehouse staff can easily spot and pick. You can devise your own labeling system based on the inventory type, cost, fast-moving/slow-moving or use a serial number system. Visible product labeling is so effective in controlling inventory that top-notch production systems like ‘Toyota Production System’ rely on them for fail-proof inventory management and just-in-time fulfillment.

4. Make Provisions for Normal And Abnormal Losses

Each time inventory is moved from one place to another it becomes prone to damage. More often, it gets damaged due to the carelessness of the staff or due to its inherent nature. Damaged goods invariably end up added to the inventory write off cost.

Every warehouse manager knows the importance of budgeting for normal and abnormal losses. Normal loss is the expected rate of loss or damage that the product will suffer from the time it reaches the warehouse to the time it reaches the customer. For example, loss of food grains during transport.

Abnormal loss, on the other hand, is caused due to accidents or errors on the part of the warehouse personnel. Abnormal costs are written off as inventory loss cost.

The reason why these two types of losses have to be accounted for is that it helps place your finger on the exact reasons why warehouse inventory loss happens. It also helps in taking proactive actions for preventing such losses in the future.

For example, if the breakage of a fragile item is too high, they can be moved to lower floors of the pallet tower to avoid damage during lifting.

5. Train Staff in Safe Handling Practices

The prime causes of lost warehouse inventory such as damage, misplacement, wrong accounting, etc., can almost always be traced back to a lack of training. Providing complete training to warehouse personnel on how to place pallets, how to handle pallets using forklifts, how to label perishable and non-perishable goods, etc., will bring down the lost warehouse inventory count drastically.

For example, a trained forklift driver would know how many stacks to pick up in a single slot, how much ideal height the forklift can rise to and the best practices to place the pallet without dropping it from a height. All these tiny details sum up to avoid a significant amount of lost warehouse inventory.


Warehouse management happens like a routine—there is a cycle of inventory being picked up, issued, replenished and accounted for. In the process of this constant cycling, a lot different events can occur that may result in lost warehouse inventory.

Although lost warehouse inventory is inevitable to some degree, it is not an insurmountable problem. With the inventory management techniques and processes, it is possible to keep lost warehouse inventory levels to a bare minimum.

To know more about MAI's expertise in contact center and fulfillment services, please drop in an email now!

Recent Blogs