Precisely, the solution we need: Inventory Accuracy

06-05-2021 9:30:57 Comment(s) By Abir

Some of the articles that have proceeded in this website have underpinned the significance of an effective TMS in the fruition of labour in the logistics business. But more often than not, we fail to understand how inventory management can also be a decisive factor in raking profit for a firm. Incompetence in handling the inbound and outbound inventory can affect any organisation in more ways than one. And while talking about company inventory, one must inevitably allude to warehouse, for that is the space which is almost synonymous to inventory. If a company does not have a proper warehouse management system to record, monitor, track inventory and document the processes and rely on the legacy methods of pen and paper or a simple spreadsheet, then the post-pandemic tech boom must act as the impetus to propel them into being tech-reliant, otherwise the world of business, which has always seen a cutting edge strife, would not take much of a time to push such legacy bearers into obsolescence.


An efficacious inventory management is the key to inventory accuracy. The latter corresponds to the rate of similarity or variance between the electronic and manual counting of the stock in a warehouse. Ideally, there must not be any disparity and the accuracy should be 100%. However, the modern statistics can give a bit of leeway, making 95% a standardised parameter of accuracy. Lack of inventory accuracy can lead to faulty delivery or delayed delivery of items, rupturing the customer satisfaction and shaking the core of customer loyalty. Inaccuracy in the form of under stocking may also lead to backorders and overstocking results in spoilage. Thus, every warehouse must have a yardstick for the minimum, maximum, average set of items. It not only yields profitability but also ramps up productivity of the inventory and the employees. By reducing or streamlining return/recall policies and numbers, by optimising operational cost and by determining a demand pattern for the precision in future orders or production, inventory accuracy assumes a seminal role in the core functionality of the logistics. There are certain ways in which inventory accuracy can be attained in a warehouse set-up. In this article, we will try to enumerate some.


Most of the times it has been observed that without a proper labelling of the inventory and warehouse location, individual units of goods can get lost and a lot of time gets wasted in procuring or looking out for the lost stock, resulting in unwanted delays and sometimes when the stock is found out, the value or the demand has been terminated. Hence, warehouse must be properly segregated in categories for different types of goods. Precision can also be achieved if similar category of items is not stacked in the similar location. Tracking system can be of much help in cases of such warehouses that deal with varying degree of products. Not only the warehouse be accurately siloed and tagged but also categories of goods and individual units of goods must also be named. In the context of naming items, the classification of product, serial number, date of manufacture, date of receipt, date of expiry should also be taken into consideration and be used in clubbing or sorting the products out. Bar-coding, usage of SKU or RFID can also reduce the probability of manual error in naming the products and can prove to be cost-effective. Warehouse being an expensive space to manage, must have a practical approach towards the proper placing of products. Products must be placed judiciously so that each item stands out from the rest and still every small but usable nook and corner is used.


There must a properly documented process that all the employees must adhere to with regard to handling the consignment ranging from receipt to put-away; from shipping of order to doing away with the scrap. These procedures are nothing but a set of rules that have been gone through and agreed upon by the staff. In an ideal layout, a warehouse must give only a limited number of employees, access to the dealing of the ware. This, concurrently, helps in minute detection of aberration and prompt corrective measures. In case of repeated non-compliance of the rules or anomaly of certain stock, company must also look into the practically of the implementation of their processes.


Apart from the yearly count of stock which calls for a shutdown of warehouse or can be very much labour-intensive, companies must focus on the automatic cycle count. Cycle count yokes the continuous assessment process in the daily routine of the warehouse and is extremely helpful in maintaining the FIFO rules or examining the high value or high moving products. One benefit of such inventory count is that it emphasises on a set of products and goes on for a long time and being a part of regular assessment, does not demand shutdown. With the help of the data curetted through cycle counts, a company not only gets benefitted in quality control but also becomes better equipped with the pattern of demand. By acting according to the ever-so-volatile customer needs by maintaining the flow of supplies and working in close quarters with the fluctuating market, inventory management can add a lot of value to the predictive analysis and thereby render assistance in the manufacture, sale and purchase of the company.


With the help of ultra-modern gadgets and efficient WMS, real-time visibility of products in any stage of the product’s life-cycle, in the form of tracking, tracing, picking, put-away, transit, gives the manufacturers or shippers a holistic overview of the consignment, ensures safety and helps strike a bond with the customers based on transparency.


In a nutshell, erroneous inventory management can cost productivity, profitability and also pushes a company light-years away from the pragmatism of the market and the popular demands. Thus, not having a proper warehouse management system to look after the stock and bring about accuracy can prove to be detrimental to the financial health and even existence of a company. The nonchalant approach towards the technological boom is passé. Embracing freshness of approach is no longer a luxury but the need-of-the-hour, to stay afloat, to stay abreast, and to stay relevant. 

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