Inventory accuracy: A pretty simple, straightforward concept, right?

Many people might agree with that. But the statement’s not necessarily true if you really want to measure your inventory efficiency.

The difference is in the way you measure inventory accuracy.

The standard benchmark is Financial Accuracy. Essentially, that is a measure of how well what you have on the shelves matches up with what you’re supposed to have on your shelves.

To simplify: If you’re supposed to have 100 widgets and you count 99 widgets, you have to account for that missing widget.

That’s why Financial Accuracy is described as a net dollar difference of adjustments after inventory.

On the other hand, there’s Operational Accuracy.

That’s a measure of whether you’re able to meet your Customer Service and Distribution goals and promises.

When an order is submitted based on what is shown as your inventory availability, you need to be able to deliver the goods. You’ve made a commitment to a customer, and you better follow through.

If you end up back-ordering that item, you’ve compromised your operational accuracy — and possibly cost your company a customer.

Part of inventory availability is being able to find the right item, in the proper quantity, where it’s supposed to be.

The best way to distinguish between Financial Accuracy and Operational Accuracy is still counting what you have.

But Operational Accuracy is based on your first count. There’s no tracking down missing items, reconciling deficiencies, trying to balance what’s not here with what’s over there.

If the count doesn’t match your records, that’s a big zero in Operational Accuracy.

When you’re pulling orders for customers, you don’t have time to run around and rectify shortfalls or miscounted items.

It has to be right, the first time — if you’re going to achieve true Operational Accuracy.

Tags: accuracy. operational accuracy, benchmark, count, financial accuracy, inventory