Keeping Our Inventory Accurate
Keeping track of inventory is critical for any company, but we go the extra mile at GIW. Having a steady supply of pumps and parts — as well as delivering them to our customers on time — is what keeps us running smoothly!
Why accuracy matters
Inventory accuracy isn’t solely the responsibility of the inventory team; there are many benefits to accuracy across the entire business, so everyone should know why it’s so important. Here are just a few reasons to keep a close eye on your inventory:
- Prepare for sales. Knowing your available inventory helps prepare for sales, replenishing low or out of stock items proactively so your customers won’t have to wait for your team to catch up.
- Avoid overstocking items. Carrying too much inventory can be a waste of money if demand is limited or items become obsolete.
- Ensure accurate accounting and profit reporting. Records must be kept up to date and accurate for accounting and profit reporting. Correct tracking keeps stakeholders and customers in the loop, improving the company’s reputation and relationships.
- Identify and resolve issues quickly. Accurate tracking can help you identify potential problems (e.g., handling mistakes, delays, shrinkage) before they become costly issues for your business.
- Build trust and improve efficiency. Employees rely on the accuracy of your inventory management to perform their jobs effectively. By ensuring accuracy, you will build employee trust, which leads to improved team efficiency as well.
- Lower warehouse costs. Accuracy helps companies lower their warehouse costs and increase their efficiency for stock at the end of the year.
Net vs. absolute inventory accuracy
There are two main types of measuring inventory accuracy: net and absolute. Put simply, net accuracy measures whether you have the inventory that your system says you have, while absolute accuracy measures whether you have the correct inventory and that it is in the correct location. The two metrics have different purposes; high net inventory accuracy is a good foundation to have, but high absolute inventory accuracy enables continuous improvement and operational excellence.
What makes this difference so important? Imagine we receive an order for an impeller. According to our inventory system, we have one in the shipping bay ready to sell. We process the order and prepare to ship it the same day; however, when the warehouse team goes to the bay to pack and ship the impeller, it is nowhere to be found. The inventory control team learns instead that the impeller is actually in the test lab! In this situation, net inventory accuracy is 100%, but absolute inventory accuracy is 0% as the impeller is not in the right location.
That’s why it is important for everyone in the supply chain to understand these metrics and take steps to keep inventory accurate.
GIW’s inventory
Having a high absolute inventory accuracy enables us to streamline our processes and support our customers. We recently completed a multi-year journey to improve our accuracy. This meant enhancing our process audits and cycle counts as well as introducing a business-wide metric scorecard that broadcast positive and negative results. We also worked with the warehouse and stockyards to improve their scorecard results and reduce their inventory adjustments.
We are proud to report that these efforts have culminated in our highest accuracy rates in the last five years: 99.98% net inventory accuracy and 99.17% absolute inventory accuracy. These 2020 results are the best in class and will be difficult to improve, but we will continue to raise the bar and focus on operational excellence.
At GIW, we make excellent inventory management a priority. Every employee on our team has an important role to play in keeping inventory up to date, and they do so with virtual perfection. To everyone who helped us achieve these great results: our customers thank you, and we thank you.
