Inventory Accuracy is More Important Than Ever

Inventory accuracy is one of the most important processes for every business that has a stockroom.

If you’re a small to medium sized business selling inventory, then you are sure to have come across some of the pitfalls it entails but getting it right and it could be more important than you think. Inventory accuracy underpins the rest of your business from making sure you can come through on promises to your customers, to getting your accounting right for those all-important audits, whilst inaccurate inventory causes inefficiency across your business.

According to research commissioned by Zebra Technologies*, respondents indicated that their inventory accuracy is 66%, which is a considerable margin from acceptable accuracy rates of 95% – 99%. A Warehouse Management System is the key to achieving 99% inventory accuracy. Locations and quantities are only the beginning of the information that a WMS can provide for inventory accuracy.

Inventory Locations

Locating inventory without WMS can be like looking for a needle in a haystack. The inability to locate the inventory influences the inventory accuracy – if you can’t find it, it’s not available inventory. There could be multiple reasons for the inability to locate the product. For example, the stock might be split between several locations, or there may be only one worker who knows inventory location, and he is absent from work. A WMS takes the guesswork out of finding the inventory and knowing the quantities at every location.

WMS uses business rules that associate the inventory with inventory locations. For every item, there is a preferred location and alternate locations. Using barcode scans, the WMS system “remembers” and tracks inventory and location. Access to the inventory location and quantities on hand is available to anyone with authority to the information.

The WMS system determines and directs the warehouse worker to the putaway and picking locations, then requires a barcode scan confirmation of the product and the location. Not only is this method faster and more efficient, but it is also updated real-time as the actions occur on the warehouse floor. Gone are the days of wasting time and labour searching the warehouse for the correct product to fulfil a customer order.

Inventory Quantities

In the past, a physical inventory count was the best effort to audit inventory on hand. The drawbacks were many: very labour-intensive, usually required a shutdown, and provided only a static count. This method was prone to mistakes, and accuracy was undependable.

Utilising a WMS for automatic cycle counts achieves inventory accuracy consistently in real-time. There is no need to shut down warehouse operations for automatic cycle count. Opportunity, directed, and on-demand cycle counts provide different approaches for performing cycle counts at any time. Opportunity cycle count occurs when a location reaches empty. A quick and easy way to perform a cycle count is by confirming zero product in the physical location with the WMS system. Directed cycle count merges cycle counting into the daily routine. Usually, a cycle count schedule is set up based on inventory movement – counting fast-moving inventory more frequently than slow-moving inventory. However, any number of factors can determine the cycle count schedule. Lastly, on-demand cycle count can occur at any time or any location.

Inventory Information

It is hard to put an exact value on inventory information, but without accurate data, the information is worthless. WMS provides reliable, precise inventory information that extends beyond location and quantity, and affects multiple sectors of an organisation.

Inventory accuracy is critical to prepare for sales demand. Accurate inventory quantities affect manufacturing runs and sales forecasts. Manufacturing depends on warehousing to have adequate storage for the inventory needed to fulfil orders, especially during sales promotions.

Quality control depends on accurate inventory information to ensure customers are receiving the correct product. Wrong products and expired products should never reach the customer. Inventory accuracy includes tracking lot/batch/serial numbers and dates such as expiration, manufacture, receive dates. Accuracy includes following FIFO rules, environmental controls, and customer requests. Shipping accuracy reduces the burden of returns and simplifies the recall process. Tracking accurate inventory information from suppliers/vendors allows for quality and cost comparisons.

Space Management

Managing warehouse space is critical for most companies. Warehouse space is expensive, so it is essential to utilise every square inch. Growing companies look for ways to squeeze the maximum inventory into the current space until the expansion is complete. Clarus WMS systems collects and analyses inventory information such as product dimensions, cubic capacity, environment requirements, controlled substances, velocity, and replenishment to determine the ideal warehouse location and is dependent on inventory accuracy. “You can’t fit a square peg into a round hole.”

Maximising warehouse space requires a flexible system for dynamic slotting and mixing items in locations or storing items in multiple locations. Just-In-Time (JIT) is another process that maximises warehouse space. To accomplish any of these space management techniques, it requires a dependable, proven warehouse management system that ensures inventory accuracy.

In Summary

The importance of inventory accuracy cannot be stressed enough for e-commerce and online retail brands. Accurate inventory tracking allows brands to fulfil orders on time and accurately. And as brands grow out of small warehouse space and into larger facilities, so does the need to efficiently manage inventory.

If you’re not already data obsessed, then you need to be. You’ll often need to be able to access and act upon inventory data within a day, or even a few hours, in order to capitalise on every opportunity that you’re presented with.

Taking your inventory accuracy to the next level is possible with our Cloud Warehouse Management System (WMS), will allow you to step up to multi-location management per product. You will be able to segregate your warehouse into bulk and pick slots. The system will determine what you should replenish and which warehouse bay you should replenish from based on rules defined in the software, to ensure that stock is properly rotated and managed effectively, efficiently and with minimal manual intervention.

About us:

Speak to one of our team to understand how Clarus’ WMS system can cost effectively support best practice warehouse management processes, better customer service and highly efficient working for a range of warehouse operations with pay per month options and no IT infrastructure needed.

Our platform can scale from a one user, small depot system to a 100’s of user distribution centre operation. The ClarusWMS platform will cost effectively scale with your business based on demand.

ClarusWMS is a UK based supplier of warehouse management solutions with a wealth of industry experience in third party logistics, wholesale / retail distribution, online fulfillment and manufacturing warehousing.

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