What Role Does Inventory Accuracy Play in the Evolving Warehouse?

Published : July 30, 2015


Every decision you make for your warehouse and your company as a whole, in some way hinges on inventory accuracy. It's vital to hone it for a variety of reasons, such as knowing how many products to order in anticipation, how much effort is needed to stock, ship or pack the largest potential order in your system, or how to determine maximum thresholds of waste. Thankfully, precision today is infinitely easier than in decades past, thanks in no small part to the advanced technology and training available to supply chain professionals.

Customer-Facing Facets Depend on It

Darrel Williams asserts in Digital Supply Chain's June 2015 issue that the warehouse floor - not in stores or on sites - is the battleground in the fight for customer interest and loyalty. It's rare to sell a product that isn't available, at least in some permutation, from another source - which means that any differentiation advantage rests entirely with your picking, processing, packing and customer service. Without solid data to build on, valuable time is lost trying to track down misrepresented or missing items, rippling into time lost on picking accurate orders, and in-office effort and resource cost in apologies or customer experience repair. Even worse, that late shipment can seep into negative online reviews or reputation perceptions with a creeping, indefinable cost all their own. 

Unavoidable Costs Can Be Diminished

While having plenty of inventory on hand seems like a good idea for those "rush periods" of sales, do you know what the true cost of keeping an excess of inventory around? Without inventory accuracy, it's difficult or impossible to determine how much liability you're exposing yourself to, cautions David Riffel of Digital Supply Chain. Too much stock with too little turnover will put you on the fast track for devaluation, theft, misplacement and even higher insurance premiums and taxes. If you buy too many bins or invest in too much square footage in your storage space, or put too many warehouse workers on the payroll, you're throwing good money after bad in the quest to legitimize the stock you didn't truly need on hand in the first place. 

Inventory Inaccuracy Can Topple a Business

If there was ever a real-life lesson in the importance of receiving and allocation accuracy, it's the sad tale of Target Canada. The wildly popular US retailer recently folded it's 100+ stores in Canada in early 2015, due in no small part to receiving UPC mismatches, as foretold by Supply Chain Quarterly in a dire article only a year prior. With damaged accuracy, the items weren't being efficiently distributed - and in some cases, not distributed at all, leading to piled-up warehouses, sluggish distribution flow, and unhappy customers unable to purchase their products at the store level. Considering the expansion into Canada happened only four years prior, it was a tragedy on fast forward, hastened along by a lack of accuracy in inventory handling.

Positive Benefits Throughout the Supply Chain

If you think accuracy benefits begin and end at the warehouse level forward, think again. When you balance your inventory on hand with a full, accurate accounting, you avoid ordering product you don't need and keep those financial resources open to application in other areas. You are better able to add agility to your existing supply chain strategy with trustworthy data, or try out a different strategy, such as JIT, without risking more than you're comfortable with. Good data makes good decisions, and if your partners know they can depend on regular orders from you, there might even be room for discount negotiation.

Don't let your lack of inventory accuracy cost you as much in opportunity as it does in effort, time and finances - start keeping track of your inventory today and enjoy better fulfillment and easier technology transitions tomorrow. 

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Topics: Supply Chain Logistics

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