We should ask ourselves specific questions. We may find that our inventory contains specific errors. This could happen if we cope with the emergency rush to immediately fill stock. Records should be implemented with scepticism instead of trust. In this case, we should make sure the accuracy of the inventory record could be improved. Many people could find that their inventory record is less than appropriate and it is necessary to find critical problems. We should define things that could improve the accuracy of our inventory records. In general, there should be enough improvements that we could incorporate in our organization.
There are some discrepancies that we need to consider and we should be able to maintain the proper balance, whenever possible. We should be able to determine the book value of our inventory and taxation issues could also affect the values of our inventory. Any value variation may cause underpayment or overpayment of taxes. With overpayment, we could be affected with profit reduction and underpayment may cause penalties. With poor inventory skills, we could suffer from higher expenditures and this will end up devouring a significant part of our capital share. We should also consider operational reasons that could ruin the accuracy of our inventory,
In this case, stockouts may results in delivery delays and production stalling. It is also important to look for misplaced or missing inventory items. Unfortunately, this could cause time delays and it may consume extra labor. Inventory shortages may also affect the overall manufacturing efficacy. However, by implementing specific systems carefully, such as MRP and ERP, we should be able to achieve very high inventory accuracy. We should know about possible reasons for inaccuracy and there are many things that will go wrong. As an example, we could enter data incorrectly and improper processing transactions could happen when we move stocks.
There are unwanted and unexpected variations between actual and book values. This could be caused by volume and process problems. It is important to consider the probability of error and it is necessary to eradicate things related to errors. Many processes should be simplified and they should be well documented. We should be aware of the volume-related inaccuracies and there could inherent error rates and probability of errors. This could translate to more errors, as we are dealing with additional transactions. In this case, we should look for methods that can improve accuracy. As an example, error rate can be reduced to 1 per 10,000 transactions or lower.
We should be aware of the physical inventory and all items could undergo physical counts. However, in order to avoid ceasing normal operations, it is a good idea to allocate dedicated employees that can ensure the accuracy of our inventory records. Without dedicated employees, any method could prone to counting errors and things can be rather expensive. We should consider implementing process improvements, such as Pareto analysis and other similar techniques.