Do’s and Don’ts of Common inventory management mistakes distributors make

In the fast-paced world of building materials distribution, managing inventory isn’t just about knowing what’s in stock—it’s about keeping the right products in the right place, at the right time, without tying up capital or creating chaos.

The reality? Most growing distributors make the same few inventory mistakes over and over. The good news? They’re fixable—especially with the right systems and strategies in place.

Whether you’re managing a single yard or scaling across multiple warehouses, here are the top inventory management do’s and don’ts every distributor should know.

✅ DO: Set Inventory Min/Max Levels Based on Demand Data

Why it matters:

Guessing how much to stock leads to overordering slow-movers and running out of essentials. Your ERP system can help you automate smart replenishment logic.

Best Practice:

Use past sales trends and velocity analysis

Adjust thresholds seasonally or by region

Review min/max levels quarterly

📉 Don’t: Use static reorder points set six months ago without reviewing turnover data.

✅ DO: Cycle Count Regularly—Not Just Once a Year

Why it matters:

Full physical counts take time, cost money, and often disrupt operations. If you’re only doing them annually, you’re likely running on bad data most of the year.

Best Practice:

Implement cycle counts weekly or monthly

Focus on high-value and high-turnover SKUs

Use mobile scanning tools and ERP integration

📉 Don’t: Wait for year-end to discover inventory errors that have been hurting you for months.

✅ DO: Track Inventory by Location—Down to the Bin or Zone

Why it matters:

“Somewhere in the yard” is not a location. Lack of location-level visibility leads to delays, double-handling, and missed picks.

Best Practice:

Define zones (e.g., Aisle 4, Yard Zone B) in your ERP

Assign SKUs to specific locations on receipt

Use mobile tools to scan items in and out of each zone

📉 Don’t: Rely on team memory or handwritten notes to find materials.

✅ DO: Monitor Aging Inventory and Deadstock

Why it matters:

Products with a shelf life—or even just shifting market demand—can quickly turn into write-offs if not managed.

Best Practice:

Use your ERP to track inventory aging

Flag SKUs older than 60–90 days

Offer promotions or bundle pricing to move slow stock

📉 Don’t: Let expired adhesives or outdated materials sit in your yard until you have to trash them.

✅ DO: Train Your Team on Scanning and Receiving Procedures

Why it matters:

Even with great software, execution fails without proper training. Every mis-scan or skipped step leads to inventory variance.

Best Practice:

Create standardized SOPs for receiving, staging, and picking

Use barcode or RFID tools to enforce accuracy

Review mistakes weekly and re-train where needed

📉 Don’t: Assume new team members know your process—or that old ones haven’t developed shortcuts.

✅ DO: Analyze Returns and Damaged Goods

Why it matters:

Returns are a rich source of insight into what’s going wrong in the warehouse or in transit.

Best Practice:

Track return reasons in your ERP (damaged, wrong item, late delivery, etc.)

Segment by SKU, vendor, or location

Use data to correct upstream issues (packing, loading, labeling)

📉 Don’t: Treat returns like a nuisance with no follow-up or analysis.

✅ DO: Use ERP Dashboards to Track Inventory KPIs

Why it matters:

You can’t fix what you can’t measure. Visibility into key metrics helps you optimize before things break.

Track:

Inventory turnover rate

Fill rate

Stockout frequency

Cycle count accuracy

Aging stock %

📉 Don’t: Run inventory blindly with no performance metrics or review rhythm.

Final Thoughts

Inventory management mistakes aren’t just frustrating—they’re expensive. They slow down your operations, frustrate your customers, and tie up working capital that could be better used elsewhere.

The good news? With ERP tools, clear processes, and a bit of discipline, you can avoid these common traps—and run a warehouse that’s faster, leaner, and more profitable.

📦 Need help identifying your top inventory risks? Let’s run an audit of your current processes and build a smarter strategy—starting with the basics.