Why does warehouse inventory data accuracy matter – and what can you do about it?

Follow these steps to efficient warehouse stock management and competitive advantage.

Picture this. Your team has worked for a year on setting up your new warehouse. It has the perfect racking layout for minimum travel time and offers great stock density. Your trucks are the strongest and most energy-efficient workhorses you can buy, and your staff have been trained to be the best. Everything is in place to maintain the necessary balance between outgoing inventory and incoming inventory, so you always know what’s in stock. But is it? Gian Schiava assesses the necessity of data accuracy.

(Executive Summary)

First question: is it really all that bad to have inaccurate stock management? Well, it may be worse than you think. If your inventory system says an item is in stock but it isn’t, your customers are the first to notice. After placing the order, nobody wants to hear that there’s a delay, or even receive a ‘sold out’ message. This doesn’t just cost you the sale: in the long run, it damages your company’s reputation. Disappointed customers may react with complaints or negative reviews, but in many cases they simply never return.

Inventory mistakes also cost money. Missing items have to be reordered (leading to overstocking or out-of-date items). Besides money, that takes time. In fact, it’s a very inefficient use of time, when you consider how long staff spend rechecking inventory, correcting orders, or communicating with customers about their missing orders.

Simple solutions to fight inaccuracies

Until recently, most warehouses could rely on a series of simple tools to keep inaccuracies to a minimum. Obviously, this always starts with a tidy and properly organised warehouse, but the following additional countermeasures have often proved to be effective.

First, you must continuously train your staff, whilst designing clear procedures. Staff need to know how to count stock, register updates and flag discrepancies. Group training sessions are a big help, and hands-on walkthroughs are often even better (remember Kaizen or Kanban methods?). Make sure standard operating procedures are well documented and easy to follow. New people should receive proper introductory training.

Next, periodic counts have always been popular. They involve regular checking of physical inventory to compare it against the recorded figures. These counts have tended to be organised annually and were often planned for just before the Christmas holidays, so we could start the new year with a clean sheet. These days, experts advise us to break them into smaller, regular batches. This is less disruptive to daily operations and helps catch discrepancies early. Today, modern tools such as drones are increasingly used, which reduces time and effort for this activity. That brings us to the next chapter…

Modern technology makes all the difference

Whilst the above-mentioned methods have been proven to be useful, our world has been changing as well. The numbers of orders have increased, mainly due to e-commerce. This, together with later cut-off times, difficulty in attracting and retaining staff, and increased pressure to cut costs, has led to the adoption of new tools to keep data accurate and enhance real-time visibility.

It’s often connected to the ERP (enterprise resource planning) system to reconcile discrepancies daily between the two systems, ensuring inventory alignment at the end of the day. At the same time, it tells you all you need to know about the inbound and outbound flows and the stock in the warehouse.

In your daily operation, the WMS is typically integrated with tools on the work floor, like RFID, scanners or other mobile devices. Your staff have less and less to think about; a simple ‘bleep’ often confirms that the proper registration is done.

Drones and robots are increasingly deployed as well. Dexory, for example, offers a combination of autonomous scanning robots and AI-powered data intelligence analytics to provide better insight into the inventory, amongst other advantages. The sight of these robots scanning over 10,000 locations per hour is impressive, but the system also relies on proper data input and impeccable labelling. In any case, 99.9% inventory accuracy is promised.

Digital twinning is a technology used to create a virtual replica of a physical inventory system, with the aim of improving real-time visibility and accuracy. Input comes from various sources, including IoT sensors, ERP systems and WMS platforms. This technology even goes a step further, as it’s mostly used as a predictive management tool. Artificial intelligence is increasingly used to improve inventory control, but its focus lies more in demand forecasting and optimising processes rather than measuring current stock.

It’s clear that we’ll see IT tools becoming more and more advanced in the coming years, as logistics operations must continue to deliver optimum efficiency.

*Thanks to Dexion for the main image and other warehouse images.