It has always been a problem on why inventory always has a variance, be it a positive variance or a negative variance. No matter how often you do your cycle count, your inventory system ends up messy after some time. This creates a big problem in your whole MRP system and it screws up your ordering patterns and end up having excess or shortage materials, which later results to customers complaining because you were not able to deliver their requirement on time. Having a bad inventory status can be too painful as it becomes cost to your company as well as more unsatisfied customers. So why is inventory always off?
NO CONTROL.. if there is no CONTROL in the way you manage your inventory, it will never be corrected. Bad inventory are caused by a lot of factors, let me share with you some key issues that affects inventory accuracy.
1. WMS vs. Business Process alignment – If your information flow is not aligned with material flow, it will create a gap in your system transactions. Your processes must have controls in addressing discrepancies found prior to or during the transaction of your inventory in the system. If discrepancies are not resolved immediately, it will pile up and for all you know it you lose control in managing your inventory in the system.
2. Process Discipline breakdown - if your staff is not following the procedure, then you are in trouble. A failure in transacting an inventory be it input or output, will mess up your inventory system. It is always important to analyze problems that occur in the process and come up with an effective action to prevent it from recurring. Training and communication with members of the team is key in order to understand the impact of any process deviation.
3. Fixed Location – sometimes people think that a material is missing, but in most cases it is found somewhere else.. This happens because materials have no fixed location in the warehouse. Key is 5S, “a place for everything, and everything in its place.." One cause of wrong count is that materials are not accounted properly due to multiple locations. This must be addressed. How can you believe that a material is missing? It can't be!
If inventory is always off, there is a need to go back to the drawing board, streamline your process, and clean up your inventory system. Establish a strong inventory control system. Cycle counting is not mere counting, you must establish a process on how to perform and manage any variances.
NO CONTROL.. if there is no CONTROL in the way you manage your inventory, it will never be corrected. Bad inventory are caused by a lot of factors, let me share with you some key issues that affects inventory accuracy.
1. WMS vs. Business Process alignment – If your information flow is not aligned with material flow, it will create a gap in your system transactions. Your processes must have controls in addressing discrepancies found prior to or during the transaction of your inventory in the system. If discrepancies are not resolved immediately, it will pile up and for all you know it you lose control in managing your inventory in the system.
2. Process Discipline breakdown - if your staff is not following the procedure, then you are in trouble. A failure in transacting an inventory be it input or output, will mess up your inventory system. It is always important to analyze problems that occur in the process and come up with an effective action to prevent it from recurring. Training and communication with members of the team is key in order to understand the impact of any process deviation.
3. Fixed Location – sometimes people think that a material is missing, but in most cases it is found somewhere else.. This happens because materials have no fixed location in the warehouse. Key is 5S, “a place for everything, and everything in its place.." One cause of wrong count is that materials are not accounted properly due to multiple locations. This must be addressed. How can you believe that a material is missing? It can't be!
If inventory is always off, there is a need to go back to the drawing board, streamline your process, and clean up your inventory system. Establish a strong inventory control system. Cycle counting is not mere counting, you must establish a process on how to perform and manage any variances.
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