Your objective should be to reduce the risk of excess inventory by removing inaccurate stock counts because poor inventory control often leads to high warehousing costs, slow-moving items in stock, inventory shortages, hectic or overcrowded warehouse floors, shipping delays, price problems, and other difficulties. You must realize that Excess inventory occurs when inventories are high, which can lead to a poor investment of cash flows and lost revenue because overstocking not only limits cash flow, but it also costs the organization money day after day.

Whenever a company's inventory is valued at hundreds of thousands of dollars, it's a major problem that may hamper the company's growth, and companies have been surprised by both excess inventory and shortages of inventory. Do not forget that Overstocking when things are not moving and understocking when sales orders go unfulfilled are not ways to increase earnings.