What is Inventory Accuracy?

Inventory accuracy is the extent to which the information recorded in your inventory database matches the actual inventory on hand. This is an essential concept, since highly accurate inventory records are needed to produce in accordance with your production plan and to determine when to order goods. It also impacts whether you can fulfill customer orders in a timely manner.

How to Improve Your Inventory Accuracy

A high level of inventory accuracy calls for a great deal of effort to develop and maintain a perpetual inventory system. The necessary steps are noted below. Clearly, there are many steps in this process, so do not expect an immediate improvement in accuracy. It normally takes multiple months of ongoing labor to achieve a high level of inventory record accuracy. The sequence of steps to improve inventory accuracy is as follows:

Install software. Select and install inventory tracking software. The only realistic way to maintain accurate inventory records in a timely manner is to use a computer-based software package. Maintaining this information manually is not feasible for an inventory of any size.
Revise storage racks. Revise the rack layout to allow for optimal storage.
Create location codes. Create rack location codes, so that every location has a unique identifying number.
Restrict access. Fence in and lock the warehouse, so there can be no unauthorized removal or movement of inventory.
Consolidate parts. Consolidate parts, so that the same items are kept in one place.
Assign part numbers. Assign unique part numbers to the parts.
Set units of measure. Establish units of measure for the parts.
Pack inventory items. Pack the parts into sealed and labeled containers.
Conduct a count. Count the inventory.
Log the count data. Enter the resulting inventory data into the inventory tracking software.
Train the staff. Train the warehouse staff in inventory procedures.
Conduct ongoing counts. Initiate cycle counting on a daily basis.
Measure accuracy. Measure inventory accuracy weekly, post the results in the warehouse, and reward the staff for accuracy improvements.