The Importance of Inventory Accuracy


Inventory management affects a 3PL’s business at all levels and can make or break an operation. There are a number of events that can cause errors in your inventory including a mistake in the warehouse management system (WMS), a poorly laid out warehouse, or an employee error. The 3PL industry standard is 97 percent accuracy, which would be the equivalent of scoring an A+ on every single test. This seems impossible, but can be done with a few simple practices. So why is it important to be this precise and live up to this high standard?

Advances warehouse efficiency

The more accurate a warehouse is, the less time it takes for a warehouse employee to pick an order. This allows a company to get more orders out in a day and to also save on overall labor costs. It would take someone an extraordinary amount of time if they were given a list of items to find, but were given no information on where the items were. It would not only take significantly more time, but would likely lead to incorrect items being shipped out. This is why it is crucial to have a great WMS in your warehouse; It is significantly easier to get an accurate picture of your inventory and eliminates the guesswork for your warehouse team.

Minimizes storage costs

A key term in warehouse management is utilization. This is defined as how much space the customer’s product uses divided by the total space the product is stored in. If your warehouse is poorly organized and the inventory is consistently inaccurate, the lower your utilization will be. On the contrary, if your warehouse is organized and properly laid out for the space, you are more likely to have accurate inventory and therefore increase your warehouse utilization. These simple warehouse practices could be the difference between being able to add another customer to your facility or not. In short, correct inventory allows a warehouse operator to use their space more effectively and increase their profit margin.

Increases customer satisfaction

One of the reasons a manufacturer outsources to a 3PL is so they do not have to worry about items such as tracking their inventory. When the customer sends product to their warehouse provider, they expect to know the total quantity and location at all times. Having an order arrive late because a product was out of stock or misplaced does not put your customer in the best situation to succeed. The less time they have to spend worrying about these issues with their 3PL, the higher their satisfaction will be.

Because of these potential downfalls, it is incredibly important to get the right inventory management software in place from the beginning of a new operation. Spartan Logistics offers its advanced warehouse management system to all our customers. Learn more about our WMS partner and how we can manage your inventory here.

Topics: Customer Service Lessons, Supply Chain Strategy