Carrying inventory is at the heart of your business but comes with significant risk. Inventory dealers make large financial investments to make sure customers get the goods and services they need, how and when they expect them. To ensure customer satisfaction and the profitability of your operation, it’s important to manage your exposures properly. Here’s how to recognize common inventory risks and how combat them:

Common Inventory Risks: Forecasting Inaccuracies

A perfect balance of ordering and selling inventory is always the goal. But as an inventory dealer, there is always the risk of a mismatch between supply and demand. If you overestimate demand, you could have excess stock, tied-up cashflow and increased waste. With underestimated demand, you may have stockouts, lost sales or even lost customers.

Accurate, up-to-date information is key to making the right purchasing decisions. Technology is a large part of the solution for modern inventory dealers. Making use of RFID technologies and real-time analytics can help maximize your inventory control.

Common Inventory Risks: Supplier Performance

Your ability to meet the needs and expectations of your customers depends on the performance of your suppliers. Stock quantity and quality problems will lead to delays, stockouts and unhappy customers. Problems don’t just come from late deliveries or slim inventory. Inventory dealers also face exposure from having too much stock delivered too soon.

To combat the risk and uncertainty of delivery inconsistencies, good relationships with your suppliers are key. A good relationship is built on good communication. Ensure your suppliers are clear on the exact delivery date and purchase order details and minimize risk with equitable contracts.

Common Inventory Risks: Damaged Supply

Damaged inventory supply is another common risk that affects thousands of inventory dealers each year. Natural hazards such as fire, flood, wind, hail and earthquake could wipe out an inventory dealer’s stock in a matter of moments. Damages from vandalism, storage accidents and transportation collisions are a threat for individual units.

No matter the cause, your damaged inventory could mean significant losses result for the business without a mitigation plan. Make sure your plan includes both emergency preparedness and comprehensive insurance coverage that is tailored to meet the needs of your business.

Common Inventory Risks: Business Losses

Inventory that is lost due to theft, fire, natural disaster or other perils can significantly impact your business’s bottom line. As an asset on your balance sheet, you know writing off lost inventory essentially reduces company assets and business equity.

A major loss could impact the viability of your business, so it’s important to combat this risk. A good inventory control system can help with tracking and preventing inventory losses, while Inventory Insurance from Lockton Affinity, you can help protect your business’s bottom line should something happen to your inventory.


As an inventory dealer, it’s important to recognize how common inventory risks can impact your business. With the appropriate steps, you can combat these risks to ensure your profitability and your customers’ satisfaction.