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5 Best Practices to Ensure Inventory Accuracy

by Olufisayo
Inventory Accuracy

Even with the help of warehouse software management systems, some organizations may still find it hard to achieve the inventory accuracy they desire. More often than not, this can result in over or understocking and spoilages in other cases. It can also give a false reading of financial reports.

Inventory accuracy requires a proactive approach to its management. Using an industrial inventory management system can help give you a base from which to generate standard operating procedures (SOPs). These SOPs can ensure that the system you use effectively helps achieve inventory accuracy.

In addition to inventory accuracy, these SOPs can also be beneficial in the following ways:

  • Help improve order placement and deliveries
  • Provide better customer service
  • Provide better data for financial reporting
  • Help reduce operation costs and labor efforts

Best Practices To Ensure Inventory Accuracy

For smooth operations, your organization needs to maintain inventory accuracy per the SOPs. Read on below to find out some of the best practices you can incorporate in your SOPs.

1. Maintain A Consistent Inventory Naming And Labeling

Initiate, introduce, and maintain a labeling and naming sequence that allows easy inventory and data flow within your organization. For example, when labeling, include information like warnings for hazardous material, expiry dates, batch numbers, and delivery dates.

When you maintain such a labeling standard, the team members can easily group the inventory and collect data. Once you have a proper labeling procedure, you can communicate with your suppliers to adopt the same. This can improve delivery times and accurate invoicing as well.

Besides a good labeling procedure, naming your inventory should also maintain a standard method. You can use a naming that groups the inventory according to product type, use, or material. When you have a group identifier, it’s easier to locate the inventory and allows quicker data entry exercises.

It’s important to note that a consistent inventory naming and labeling procedure can give you accurate data reporting and analysis. These two can be crucial decision-making points, especially for purchasing and finance functions.

2. Limit And Keep Track Of Who Accesses Inventory

From the initial steps of adopting an inventory management system, you should define who needs to access inventory records and make changes. This should also include the access authority levels to the system itself.

It’s much easier to track inconsistencies when you have a specific and small group of team members with access to your inventory. It can also enable you to better reduce errors, manage the system, and introduce any changes. Additionally, you can easily identify any training needs and mitigate redundancies before affecting inventory management.

Periodically, you can review the access records to determine the cycle of the select group. During this review period, you can cross-reference inaccuracies in the records to see if it’s consistent with one team member or all team members. This can help identify loopholes in the system or staff training needs.

3. Develop A Cycle Counting Culture

Traditionally, inventory counting involves disrupting normal operational procedures, which sometimes means a loss of revenue. However, cycle counting means you take stock of small batches over a long period. As a result, for example, you won’t have to wait until the end of the year to close shop and do an inventory count.

Overall, cycle counting helps you maintain inventory accuracy as you can easily identify deviations sooner. Generally, you can practice cycle counting according to product movement, importance, or value.

4. Establish Efficient Receiving And Storing Policies

The efficiency of inventory management starts from the receiving area. If there’s wrong data entry, the whole inventory system can generate false reports. Therefore, you can initiate clear documentation of the receiving processes and good inventory storage.

The receiving and storage policies can include product handling and documents to expect during receiving. It should also detail how to handle sub-standard deliveries and storage guidelines for each product. You can carry out an interactive training session with warehouse staff to ensure they understand the policies and what to expect from them.

Over time, you can carry an internal audit exercise to see if the policies are working and, if not, what you can change, add, or remove. Additionally, apart from receiving and storage process, these policies should also show steps to take in case of deviations by the team members. This can help ensure the staff stick to the process and minimize shortcuts.

5. Maintain A Well-Organized Warehouse

Keep your warehouse in such a manner that even new team members can easily find their way and locate products. This can include using maps of the warehouse, signages, and providing descriptions of sections. If there are empty shelves, indicate what’s usually there or what you expect to put.


In summary, inventory management systems can work well, but it also needs your input in developing and maintaining the above best practices. In this way, you can ensure inventory accuracy at every turn.

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