How an ERP Assessment Helped Transform Inventory Accuracy from 85% to 99.8% While Improving Operational Performance and Decision-Making

As companies grow, their systems often struggle to keep pace. What once worked well can become increasingly difficult to manage as product lines expand, inventory grows, operational complexity increases, and leadership requires greater visibility into costs and profitability. Unfortunately, many companies assume their ERP system is the problem when the real issue is how the system is being utilized. This was the challenge facing one growing manufacturer.

Inventory accuracy was declining. Cost accounting had become unreliable. Workarounds and spreadsheets had replaced standard processes. Leadership lacked confidence in inventory values, product costs, and profitability information. Most importantly, the company was losing visibility into the operational and financial information needed to make sound business decisions. To address these challenges, the company partnered with LMA Consulting Group to conduct an ERP assessment and develop a roadmap for improving system utilization, data integrity, operational processes, and reporting capabilities. The result was a transformation in inventory accuracy from 85% to 99.8% while significantly improving operational visibility and decision-making.

The Challenge: Growth Had Outpaced Processes

Like many growing businesses, the company had developed numerous workarounds over time. Instead of utilizing the ERP system as originally designed, employees created manual processes and homegrown solutions to address immediate needs. While these workarounds initially solved individual problems, they eventually created larger challenges. Inventory accuracy suffered. Cost accounting became increasingly difficult to trust. Operational visibility declined. Leadership struggled to understand product costs and profitability. The company began questioning whether its ERP system could continue supporting future growth.

Evaluating the ERP System

One of the first findings from the assessment was surprising. The ERP system itself was not the problem. In fact, the system had sufficient capabilities to support a business significantly larger than the company’s current size. The real opportunity was improving how the organization utilized the system.

LMA evaluated:

  • ERP configuration and utilization
  • Inventory processes
  • Cost accounting impacts
  • Data integrity
  • Operational workflows
  • Reporting capabilities
  • Process ownership and accountability

The assessment identified opportunities to strengthen system usage, improve data quality, and eliminate inefficient workarounds.

Returning to Standard Processes

Rather than replacing the ERP system, the focus shifted toward using it more effectively. LMA worked with the team to redesign processes, improve data management practices, and establish stronger operational disciplines.

Key initiatives included:

  • Improving inventory management processes
  • Strengthening inventory control procedures
  • Improving transaction accuracy
  • Standardizing ERP usage
  • Eliminating manual workarounds
  • Improving cost accounting accuracy
  • Establishing stronger process ownership

The objective was to create reliable information that could support both operational execution and financial decision-making.

Improving Inventory Accuracy

Inventory accuracy became one of the most visible measures of success. At the beginning of the engagement, inventory accuracy was approximately 85%. While this level may appear acceptable on the surface, even small inaccuracies can create significant operational and financial challenges. Purchasing decisions become less reliable. Production planning suffers. Inventory valuations become questionable. Customer service can be negatively impacted. Through improved processes, better ERP utilization, and stronger inventory disciplines, the organization achieved dramatic improvements. Within several months, inventory accuracy improved to more than 98%. By year-end, inventory accuracy reached 99.8%, exceeding the company’s target of 99.5%.

Creating Accurate Cost Visibility

Inventory accuracy was only part of the story. The company also needed confidence in its cost accounting information.

Without reliable inventory and transaction data, it becomes difficult to accurately understand:

  • Product costs
  • Customer profitability
  • Operational performance
  • Gross margins
  • Financial results

LMA Consulting partnered with their IT partner, developed reports and connected data. As data quality improved, leadership gained greater confidence in the financial information used to manage the business. Accurate inventory values and cost of goods sold calculations provided a stronger foundation for decision-making and financial planning.

Understanding Customer and Product Profitability

Another important component of the engagement involved developing customer and product profitability analysis. Many organizations focus heavily on revenue while lacking visibility into which customers, products, and services generate the greatest profitability. LMA worked with the company to develop tools and analyses that provided deeper insight into:

  • Customer profitability
  • Product profitability
  • Margin performance
  • Pricing and cost drivers
  • Improvement opportunities

These insights enabled leadership to make more informed decisions regarding pricing, customer relationships, inventory strategies, and operational priorities.

Strengthening Operational Performance

Improved ERP utilization created benefits well beyond inventory management and financial reporting. With better data and stronger processes, the company improved operational execution throughout the organization. Teams gained greater confidence in system information. Decision-making became more proactive. Processes became more disciplined. Leadership gained visibility into key operational and financial metrics. Most importantly, the organization moved away from reactive management and toward data-driven decision-making.

The Results

Through its ERP assessment and improvement initiative, the company achieved significant business results:

  • Improved inventory accuracy from 85% to 99.8%
  • Exceeded inventory accuracy goals of 99.5%
  • Improved cost accounting accuracy
  • Increased confidence in inventory valuation and cost of goods sold
  • Eliminated inefficient workarounds and manual processes
  • Improved ERP utilization
  • Enhanced operational performance
  • Developed customer profitability analysis
  • Developed product profitability analysis
  • Improved decision-making through accurate data and reporting

Most importantly, the organization gained confidence in the information used to run the business.

Turning ERP Into a Competitive Advantage

ERP systems create value when they are supported by accurate data, disciplined processes, and strong organizational adoption. Rather than replacing technology, many organizations can unlock significant value by improving how they use the systems they already have.

By partnering with LMA Consulting Group, this company transformed its ERP environment into a platform for operational excellence, financial visibility, and informed decision-making. The result was improved inventory accuracy, stronger operational performance, better profitability insights, and a foundation for continued growth.

 

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Published: August 10, 2018 | Updated: May 2, 2026