Inventory Managment Pitfalls

By Joshua Long

It never fails, if I ask a leader in an organization what their top pain points are, inventory accuracy is always in the top 5. Inventory accuracy is defined as the consistency with the physical part’s locations & quantities, reconciled against what our inventory management systems (like an ERP system) say.

Lack of inventory accuracy has large and far-reaching impacts on an organization. Including their ability to borrow cash and deliver to their customers.

Building processes and discipline with inventory management can go a long way to building accuracy and trust in our inventory and results.

Three keys to inventory management, which I feel are often overlooked or miss prioritized are:

If you move it, scan it. Effective and modern ERP systems should have robust mobile functionality, allowing material handlers and managers the ability to scan inventory identification tags, and the location where the inventory is being moved too. If our ERP system requires us to walk back to a PC terminal or manually key in data, like part numbers, the room for error can double and even triple, compared to effective and efficient mobile inventory transactions, performed at the point of use/move. I often see organizations refuse to invest in reliable mobile hardware, completely ignoring the long term cost and waste produced as a result.

Verify Training Effectiveness. So often when new software is implemented, changes to current processes are made, or even new employees are hired, minimal training is provided. No matter how in-depth the training and related documents are, it is imperative that leaders verify by auditing and monitoring the actual transactions on the production floor and warehouses, to ensure that the operators fully grasped their training and are effectively completing inventory transactions.

Again, I hear it all the time, operators are trained to do something, normally once and are released to perform those functions. When they struggle with it or even fail at it, some supervisors just shrug their shoulders and say something like, “I told them how to do it”. Let’s take a lesson from President Regan in this regard, Trust but Verify! We should train, verify, then trust!

Everything has a place and everything must be in its place. Inventory including raw material, MRO items, and finished goods are cash! As such and like cash, parts should be clearly identifiable and located. No matter if in our warehouses or at our machines, locations should be clearly marked, clean, and accessible. Inventory should be properly labeled and treated like the value it is worth. Anyone who moves or even just touches those parts should clearly understand the value in dollar terms of those parts. I have been in many organizations where parts are worth hundreds to thousands of dollars, yet employees will toss them and even bury them around, with no regard to the dollar value of the parts.

My experience tells me that once the connection is made between parts and dollars, employees begin to really appreciate what they are truly holding in their hands.

There are many many other variables to control inventory within manufacturing environments. The above few examples are overlooked or downplayed pitfalls when troubleshooting inventory accuracy in a lot of operations.

My recommendation is to always map our processes to idenditfy where mistakes can be made. Do not be afraid to reach outside our walls to industry consultants and coaches, who can help you determine best practices for your industry and operations.

Just My Two Cents!

(Josh is an industry blogger & career coach and also a Manufacturing & ERP Consultant with Revolution Group, you can learn more about Revolution Group at www.revolutiongroup.com)

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