Inventory inaccuracy is a critical issue for many companies. It contributes to lost sales, lost profits, lost production, excess inventory, increased costs due to expediting orders, reduced customer satisfaction, and In accurate material planning. With reduced profit margins and companies operating in Just-in-Time (JIT) environments, this problem gets compounded.
Companies take different approaches to solving inventory invisibility with varying degrees of success. Typical approaches tend to be instituting rigorous counting processes in the form of cycle counts and a physical inventory once a year. These are good approaches, but do not address the entire problem. Companies must subscribe to a holistic approach and be persistent to get a handle on inventory issues. An inventory improvement plan allowing for incremental improvements is necessary.