10 reasons for inventory errors

Before any improvement plan begins, you must have a clear understanding of what will cause errors to your inventory and the effect they have on your business.  Only then can you take the necessary steps to correct these errors.
 

• Insufficient training of Staff:
• If your staff does not have a clear understanding of their job, how can they be expected to perform effectively? Training is not a quick solution, but it will have the greatest ROI.

 

• Uncontrolled (open) stockroom:
• If everyone has access to your inventory, then why bother controlling it?   Restrict access to your inventory to ONLY KEY individuals.  This can be accomplished with an inexpensive pad lock and key or as high tech as electronic key cards.

 

•  Receiving/Shipping Errors:
• If an error occurs at the back door, then it will be wrong throughout your facility.  Ensure your staff inspects all inbound/outbound freight for accuracy of the product(s).  The sooner an error is found the easier it will be to correct. 

 

• Storage issues:
• Are you stepping over or around boxes or stocking items to the ceiling?  Not only is this disorganized but also a safety hazard for you, your staff and in some instances, your customers.  Simple “house-keeping” measures should be taken to resolve.  Other areas to review include min/max levels and obsolescence.

 

• Obsolescence:
• As mentioned above, obsolete inventory can cause inventory errors.  Not necessarily directly but indirectly.  This excess and dated product is occupying valuable space that can otherwise be used for inventory that is frequently being utilized.   

 

• Delayed or lost paperwork:
• Are the daily receipts and/or dispersements processed in a timely manner?  Is paperwork frequently “lost”?  These issues can cause errors in ordering product.  In some situations, product will be over ordered and other situations product is never reordered. 

 

• Inaccurate identification of inventory:  
• When product is incorrectly identified you are ordering and receiving product you do not need.  The opposite effect is the correct item is never ordered.     

 

• Complex or lack of part numbering systems:
• A complicated system can be worse than actually having no systematic of controlling your inventory.  When an item can’t be located, the assumption is that it was consumed and therefore reordered.  A simple, easy to maintain numbering system for your inventory will enable anyone to locate items after they have been stored.

 

• Bad units of measure:
• There are numerous units of measure.  Incorrect U/M’s will lead to sever issues of overstocking.  For example: Should the order be for 50 pieces or 50 boxes?  Order too little and you have an issue of insufficient stock.  Order too much and you are well overstocked and now dealing with storage issues.

 

• Theft:
• There is no particular reason why this issue was mentioned last.    It could have easily been placed 1^st.  However, most business never experience theft but for the businesses that do, it can account for a major hit against the bottom line. 

 

By implementing and maintaining an Inventory Management program, you will be proactive in identifying these and other issues.  Once identified, you can then develop long term solutions that are beneficial to you, your staff and more importantly, your CUSTOMER.

 

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With more than 20 years of Inventory Management experience, my mission is to help companies find the “LOST” cash in their warehouse.  I accomplish this by developing customized solutions that will make businesses more organized, productive and therefore more profitable.

 

For more information on my services, please visit my website, www.jitsolutionsgroup.com or visit my LinkedIn profile: www.linkedin.com/in/inventoryjoe/.