Supercharged Supply Chains

CHAPTER 3Inventory: Essential to Know What You Have

A primary input to MRP is inventory. For the MRP system to create an accurate plan it must have accurate inventory data.

FIGURE 3.1 Business Excellence Planning

The world‐class standard for inventory record accuracy today stands at 99.5%. Very few organizations can claim they are performing at or above this standard. Many achieve good accuracy in automated warehouse locations but fall short in more informal storage, transport, and supply chain areas. The harsh reality is that most companies are still struggling with very inaccurate inventory records.

Oliver Wight himself, during a class that he taught in 1975, asked the class what industry has better than 99.9% inventory accuracy, recognizing that there lots of those locations nearby. No one could answer the question. His response was, “Banks.” They count the money when it goes in and when it goes out. That simply is the basis for inventory accuracy.

In this chapter we focus on the Inventory Status box of Business Excellence Planning, Figure 3.1, and its relationships with the other disciplines.

Imagine if Amazon.com had only 90% inventory accuracy. Would customers accept that 10% of their orders would be shipped later than the delivery promise that comes with their Prime membership? Also consider traceability, which is becoming required at more and more companies. How ...