What is a potential consequence of poor inventory management?

Poor inventory management can lead to increased waste and loss in profits due to several factors. When inventory is not tracked effectively, a business risks overstocking or understocking products. Overstocks can result in perishable items expiring or unsold goods becoming obsolete, leading to a direct financial loss as these items would need to be discarded.

Conversely, understocking can cause interruptions in the supply chain, leading to missed sales opportunities and dissatisfied customers who cannot find what they need. This can result in lost revenue and a damaged reputation, which can further exacerbate financial losses. Consequently, properly managing inventory is crucial for minimizing waste and optimizing profits, demonstrating why increased waste and loss in profits is a likely consequence of poor inventory management.