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KNOWLEDGE LIBRARY

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27Jun

Warehouse Occupancy Percentage

Optimal storage utilization helps enforce healthy inventory management. In our early work with Honda their...

02Jun

Efficient Procurement Inventory

Efficient procurement inventory (EPI) is often required to realize steep discounts when a special opportunity...

02Jun

Inventory Carrying Rate

The inventory carrying rate (ICR) is the percent of the unit inventory value used to...

26Jun

Inventory Activity Profiling & Data Mining

Suppose you were sick and went to the doctor for a diagnosis and prescription.  When...

27Jun

Inventory Performance Measures

Inventory performance measures include financial, productivity , quality, and response time indicators for evaluating the efficiency and...

Inventory Accuracy

First of all, what does inventory accuracy have to do with inventory performance? Suppose the inventory accuracy in the warehouse is lousy. What difference would that make? First, inventory inaccuracies can lead to problems with warehouse picking productivity when we send an order picker to a location with the wrong item or insufficient quantity in the location. Second, inventory inaccuracies can lead to fill rateproblems, where products are not available to the customer. We may also buy extra product to cover potential errors. If you say, ”r;Man I’m always off by 20% in the warehouse. Almost always we figure we’re short instead of over. So we may overbuy by 20%.” Inventory inaccuracies play themselves out in lots of different areas in the organization. So it’s important to try to get this right. So, in some cases, we measure the percent of warehouse locations that don’t have discrepancies. This does not mean if there are 1000 locations in the warehouse, and 500 of them have too much, and 500 of them have too little, and that’s perfect accuracy. That’s not what we’re meaning here. This means if there’re 1000 locations in the warehouse, and 100 of them have errors, the accuracy is 90%.

We recommend that the organization maintain metrics for location inventory accuracy (the % of warehouse locations with discrepancies), item inventory accuracy (the % of items with discrepancies), and overall $ value inventory accuracy (the % of dollar value with discrepancies).

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