25 September 2021 Understand the reasons that could undermine the good levels of accuracy in your warehouse. Probably, during your professional experience, you have already encountered some type of inventory problem, whether it is related to excess items or their shortage. In these cases, you have quickly seen the consequences, with losses, logistical difficulties, and even lost sales. This is the reality for many companies that have not yet considered that taking care of inventory management means taking care of money, after all, inventory directly influences other processes, such as production, purchasing, and sales. It is important to keep in mind that stock is important for companies to be able to serve their customers well. Can you imagine losing power by urgently seeking suppliers or rushing the production flow to fulfill any order? If such situations occur, it is a sign that things are not going well. Certainly, the company would have many productivity and organization problems and would hardly be able to maintain service quality. Stop looking for the guilty and understand why As obvious as it may seem that products should not be scarce or excessive, many people still get lost in these problems, not because they do not understand them, but because they fail in inventory management. And when mistakes are made, the tendency is always to find the culprits, instead of analyzing the causes. It is understanding the reasons that will enable the logistics manager to correct bottlenecks and improve their level of accuracy. In general, the causes of inventory problems are linked to the ten factors listed below. Understanding each of them is crucial to defining the adjustments that need to be made and choosing the right technologies that can help you improve processes. Information prevents failures before they occur Before talking directly about the causes, it is important to remember that it is necessary to have control of inventory information in real-time, so as to have the opportunity to make changes before errors occur. Therefore, it is always necessary to keep track of two indices: Divergent items = how much difference there was between physical inventory and inventory in the system Accuracy percentage = physical inventory in value or parts divided by the total inventory in the computer system x 100 These two values show what is wrong and how the accuracy rate of your inventory is. Ideally, the latter should be as close as possible to 100%. Main reasons for inventory problems Discover the ten possible causes of low inventory accuracy levels: 1. Information errors Since we have just discussed the importance of tracking all indicators, we place information divergence as the first cause of an inventory problem that needs to be evaluated. Some questions can be asked: – Is there verification of the quantity of products that is on the invoice and the quantity that enters your warehouse? – Are all product details (such as batch, expiration date, weight, quantity per box) recorded? – Do you have a system that allows you to record the quantity of products that enter, the address where they are stored, and the quantity that exits with each order? – Are the processed information at each input or output of a product available to be verified at any time? – What information do you have for replenishment? Do they match the exact reality of your inventory? If any information about the product, its availability in inventory, or the quantity shipped is incorrect, errors in the accuracy of your inventory will be inevitable. You must correctly record the information and have access to it so you can track all movements in your inventory. 2. Lack of periodic inventories Many companies choose to conduct only one inventory per year, which could be a big problem. By conducting periodic inventories, it is much easier to control the correct quantity of stocked items and, most importantly: it is possible to identify small divergences, preventing them from growing and causing significant damage. There are cases of companies that have lost millions because they did not perform cyclical inventories, and when they discovered the inventory problem, it was too late. On the other hand, the transition from general to cyclical inventory has already brought good news to warehouses that had marked items as lost and ended up finding them during a new count, that is, a loss converted into gain. Hence the importance of conducting inventory periodically. 3. Security errors Do you know who enters and exits your warehouse? And the roles each one is playing at that precise moment? Security is crucial to avoid losses due to theft or damage to products. In this case, technology helps a lot because, through security cameras and a system that monitors the work of each employee, it is possible to have greater control of what happens in your warehouse. 4. Poor storage Do you know the particularities of each product well? Do you know what the ideal storage temperatures are, if the item tolerates humidity, sunlight, among other details? This information is essential so that there are no losses due to poor storage. And you must have strict control over which addresses are most suitable for each type of product. Additionally, it is crucial to monitor expiration dates and adhere to FIFO or FEFO parameters. These are strategies that allow your products to always have the ideal quality for shipment. In case of damage or expiration, your inventory will not be correct. 5. Not recording all movements You must control what enters and exits your warehouse. Any error in processing a shipment, for example, can directly affect the quantity reported in your inventory, which also involves the Purchasing area. Therefore, record all movements of each product and always keep this information at hand to make decisions. 6. Register products without detailing their description It is important to emphasize that all information must be well recorded, as the lack of one of them can mean divergences in your inventory. Imagine a clothing warehouse that has not recorded the colors of some batches of t-shirts that have arrived. When, for example, a t-shirt of a specific color is ordered, it is not known if it is available for sale or not. This can be fatal in inventory control and, consequently, in good customer service. Be as detailed as possible in product registration. 7. Not verifying at entry It is very important to rely on a rigorous entry verification, checking that the quantity sent by suppliers is the same as that on the invoice or Waybill. Also remember to check your quality so that no damaged goods enter your inventory. 8. Not having control of information coming from sales You need to have an idea of the sales margin to schedule your inventory and request replenishment when necessary. Therefore, always try to be in tune with the sales team, and even more: the information from each sector must be interconnected. 9. Lack of a system Technology exists to facilitate processes, organize them, and, above all, ensure their accuracy. Use it to your advantage. WMS (Warehouse Management System) can be a powerful ally because it integrates with ERP systems, connecting all other areas of your company, automates various processes, ensuring their effectiveness, and relies on real-time accessible indicators, allowing greater control of all warehouse movements. With WMS, inventory accuracy can reach 99%. 10. Lack of control: problem in management This can happen not only due to inefficiency or unpreparedness but also due to improper use of your skills. If a manager spends a lot of time correcting problems that could be avoided, their management is totally compromised. So, here’s a tip: look for ways to improve processes and the management work will be as skilled as possible! Now that you know the top 10 causes of major inventory problems, understand how the lack of intralogistic control can affect your business! 10 Most Common Causes of Inventory Discrepancy Deagor WMS per ecommerce può aiutarti!