The Problem: Inaccurate Perpetual Inventory Perpetuates Costly Errors
How accurate is your perpetual inventory? Is that acceptable? It is likely less acceptable than you think. This filtration manufacturer understood the excess costs created by errant assembly, order processing and purchasing. The engagement started as a warehouse system package selection.
They believed the inaccuracies were system errors. As soon as we begin to look under the covers of inventory inaccuracies at any company it resembles the opening of Pandora's box. There is an ancient saying; "purification leads to progress".
The Approach: Implement Best Practices: Improved Inventory Procedures, Physical Inventory and Cycle Counts
Inventory adjustments as well as receiving, put-away and picking problems are, for the most part, symptoms to deeper inventory control issues. Companies often blame inventory applications for inaccuracies. In fact, when we looked at this manufacturer, the problems were most often caused by work-flow processes on the assembly line and in the warehouse.
After an assessment of inventory processes throughout assembly and the warehouse we found little wrong with the system. It was in need of a few enhancements but didn't require replacement. We enhanced several operational processes resulting in significant reductions in trouble tickets in picking, receiving and put-away.
Significant room for growth was created simply by improving processes which in turn reduced costs from the frequent problems being created by inaccurate inventory. Reduced labor costs allowed the business to take on more orders without increased labor. Thus boosting profits.
Inventory purification leads to progress.