5 Hidden Costs in Your Inventory Management System

Inventory Management Tips


On my weekly trip to the market, I choose my gourmet products and head to the cash register, where the cashier tells me the total and I pay. To get my merchandise back home, I pay a little more for gas, and then store my food in the precious real estate that is my tiny kitchen cupboard.

Purchasing inventory is something that people in practically any field can relate to. We know that there are external costs to getting inventory to our labs, such as delivery fees and storage space. However, we must keep an eye out for the common weak spots in an inventory management system that cost dearly.


For example, what if I got home with my bag of shiny red apples, only to realize that I already had apples that were about to expire! Add to that, my roommate walks in with even more apples because she didn’t know I already bought more. Now, I have too many apples and I won’t be able to use them before they expire. Plus, where am I supposed to put all those apples in my limited kitchen space?

In a university or chemical facility, we may see multiple departments with multiple people responsible for making purchasing decisions. If there is no central inventory system, over-ordering chemicals and not using chemicals before they expire is unfortunately all too common.

While the apple example is a stretch (the obvious answer is to bake the extra apples into a delicious pie and share it with my friends), over-ordering inventory is Hidden Cost #1 on our list.


5 Hidden Costs in Your Inventory Management System

1) Over-ordering chemicals

When a researcher can’t find a chemical, new supplies are ordered. Even if you manage to use excess materials before they expire, you’re still overspending on inventory. On a facility level, can you say if you are exceeding maximum allowable quantities for hazardous materials? The fine for being out of compliance won’t stay hidden for very long!

2) Paying for shipping and handling on duplicate orders

3) Spending money to store excess chemicals

Chemical storage space isn’t free, and it adds up quickly across multiple departments. There is also the insidious problem of increased liability due to excessive quantities of hazardous materials.

4) Time spent producing reports

EHS professionals are tasked with protecting our lives and health, and keeping our facility in compliance. If departments are sending reports to the EHS folks in multiple formats, or gasp! on paper spreadsheets, creating reports is taking much too long and wasting money. Software solutions can generate turnkey reports, so you can get back to the big fish in the safety pond.

5) Clean up costs

Labs often don’t realize the cost of disposing of the excess chemicals they ordered because disposal fees are not always pulled from the lab’s budget.


We see facilities spending about $1 – $10 in management costs for every $1 spent on chemicals. So, let me throw a little math your way – if a university or research facility spends $1,000 on chemical inventory, they can expect to spend between $1,000 and $10,000 on inventory management. If a facility is spending $100,000 on chemicals, then inventory management becomes a huge cost. Addressing these hidden costs and choosing an efficient inventory management system will bring these costs under control, reduce liability and improve safety.

At ChemSW, we offer several chemical inventory solutions to improve safety and efficiency. Please visit our website to find out more about our products today!

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