These are some of the reasons why preventing inaccurate inventory is critical. Your business must increase its bin and pallet sizes, implement a label printing program, and conduct routine inventory audits to maintain inventory accuracy. An organized warehouse’s foundation is made up of standardized bins and pallets. Standard dimensions make it easier to transfer products and improve warehouse operations.
- It is because in a congested area, there are more chances of mistakes that could damage your inventory counts..
- Fortunately, Cogsy’s actionable dashboard makes monitoring your inventory data a breeze.
- Inventory accuracy is crucial to prevent shortages, stock-outs, shrinkage, maintain a positive customer experience, and control inventory quality.
- It’s a single source of truth for your inventory data, giving you an always-updated bird’s-eye view of how much inventory you have, where.
- The other problem is that you may carry too much inventory, thus reducing your profits.
This is how much revenue you earned from total sales over a specific time period. If you have inventory that does not show in the inventory system, you won’t be able to move this inventory or sell it. Comprehensive analytics addresses issues such as faulty or delayed delivery. If there is a problem with a certain week, day, or depot, one can investigate the information to discover the source of the problem causing issues. Cycle time directly affects the productivity of your manufacturing unit….
Makes Inventory Forecasting Easier
This covers businesses that manage inventory using SKUs and barcode scanning. However, such a low (or even lower) percentage is bad for the company. According to the RFID Lab at Auburn University, businesses typically achieve inventory accuracy between 65% and 75%.
Although an investment of this kind might incur higher overhead costs, you may end up saving money, in the long run, thanks to greater inventory accuracy. Of course, a good warehouse is not enough though; Proper warehouse management will help you keep tabs on real-time inventory records. Cycle counting is a way breast cancer of managing inventory where a portion of inventory is counted in specific locations, on certain days, on a recurring schedule. Implementing a cycle count program allows you to forgo annual physical counts so you can count specific items on a more regular basis and therefore ensure your inventory is accurate.
- For example, if you sell bottles that come in boxes of 12, you might use a UOM of one box.
- Because operations software works around the clock, you can feel confident that your inventory data is always accurate.
- From forecasting demand to reducing dead stock, use the formula given above to regularly assess your inventory accuracy rate.
- Instead of manually entering data for new shipments, everything is automatically uploaded to the records.
Employees who know what they’re doing are less likely to make mistakes, which means better accuracy in managing inventory. What if customers purchased the remaining 80 necklaces that month, but when the brand went to fulfill those orders, they found out they were five necklaces short. It offers reports and analytics features that collect and visualize real-time statistics to assess your inventory accuracy.
Lowers Operating Costs
Many eCommerce retailers desire to be as self-sufficient and cost-effective as possible by taking care of the entire process of inventory management and order fulfillment on their own. When inventory is not professionally stored or handled at a warehouse, it might result in inventory accuracy issues. The benchmark for inventory accuracy is 97% or above, but most companies only achieve an average inventory accuracy rate of 65%-75%. Keep in mind that the possibility of inventory data errors increases as your business sells more products. Your operations costs can be greatly reduced with inventory accuracy accounting. The inventory tracking reveals which products are selling well and which are not.
How to improve inventory accuracy
According to Voxware, up to 69% of your customers won’t shop with you again if their delivery is delayed by more than two days. In this article, we’ll explain what inventory accuracy is in-depth, showcase examples of companies improving it, and how you can do it too. Let’s take a closer look below at some specific reasons why it is crucial to have an accurate inventory.
Inventory Accuracy Challenges
Exact inventory counts help your business increase its efficiency and customer satisfaction. Conduct periodic audits and reviews of your inventory management processes. This involves assessing the accuracy of your records, identifying any recurring issues, and implementing corrective measures to address them. It should act as the single source of truth for stock levels, but poor systems—like those without the ability to manage stock across several stores—can cause inventory inaccuracies. They won’t order products that are out of stock and this is pretty helpful for them. Moreover, you’ll have a better idea of which products are selling, so you can push them further and make the whole experience smoother for customers.
Inventory Accuracy 101: How to Calculate, Track, and Improve Accuracy
Overall, keeping accurate inventory records is essential for business performance and customer satisfaction and helps you stay on track with your financing and marketing goals. Because inventory is vital for business functions, your counts should be as accurate as possible. Many companies use programs like an inventory management system to keep records of their stocks, while others prefer basic counting systems. To satisfy customers, retail brands need to maintain accurate and effective levels of inventory.
AI based inventory management for your eCommerce Business
You can ensure inventory accuracy by scanning and validating product barcodes and inventory locations. Warehouses make it easier for your business to store, manage, and control its stock, improving the overall inventory accuracy rate. At GreenGrocer, the inventory management system reports that there are 800 pounds of organic apples in stock (Recorded Inventory). However, a physical count of the stock reveals that there are actually 850 pounds of organic apples on hand (Physical Inventory). Inventory accuracy is essential for both current and future company dealings.