Inventory accuracy increases the number of supplier orders delivered on time, reduces dock-to-stock cycle time, and increases the number of sales orders delivered on time.
Benefits of Inventory Accuracy
There are many reasons to strive for inventory accuracy, including that it provides the flexibility to handle ever-changing customer demands, reduces costs, and increases employee productivity. Inventory accuracy also gives managers increased visibility into their supply chains. Here are a few other reasons to achieve inventory accuracy:
Improve Customer Service - A high level of inventory accuracy allows companies to fulfill orders quickly and efficiently, leading to happier, more satisfied customers. It also gives companies the ability to handle customer requests better and meet expectations. And, in the scenario that something goes wrong with an order, companies with an accurate inventory can proactively communicate with their customers.
Strategic Planning - Inventory accuracy helps an organization with strategic planning since it offers complete visibility of an entire supply chain. Inventory accuracy helps managers determine if they can handle current and future customer orders, identify sales trends, predict future trends, and know when to order additional items. With inventory accuracy, companies stay ahead of the demand curve and have the right amount of products on hand.
Increase cash flow - Cash flow is critical to a successful business, so there is no reason to tie up valuable cash up in excess inventory that is gathering dust. Companies with a high level of inventory accuracy avoid overstocking products, and only purchase products that they need, freeing up valuable cash to spend on other areas of the company.
Maintain accurate stock levels - Inventory accuracy allows companies to maintain accurate stock levels, simplify reordering processes, minimize delivery delays, reduce safety excess inventory, and make more informed purchasing decisions to reduce delivery delays.
Minimize theft and losses - Companies with a high level of inventory accuracy have a better handle on inventory levels, which builds employee accountability and responsibility and discourages inventory theft. Inventory accuracy also gives clues on the cause of inventory loss, including theft, damage, or another reason, so companies can take steps to fix the situation.
Manage parts and pieces - Companies need to ensure that they have adequate parts in stock necessary to service customers or produce goods. Accurate inventory is crucial since companies will be able to get an accurate view into which parts are missing or have low quantities.
Increase employee productivity - Accurate inventory allows employees to concentrate on other things to improve the company.
Improve accounting reporting accuracy - Accurate inventory will improve the accuracy of accounting reporting.
Share real-time information - Inventory accuracy allows a company to communicate updated, accurate product information to sales teams, suppliers, and customers.
The Costs of Inventory Inaccuracy
Inaccurate inventory comes in many forms, including inaccurate quantities, incorrect locations, erroneous pricing, and wrong identification. The cost of inventory inaccuracy is high since it decreases a business's ability to fill customer orders quickly, take out loans for materials, maintain a positive chase flow, or generate a profit all leading to lost time and money. In the dreaded scenario, when an inventory system's counts fail to match its physical counts, it can cause chaos, leading to lower customer service, frustrated employees, delivery problems, accounting issues, and even financial loss.
Why Business Intelligence is Important
One of the main advantages of investing in a BI platform is the fact that it will boost your ability to analyze your current consumer buying trends. Once you understand what your consumers are buying, you can use this information to develop packages and systems that match the current consumption trends and, consequently, improve your profitability.
Improving visibility through your organization creates tools to easily identify areas for improvement. Whether it’s by knowing who your best performing employees are and how to get them to improve on each step, or identifying how stock becomes missing and determining where it’s going before the final invoice has been issued and that revenue is lost.