As supply chains continue to get more automated to streamline inventory, through the use of technology and utilizing best practices in operations, accuracy naturally beings to improve. However, not every warehouse is automated and for various reason, If the physical inventory “on the books” and the physical inventory in a warehouse do not match, the situation is often chaotic. For example, when a picker goes to retrieve a part and it is not there (or not enough is there), a series of manual checks and back tracking must be completed to fix the problem and get the order out the door. The importance of warehouse inventory accuracy cannot be underestimated when you consider that your inventory could be the largest asset to a company. Inaccurate inventory record accuracy results in having wide impact on other system and areas in warehousing including:
- Poor buying practices and excess safety stock associated to buyers lack of confidence in record accuracy.
- Delays in order fulfillment associated to lost or misplaced product.
- Lost sales due to stock outs and over commitments.
- Costs associated to placing and managing back orders.
- Lower labor productivity associated to searching for lost product.
- Potentially higher freight costs resulting from expediting shipments to customers.
These issues could result in excess inventory, which ties up capital and negatively impacts capacity. The results are higher costs, low productivity and bad customer service. The self-checking nature of advanced warehousing technology such as Warehouse Management Systems or WMS, in addition to a good cycle counting program, ensures inventory accuracy of 99+%. This high level of inventory accuracy is the foundation for a majority of the other benefits realized in using a WMS.
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