What Physical Inventory Says About Quality
Manufacturing and distribution organizations rely on inventory to satisfy their customers and customer satisfaction is a key measurement for quality.
Risk is also a key concern for Quality and inventory management is all about managing risk. Too much inventory ties up too much cash and too little inventory prevents meeting customer needs.
Executing well the physical inventory process and completing the task through the 4 phase of Physical Inventory…
Prepare — Count — Reconcile — Fix
…will yield a tremendous amount of data that can be used for many meaningful improvement management projects in the organization.
Meaningful Physical Inventory Results
Without real time inventory transactions to mirror the events of your processes, your physical inventory is nothing more than a snapshot in time. Real-time tracking with integrated solutions mean you can identify what your expected counts should be and you can monitor how effective your business process controls really are by examining the returned accuracy of the counts.
The “Two For” Benefit
Integrated software solutions provide a “two for the price of one” benefit. This is because every transaction that affects an inventory item also generates the correct accounting transaction, so your decision-making data is always real-time and accurate. Month-end processes close more quickly.
Investigating the reconciliation tasks from physical inventory will highlight issues in your processes that need to be fixed. Comparing year over year counts for high value and high count items will help identify which products are moving most rapidly. This is also the opportunity to consider if safety stocks are hiding vendor issues.