How many times have we heard this? Or, perhaps your inventory resource will keep looking until he/she finds it; however, it took them 3 times as long to pick product to ship or materials to supply the line? Perhaps the line shuts down…..not good! Unfortunately, in my experience with manufacturing and distribution companies over the last 25+ years, it happens every day. Logistics managers are constantly struggling to keep their inventory intact. The problem is that inventory accuracy is dependent on several factors spread across multiple functions:
- Transaction timing – it is not good enough to eventually (perhaps the end of the shift) “ship an order to the customer, enter production, transfer inventory, receive an RMA, address an item in quarantine and so on. Conceptually it is quite simple – the system transaction coincides in timing with the physical transaction. In reality, life gets in the way.
- Transaction accuracy – even the best of typists make mistakes. Is the work being checked? I can’t tell you how many times a transfer of 100 might end up as 1000. Certainly could cause an issue!
- Transaction understanding – even if you are accurate with typing, you might not understand the correct sequence of steps or the method to get the system to accept the transaction properly. This can lead to much confusion. The worst case scenario is that the system can get screwed up and require IT to fix it. The typical case is that the transaction accuracy is affected. Here’s a key question – do you know how to fix incorrect transactions? Think about how many of your resources know how to do this properly.
- Coordination of resources – it is rare that one person owns every transaction performed within an area. Actually that creates a new set of problems as any time the person is out, everything goes awry. Typically, there are multiple people shipping, entering production, transferring items, etc. Transactions can get duplicated or forgotten with the best of intentions without clear-cut coordination.
- Scrap/other adjustments – these create havoc for most of my clients more than anything else. Pay special attention to these.
It’s no wonder every organization struggles with transaction disciplines – and ultimately inventory accuracy. On the other hand, we’ve worked with dozens of clients on inventory accuracy and brought 50% – 60% (and unknown figures for untracked inventory accuracy levels) consistently to the high 90%’s. Suddenly, customer service improves, productivity increases, and profit even follows – nice reasons to think about the importance of inventory accuracy. If you’d like to talk further about your inventory accuracy struggles, please contact us.