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Distribution and Inventory Accuracy
A businesss success or failure can ride on the accuracy of its inventory procedures. Without adequate check and balances, costly blunders can occur. No distributor wants to be caught without a particular product on hand when retailers want it, particularly when sales are seasonally hot. If retailers cant get it, customers cant get it. This means they will purchase from competitors who do have what customers want. By the same token, nobody wants to get stuck with an enormous supply of a product that isnt moving. Either scenario affects sales and impacts the integrity of the distributors reputation. Inventory must be optimized - not too much and not too little, but ideally just the right amount to keep the wheels turning and the customers bying.

And the truth is that no inventory system is perfect. There is no means of making the right judgment call each time, every time. Distributors and suppliers both have to walk a fine middle line, which is not always easy to accomplish. However, properly implemented technologies can result in a more effective system for everyone and reduce errors substantially.

Since any electronic system is only as good as the information it receives, well defined processes are the first key to keeping inventory accurate and those processes need to be checked and re-checked to locate opportunities for errors and then reduce or eliminate them altogether. Formal checks should be in place and all employees need to understand the processes and their importance. There is no room for taking shortcuts if an inventory system is to operate accurately. In addition, each procedure must be clearly documented and the procedures distributed to all employees.

There are techniques that companies can implement to help ensure the accuracy of an inventory system. For example, both organizations and individuals should check accuracy. Accuracy can be tracked as a measure of the percentage of total transactions, rather than just a measure of the number of errors. Adequately communicating error percentages generally results in people working harder not to make them.

If inaccuracies occur because of peoples errors, the individuals who are responsible must be held accountable for them. Everyone makes mistakes. However, there is a difference when an error occurs because of genuine mistake and when one occurs because people do not follow a policy or procedure or when people take shortcuts.

Even though the electronic system is tracking inventory, it is always wise to physically count periodically to verify the accuracy of the system. Methods for conducting periodic counting should also be specified in the procedures.

Finally, processes and procedures should be works in progress - with revisions and enhancements added whenever weaknesses or discrepancies are found to exist. Employees are key to the inventory process and companies need to make certain that specific people are delegated the responsibility for inventory. With adequate training, employees can be a companys most valuable inventory control resource. Those who are well trained and who have experience in their jobs generally make fewer errors than those who are new in their job.

While occasional glitches occur in computerized inventory systems, they can most often be attributed to human error. When management has a thorough understanding of what the electronic system does and how it works, problems are easier to track and fix. If managers have not taken the time to help set and understand the way a system works, these managers are more dependent on employees who may not have the same investment in ensuring accuracy.

By knowing the system completely, putting good working procedures in place, taking the time to check and re-check those procedures, and remedy weaknesses as they are found, the combination of electronic inventory control system and employees who use it can be a powerful tool for a company.

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