Wednesday, August 6, 2008

Inventory accuracy

Maintaining inventory accuracy must be an integral part of the attitude of the organization. Like quality, customer service, and plant safety, accuracy must be promoted throughout the organization as everyone's responsibility. This attitude must start at the top levels. Yeah I know all you managers and execs out there want an accurate inventory but are you doing your part through your decisions and business practices to promote it. Processes are often shortcut in the name of "Customer Service" (this also applies to processes for Quality, Inventory Management, and Production Plans) that reduce or eliminate the effectiveness of the plan, which in the long run will reduce your ability to service your customers. Remember that these plans are designed to meet the needs of the customer, don't compromise them.
Procedure Documentation is the part where you use the previously defined processes to document the procedures the employees will follow to maintain inventory integrity. The procedures documented here should not be limited to inventory issues.You will have to count it to determine the accuracy, as well as determining areas needing additional evaluation. Year-end physical inventories are tools used by accountants and do very little for inventory accuracy. You should count your inventory on a continuous basis (cycle counting) to maintain high levels of accuracy. This is one of the best ways of identifying problem areas on a timely basis and providing an environment conducive to continuous improvement.

(c) Dave Piasecki

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