10 Reasons Why Your Inventory Isn’t Accurate
Supply chain optimization, put simply, is providing the customer with what they want, when they want it, and at as low a cost as possible. If your not completely accurate in your inventory, it’s going to be much more difficult to fulfill this promise. Here are 10 reasons why your inventory may be inaccurate:
1. It’s been too long since you did a physical inventory. Allowing 12 months to lapse between inventories is asking for trouble. This needs to be comprehensive, leaving no item uncounted and no warehouse unchecked.
2. Too much time has passed between physical inventories. Two months is a good frequency for physical inventories. Every transaction in the time between inventories must be netted out from the last one to give an idea of what your perpetual inventory is. This will correspond with what your IT systems are saying you have.
3.You don’t have a program for cycle counts. You can’t do without one. This is because inventory accuracy relies on counting a little bit of inventory every day, methodically, not relying on the quarterly or annual counts for accuracy.
4. You’re not paying enough attention to part numbers. These need to be read and re-read to cut out mistakes; problems can arise from inaccurate records for part numbers. Avoid characters that could be confused, such as zero and O, 1 and I etc.
5. You don’t have a warehouse management system (WMS). WMS is a great help when it comes to managing your inventory. If your company has more that 20 SKU’s then you should really see about getting one.
6. You don’t use your WMS. This will certainly lead to inventory accuracy issues. The accounts department needs this to be able to value your inventory also.
7. You’re doing “one off’s.” There should never be one offs, go back to step one to find out why.
8. You’re inventory is easily stolen. If it’s easy for people to lift items and walk away with them, they might just do that.
9. You don’t have a unit of measure (UOM). This must comply with other departments and partners.