Inventory accuracy is about more than having an accounting of your materials. Inventory issues affect every other aspect of fulfillment. Without an accurate inventory, you can’t prepare for spikes in demand. You won’t even know that you should prepare.
Estimates suggest that inventory issues cost an estimated $1.1 trillion every year. Problems like shrinkage, stockouts, and the costs associated with overstocking eat into profit margins. Some companies don’t even know it’s happening.
It’s not all about saving money, either. If your inventory doesn’t match what the customer receives it reflects on your fulfillment processes.
It can get complicated. If a product comes in a pallet, for example, do you know what to do with it? Do you have to put it into a case before shipping? You have to answer these questions in your inventory. The end-goal: the customer receives the right product quickly. Inventory management helps ensure that happens as consistently as possible.
But true accuracy isn’t achieved simply because you have two systems in agreement. Accuracy means one of your employees can inspect the location of a product and find it. Is it in the right location? In the right quantity? With the right serial number? The right label?
Without inventory accuracy, you could have the wrong lot numbers, the wrong on-hand balance, or misplaced items. It all adds up to confusion, work, and obsolescence. Don’t let this eat into your profit margin. It’s worth getting right
IMPROVING ORDER ACCURACY WITH AN ADVANCED WAREHOUSE MANAGEMENT SYSTEM
The best way to improve accuracy is to use an advanced WMS, or Warehouse Management System. A management system will have tools for improved inventory accuracy already built-in. For example, even the proper tagging of inventory has improved accuracy from 63% to 95%.
Standardization is the key here. The more standardized your inventory is, the easier it is to identify every product. As QAD notes, even something as simple as tidiness can have a dramatic impact on your inventory accuracy. Using different sizes on a single rack means that if something is the wrong size, it can fail to show up in inventory. As a consequence, it disappears from the system.
How do you know that you’ve made progress on upgrading your inventory system? There are a few variables you can watch out for, including:
- Real-time inventory visibility. If your inventory isn’t accurate up to the current moment, it isn’t accurate. Real-time tools include barcode scanning, real-time inventory reports, web-based reporting for real-time data, and transaction history for every item.
- Data warehousing and data mining. Inventory is, ultimately, about your data and how it’s organized. Comprehensive data warehousing and mining are requirements. Make sure you can view your inventory in a single location without sifting through disparate systems.
- Transaction History / Order Status / Shipment history. Can you find these elements in your reporting software? Are they accurate? With barcode scanning, you can use the most recent scan to find inventory. The product should be right where history says it is.
- Automated reporting. Web/email-based reporting can create automated reports with minimal input. This makes it easier for employees to review at a moment’s notice. They save time by avoiding digging through the information themselves.
IMPROVING SERVICE LEVELS THROUGH INVENTORY ACCURACY