Accurate tracking of inventory is very crucial to ensure that businesses meet the demands of customers, reduce waste, and have a smooth supply chain. It is one of the most critical aspects of any business whether it is a retail store, warehouse, or manufacturing facility. However, it is not easy to achieve inventory accuracy. Incorrect inventories may lead to stockouts, overstocking, and even loss of sales, ultimately affecting profitability.
Taking facilities management courses offered by the British Academy for Training and Development is very important to have all-round knowledge and expertise in managing complex facilities. The courses are industry-recognized, and hence the career prospects are enhanced. This blog provides an in-depth guide on how to improve inventory accuracy. We’ll explore strategies, technologies, best practices, and common mistakes to avoid, all aimed at enhancing the accuracy of your inventory management system.
Before diving into the methods for improving inventory accuracy, it’s important to understand why it's so crucial. It is necessary to calculate inventory accuracy correctly to make things go smoother. Accurate inventory management ensures:
The customers assume that the products are ordered in stock and delivered on time. Where inventory management is poor, it means missing sales and frustrated customers.
Overstock and stock out can both result in high costs. Overstocks mean tying up capital invested in unsold goods whereas stockouts result in potential revenue loss and expedite shipping costs.
Accurate inventory allows the business to optimize supply chains and operations, reduce waste, and streamline production.
Better information helps management make effective orders, and prices, and offer promotions.
Proper inventory can be achieved with real-time tracking as the best technique. The traditional method generally needs manual counts that could reflect a high rate of human error in most cases. The removal of such errors provides timely information on stock levels through this real-time tracking.
RFID tags are read automatically without the need for manual scanning of inventory. Every item has attached its unique RFID tag, and whenever an item is moved or sold, the system automatically updates. Barcode scanning is another technique where real-time inventories are scanned. Here, every product has a bar code attached to it, and the scanner updates the system every time such a product is sold or shifted. Real-time inventory tracking ensures it always is up-to-date, hence eliminating errors like stockouts and overstocking.
Cycle count: The counting of all or a part of the inventory at regular intervals instead of a full physical count. This is done to increase accuracy as it regularly discloses discrepancies.
Random Cycle Counting: A sample of inventory is selected at random and counted daily.
Inventory is classified into three categories (A, B, and C) based on value or usage with the highest-value items counted more frequently. The firms can reduce the disturbances and costs that the annual physical counts bring about without losing an eye on the levels of inventory by using cycle counting.
Inventory management software is the key to accuracy about the inventories. In automation, such systems could update continuous stock levels; automate reordering points for these; and eventually inform real-time updates without producing differences. Some of the latest features added to modern inventory management software to enhance its accuracy include:
Integrate your POS to your inventory software which updates your stock level instantly a product is sold.
The tool automatically sends alerts to the management regarding low stock levels as well as when to reorder based on historical data and past trends.
Forecasting tools compute analyses of sales trends based on which the future need could be determined, letting companies project stock levels more acutely. With the help of an inventory management tool, businesses can reduce dependence on a lot of hand tracking and improve general stock level accuracy.
Your employees are part of your inventory accuracy efforts. Without proper training, they may err when receiving shipments, picking and packing orders, or conducting cycle counts.
Employees should be taught how to check received goods against purchase orders to detect discrepancies before they enter the system.
Employees who pick and pack items for orders should check the item codes and quantities to avoid shipping errors.
Schedule frequent training sessions on the procedures of inventory control so that the employees are always abreast with the best practices and the most advanced technology. The more learned and trained your workforce is, the fewer chances of mistakes will occur, and therefore, your overall inventory accuracy will be enhanced.
The processes of inventory need to be standardized so that accuracy is ensured. In standardized inventory management processes, confusion and errors are less likely to occur. Standardized receiving and put-away procedures: Define how items received are to be processed, inspected, and stored. A consistent process ensures that goods are not misplaced or incorrectly entered into the system.
All items would be labeled appropriately with product code, description, and quantity. Accurate and standardized labels allow workers to track down and locate items.
Determine the work assigned to each employee to accomplish (receive, check-in stock, pick order). The less overlap, the fewer mistakes. This prevents possible human error in inventory dealing and the whole system has become neat and more organized.
Auditing is another key activity in inventory management. It entails conducting regular audits, and complete physical counts or cycle counts to ensure discrepancies within the system are discovered before becoming too large of an issue. Two types of audits can be taken:
Conducted internally by your company team to identify discrepancies on the onset.
Those are carried out externally and provide an objective analysis of how your inventory system performs or would perform. Probably will identify some issues that could never come up in internal audits. Auditing reveals faults and prevents fraudulence while keeping inventory right, a regular audit rectifies this problem before them, leaving no room for fraud while keeping the account updated.
However, the internal process needs reliable suppliers and vendors to be accurate. Poor communication or a late delivery may disrupt your inventory system and may also cause an inaccuracy.
Let your suppliers and vendors know about delivery times, quality, and packaging.
Maintain open lines of communication with suppliers to ensure that you’re receiving accurate and timely shipments. Share your inventory forecasts with them to help them plan and deliver accordingly.
In some cases, it may be beneficial to implement VMI, where the supplier manages the inventory levels on your behalf, ensuring that stock levels are always accurate. Work with suppliers as much as you can so your stock is steady and predictable.
Too many stock movements mean that inventory can get imbalanced easily. To avoid this kind of discrepancy, consider these tips:
Transfer of stock between warehouses or among storage locations as little as possible, unless not avoidable. A central stock room limits the chances of losing the stock or missing it during the count.
The higher the amount of manual handling involved, the higher the chances of an error being made. Implement automated movement of stock like conveyors or robots. This cuts stock movement and streamlines the movement of inventory by an incredibly significant margin, lowering the potential for miscounts and losses on items.
Data analytics will be very beneficial to your system of inventory. In examining previous trends and patterns, business operators can better project their requirements in the future.
Past sales data are used to predict the demand for the future. It will allow proper planning of inventory levels and avoid chances of stockouts or overstocking.
Analytics from data can be used to analyze supplier reliability and delivery timelines to manage your stock more effectively.
Keep track of how fast the items are sold and replaced to ensure that the stock is not idle and becomes obsolete. With data-driven decisions, business organizations can better and more precisely manage their inventory.
Improving the accuracy of an inventory is a combination of technological advancements, employee training, and standardized processes. It's only through the implementation of real-time tracking systems, cycle counting, and inventory management software that can reduce errors drastically and make the inventory highly accurate.
Other factors, however, that contribute to having a more reliable inventory system for an organization include regular audits, stronger supplier relationships, and efficient stock management practices. You must take facilities management courses in Zurich that are offered by the British Academy for Training and Development. They are on the latest trends and best practices to ensure that professionals can work efficiently to maintain and improve facility operations.