Inventory is a huge expense a business has to incur to drive production, sales and customer service. Rather than counting all of your inventory, you check specific items and use that cycle count accuracy as an indicator of your overall inventory accuracy. Perhaps most importantly, organizations can improve inventory accuracy by taking steps to identify and correct defective processes within their logistics functions that generate inventory errors. The systems only work if the data is correct and with the introduction of integrated data, there are wide ranging repercussions for businesses that draw conclusions and make decisions based on inaccurate records. Top Tips for Optimizing Inventory Accuracy 1. 1. After Major Acquisitions, Rowmark Improves Inventory Accuracy to Nearly 100 Percent. Review your existing inventory control processes as part of your effort to improve inventory accuracy. Slotting, the process of organizing the inventory within your warehouse or operation so that items are stored thoughtfully based on a number of factors, can provide great benefits in the form of increasing throughput and providing increased accuracy levels. 2021 Logiwa, All Rights Reserved Using cycle counting to maintain high levels of accuracy is one of the best ways to identify problem areas. Once you have your inventory accuracy, set a target. Finding every item on the inventory sheet is tedious. How to improve inventory record accuracy December 17, 2020 / Steven Bragg. Having easy access to the right data allows you to order just the right amount of buffer stock. Jun 06, 2019. Information should be 100% complete and accurate. Join thousands of Logiwa customers who get up to 100% inventory accuracy and 2x their efficiency. Include your entire inventory pipeline—inbound and outbound shipments as well as inventory in the DC. The planning team needs to know about new wins in order to forecast future sales for the business. Once you’ve done one large inventory count, it pays to conduct periodic cycle counts. The sales pipeline is a critical input into all types of demand forecasting process, as it informs the business of new customer wins and potential drivers to short term demand. By making a strategic investment in inventory processes, best practices, and warehouse technology, your business can enjoy these benefits. An effective system will increase inventory accuracy, while reducing cycle times and handling costs. 10. Comparing the actual inventory count to Bloomingdale’s inventory management system over the 13-week period, the researchers found that inventory accuracy declined by 3.13 percent in the RFID-enabled test store and 4.24 percent in the control store. All of these factors translate directly to the bottom line, to the profit of the company. . Inventory accuracy is one of the most important aspects of supply chain management. Kitting and Assembly Solutions Improve Operational Agility & Boost Revenue, Expiration Date Tracking Could Make or Break Food Brand Success, How Alcohol Delivery Methods Maximize Profits in DTC Business Models, Organized Chaos: Behind The Scenes of Amazon’s Inventory Management System, SKU Number: Everything You Need to Know in 2019 (Free SKU Generator Excel Template), Warehouse Robotics: Everything You Need to Know in 2019, First In First Out Warehousing: The Only Guide You'll Ever Need, Safety Stock 101: How to Find Right Safety Stock Formula. Before we dive into the ways to improve your company’s inventory management plan, let’s explore the benefits of effective inventory management. Once you establish a bench mark, set an improve ment goal—aim either for a specific percentage or dollar figure. to check expiration dates), Ensure stock pickers select oldest items for shipment, Install security cameras or hire security to prevent theft, Limit each employee’s access only to areas necessary for their job, Develop a system that allows employees to report theft anonymously, Immediately document items shipped to retailers or direct to consumers to avoid inaccurate inventory or creating an artificial “excess inventory” problem, The cost of RFID tags and upgrading your facilities as well as securing buy-in from supplier and transportation partners, Interference issues with the radio signals depending on the type of materials a company stores (e.g. An accurate inventory test item is considered to be one for which the actual quantity, location, unit of measure, and part number matches the information stated in the inventory record. How many pieces of equipment do you have available? What are some ways you can increase inventory accuracy related to order picking? You make money off the sale of goods, after all. Know the Process Flow. . In the long term, stockouts erode customer loyalty. Companies can choose from a variety of inventory quality programs such as ISO, lean manufacturing, Six Sigma, kaizen, and Total Quality Management. Know what you are up against. temperature, rotation requirements, environmental), Ensure tracking system prompts workers to take appropriate actions (e.g. Making sure that you know exactly what it is you have and where it’s located is … You can't improve what you don't know. Because a reliable sales pipeline is so important in short term demand forecasting, you may choose to incentivize the sales team based on whether their pipeline reporting proves to be accurate. Everything in its Place What is a Lot Number? What is Inventory Accuracy? Get On Top of Your Inventory Accuracy Get On Top of Your Inventory Accuracy: Any distributor making replenishment calculations needs an accurate electronic inventory reference because, simply put, the electronic system data is the theoretical balance in stock and it … Make sure your employees are trained and informed. For inventory accuracy the data and the product have to move at the same speed." While the strategies above can improve picking accuracy, they’re only as effective as the foundation they’re built upon: accurate inventory data. how Logiwa uses real-time tracking to help customers get up to 100% inventory accuracy and increase shipments by 2.5x. Maintain an efficient and well-defined warehouse; Before procuring raw materials or other goods in your warehouse, make sure that you plan and strategize it appropriately. For inventory management, the pressure for most companies is to become more efficient and hold less inventory. Inventory should be easily located with signage, rack labels and other warehouse labels, and products should be readily identifiable. So I asked him to elaborate. Working with capable supply chain partners and using compatible systems helps improve end-user delivery accuracy and customer service. rotations) for said items to avoid spoilage, Schedule regular inspection dates for products (e.g. Examine your entire supply chain. If you wait to solve your inventory issues at the time of the physical count, you are simply addressing the symptoms of poor inventory management. metals), An overload of data that may be difficult to manage, especially for companies with limited data management talent within their workforce, Incompatibility in RFID technology across multiple geographies, which can be a problem for companies that operate internationally, It’s a redundant method (print Excel sheet, record inventory manually, enter count back into Excel), The information can only be accessed by one person at a time, reconciling your physical count against your electronic records, purchasing the technology that will make inventory management more efficient. The director of distribution didn’t miss a beat. Incorporate the following best practices for your cycle count accuracy: A great inventory control process limits instances of theft, improves record-keeping, and empowers businesses to identify and prove supplier fraud quickly. What is your current inventory accuracy, and how do you assess it? #How can ERP system improve inventory accuracy? #How can ERP system improve inventory accuracy? How ERP System Improve Inventory Accuracy How can ERP System Improve Inventory Accuracy? One way to limit business disruption is to conduct cycle counts, which we will discuss later in this article. Get On Top of Your Inventory Accuracy Get On Top of Your Inventory Accuracy: Any distributor making replenishment calculations needs an accurate electronic inventory reference because, simply put, the electronic system data is the theoretical balance in stock and it is … This allows you to track inventory performance across your entire network and improve accuracy throughout the supply chain. Increasing Inventory Accuracy - 6 Key Tips. Sometimes, inventory inaccuracy occurs due to innocent human errors. How ERP System Improve Inventory Accuracy How can ERP System Improve Inventory Accuracy? If the numbers don’t match, the first step is to check your sales records and sales receipts. Out-of-stock items cause profit loss, but paying for inventory storage and transportation also impacts the bottom line. Get tips on how to improve the speed and accuracy of your inventory counts. Cycle counting involves counting some of your inventory every day. The necessary steps are: Select and install inventory tracking software. During this review, identify any trends and patterns in your warehouse process flows. Track order accuracy rates religiously. Inventory accuracy is a vital measurement of the efficiency and reliability of any warehouse. Mobile devices allow quick access to accurate information and data so that managers can act quickly on their inventory decisions, especially in the DC. A variety of inventory systems exist, from simple paper to advanced RFID technology. To calculate inventory accuracy, divide the number of completely accurate inventory test items sampled by the total number of all inventory items sampled. The end result in accuracy improvement will be directly related to the effort put forth to achieve it. The inventory eventually aged, and the business was forced to write off and dispose of the inventory as it expired. Revise the rack layout to allow for optimal storage. If you can’t find any sales receipts that account for the missing inventory, you likely have one of two problems: employer theft or supplier fraud. If your inventory is organized and properly labeled, staff will have an easy time finding the right section and the right products to distribute. Keep your measures simple and manage them every day. How to Maintain Inventory Accuracy. If you're currently working with manual processes, your first strategy to improve accuracy is to minimize the amount of times you touch a product. Build customer loyalty by providing accurate, Allocate employees to other activities by eliminating manual quarterly/annual, How to take stock of your current inventory accuracy situation, Assessing your standard operating procedure for inventory control, How an inventory management system can lower human error, Conduct a visual inspection of each item in shipment, Refuse any damaged items or items not documented in bill of lading, Document specific storage requirements of each item (e.g. One report puts the average inventory accuracy rate in the United States at 65%. Integrating your POS system with your IMS makes it easier to account for sold inventory if you have brick-and-mortar locations. Conduct an inventory reconciliation exercise. Taking the time to change and improve your warehouse and inventory management processes will make your supply chain run smoother and will lead to greater efficiency and profitability for your business. Improving Inventory Accuracy Keep your processes simple. ‍ Conduct regular cycle counts ‍ Cycle counting is the process of partially counting merchandise on a periodic basis so you can stay on top of stock levels without interrupting regular operations. The constant movement of goods makes inventory discrepancies nearly unavoidable. When you redo your inventory locations and start reviewing route changes, you’re collecting a lot of data along the way. You can assess your inventory accuracy and identify the source of discrepancies. “We place our best team members on the receiving dock – this is the first line of defense to ensure inventory accuracy… About Inbound Logistics | Contact Us | Advertising Opportunities | Editorial Submissions | Order Reprints | Glossary | Privacy Policy | Terms and Conditions | Get the App! With an warehouse inventory management software, there should be user-friendly tools to facilitate this update. Inventory labeling is a big part of keeping your warehouse organized. Improves customer satisfaction by providing consumers with adequate inventory, ensuring accuracy of customer orders, and by offering the quickest service possible when fulfilling orders. It also eliminates the errors and delays associated with a paper-based operation, improving accuracy, efficiency, and … What is your current inventory accuracy rate? However, today the combination of complicated supply chains (e.g. Today, most companies use mobile scanners. Whatever your beliefs are about your operational efficiency, unless backed by data, they’re probably wrong. “We place our best team members on the receiving dock – this is the first line of defense to ensure inventory accuracy… This will help you: Essentially, you want employees to take specific steps every time they move inventory since these are the instances in which inventory goes missing. The key to maintaining accurate inventory is having an established method of inventory tracking, and sticking to the method faithfully. Hire Professional Help: If you’ve struggled to maintain proper inventory control or improve inventory accuracy in the past, chances are that you simply don’t have the personnel or the right tools to manage this process internally.If that’s the case, you are certainly not alone. But how can improving your inventory accuracy help your business? Transform your 3PL business into a new age fulfillment center. They scan barcode and that information is loaded into a CSV file or into a specific software, eliminating double counting and entire recounts. Duplicate these successes and share improvement strategies so all areas of the organization can benefit. Typically, the inventory control process includes the following steps: At minimum, your inventory control standard operating procedures should account for the following activities at each stage. Inventory count frequency—consider the business case for increasing the frequency of inventory counts for stores and for certain categories to restore accuracy and to recover lost sales. Make sure your warehouse is organized in a systematic and orderly... 2. Inventory accuracy is vitally important; the challenge lies in achieving it. Maintaining an inaccurate inventory is a sure way to increase inventory management costs, lower your order fulfillment rate, and annoy customers. In the short term, a stockout prevents you from making money. Inventory is a huge expense a business has to incur to drive production, sales and customer service. If … A high level of inventory record accuracy calls for a great deal of effort to develop and maintain a perpetual inventory system. How important is to improve inventory accuracy? Whereas traditional barcodes require scanners to have line of sight to the Universal Product Code (UPC), RFID don’t, enabling an entire pallet of items to be scanned at once. a mixture of supplier-to-store and direct-to-consumer pipelines within the same business) and the falling price of RFID technology attracts more and more companies. The more you cycle count, the higher your inventory accuracy levels increase. After answering all 10 questions, right or wrong, the diagnosis of your inventory health sets your company up for significant opportunities to improve expense and asset effectiveness and creates potential for capturing missed top-line sales. If an online beauty retailer needs olive oil for its organic soap line, total cost isn’t equal to the price of the olive oil. 6. Schedule your free WMS demo of Logiwa today. Here’s the basic formula to calculate inventory accuracy by units: [1 – (the sum of the absolute variance in units or dollars/the sum of the total inventory in units or dollars)] * 100%. In addition, once the physical count happens, someone has to enter that data into a spreadsheet. Typically, a clothing retailer performs a store audit once or twice a year, physically checking all stock across the estate. While excess goods can lead to blocked capital and storage cost, stock-out can lead to unsatisfied customers. 50% of US retail decision makers cite inventory misjudgments as their primary barrier to full-price sales. You can use this data to identify waste or lucrative opportunities for improvement. The formula for inventory accuracy is: Inventory should be easily located with signage, rack labels and other warehouse labels, and products should be readily identifiable. According to the National Retail Federation, the average inventory shrinkage in 2018 was 1.33%. Methods to improve accuracy include Cycle Counting, Physical Inventory, Transaction Reduction and Process Improvement. To be successful in business today, you need to manage its every aspect; when we talk about manufacturing, you must ensure optimal productivity. Post Link: How to Improve Inventory Accuracy How to Improve Inventory Accuracy Inventory accuracy is one of the most important aspects of supply chain management. How close do  your inventory records and your actual physical inventory match up? Consider the following when selecting a POS technology for your inventory management: Checking and maintaining inventory accuracy is a non-negotiable part of running a business. Choose supply chain partners who offer systems that interface with your inventory system. Jun 06, 2019. If you know how to improve inventory accuracy, you can get a lot of benefits by doing that. It’s also difficult to analyze how to improve accuracy and timeliness. Implementing WMS software helps businesses improve their stock accuracy through better product tracking. Learn how Logiwa integrates all your sales channels and provides real-time inventory tracking. Physical Inventory-- In a physical inventory, normal operations cease while a physical count of every item is conducted. In fact, some organizations simply do not measure their inventory properly. *sample RigServ inventory reporting. If you can, be sure to count your B and C group products regularly, too, at least once a quarter if possible. I was recently at a client location and I asked them what their number one operational problem was. Keep your measures simple and manage them every day. Once you have the correct figures, conduct an investigation to find the cause of your shrinkage. If you’re not one of them, you’re lucky. How Does It Work for E-commerce, Warehouses & Wholesale? According to observers, the future of inventory counting is RFID. Without a total replacement, how can you incrementally improve systems and processes? To guide your company in the right direction, Mike Honious, vice president of engineering, Ozburn-Hessey Logistics, shares 10 practical ways to improve inventory accuracy. How to Improve Inventory Accuracy 1. In short, the most effective way to increase the accuracy of physical counts is to prevent the unnecessary buildup of excess inventory in the first place. Employing 100% physical inventory counts and cycle counts will ensure that you can ship your customers what they want when they want it - and spend as little money as possible getting that done . All of these factors translate directly to the bottom line, to the profit of the company. Inventory is a central theme of Lean Manufacturing, Lean Warehousing and Lean operations and here we explain how Inventory Accuracy fits into these Operations Strategies. The chances of double counting and human error, not to mention lost sheets that result in entire recounts, are high. “Inventory Accuracy,” was his reply. 2. Factors that affect inventory accuracy. Maintain an efficient and well-defined warehouse; Before procuring raw materials or other goods in your warehouse, make sure that you plan and strategize it appropriately. Oftentimes, this addresses any discrepancy: You simply sold the missing stock. If even one of these items is found to be incorrect, then the entire item tested should be flagged as incorrect. You can’t just guess the answer based on the number you remembered. It’s a dicey game. Physical inventory counting is a pain. Bottom line: Do not move inventory unless it is authorized and documented. The accuracy of data has gradually been emerging in importance. For this reason, you should make sure that all members of the sales team document their pipeline in a consistent … Don't Let Your Inventory Become a Liability: Poor inventory accuracy leads to a host of issues that cut into your margins. This eliminates a lot of the manual tasks that come with traditional scanners, such as re-orienting all of the boxes on a conveyor belt so that the barcodes with the UPC face the scanner. Enforce this rule, so employees know you are serious. Inaccurate inventory reporting can result in lost sales. Productivity can see significant gains when you … But there’s also such a thing as ordering too little inventory leading to stockouts. Good inventory labeling goes beyond your warehouse. These are like inventory spot checks. Implement a continuous cycle-counting program. As a retailer, doing physical counts of inventory probably isn’t on your list of favorite things to do. You need to count some amount of your inventory everyday, even if it’s one part per day—ideally a different part everyday, and one that’s high in dollar value, high in volume, or critical for customer supply. Her specialties include small business development and inventory management. *sample RigServ inventory reporting. First, your company has to know where it stands with its daily... Assess Your Standard Operating Procedure for Inventory Control. Making sure that you know exactly what it is you have and where it’s located is … Inventory Accuracy is Key to Operational Performance. While this may sound like a lot of activity, over time, your inventory accuracy improves, and the time spent cycle counting will decrease. In face, RFID scanners can help reduce labor costs, which is one of the biggest operating expenses for companies. Pick a quality program and stick with it. In other words, both systems lost inventory accuracy over the 13-week period. And while going fast is good, she says you can sometimes improve inventory accuracy by slowing the process down, or capturing data at a different point of the process. Examine your entire supply chain. What is Deliverr? Let’s discuss some ways to improve inventory accuracy. I asked them what their number one operational problem was with your IMS makes easier. Said items to avoid spoilage, Schedule regular inspection dates for products ( e.g supply chain just a function the. The constant movement of goods makes inventory discrepancies nearly unavoidable this addresses any discrepancy: simply! 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