Stock record accuracy: how to measure it and improve it

What stock record accuracy measures

Stock record accuracy compares what your system says you have with what you actually count. The most useful version works item by item: for each item counted, is the system record right or not? The result is the share of item records that are right. The same measure is often called stock accuracy, inventory accuracy or inventory record accuracy (IRA). Some companies work it out from total units or total value instead, but totals can hide errors when an over on one item cancels a short on another, so the item-by-item version below is the one that shows where the problems are.

It is deliberately strict. An item that is out by one unit and an item that is out by a hundred both count as one inaccurate record, because either can cause a wrong pick, a missed order or a wrong purchase.

A worked example

With no tolerance, 2 of 5 records are right: 40%. With a 2% tolerance, B-210 is also accepted and the figure is 60%. The overs and shorts in units do not cancel each other out: the record is either right or it is not.

Why the item method gives a lower figure than totals

The same five items give very different results depending on what you divide:

The unit figures look excellent, yet three of the five records are wrong and any of them could cause a short pick. The net figure is the most misleading, because the extra unit of B-210 partly hides the shortages of A-102 and C-330. If you report a unit or value figure to management, report the item figure next to it.

Choosing a tolerance

A tolerance lets small differences count as accurate. There is no universal figure, and it should be a written policy, not something decided during the count. A common approach is no tolerance for high-value, controlled or serial-tracked items, and a small percentage for bulk, low-value items where exact counting is impractical, such as loose fixings or items counted by weight.

What is a good stock accuracy figure?

There is no single figure that suits every warehouse. It depends on how strict your tolerance is, which items you count and whether you measure by item, unit or value. A 95% figure with no tolerance is a much better result than 95% with a wide tolerance. Set a written target for each item group, stricter for high-value and fast-moving items, and judge progress by the trend from one count to the next rather than by one result.

Why differences happen

Before adjusting stock, find the cause. In practice many differences are not loss at all:

• Receipts, issues or transfers not yet posted when the count was taken.
• Wrong unit of measure, for example cartons counted but pieces recorded.
• Stock put away in the wrong location, so one bin is short and another is over.
• Mixed batches or wrong item codes on labels.
• Damaged or expired stock removed but not written off in the system.

Recount the largest differences first, check recent transactions, then adjust only what is confirmed, with approval.

Many of these differences start at the dock, when goods are received. The goods receiving checklist covers the checks that stop them getting into your records.

How to improve stock record accuracy

• Post every movement the same day. Receipts, issues, transfers and returns entered late are the most common cause of differences.
• Check quantities at receiving. Count against the delivery note and record what was physically received on the goods received note, not what was ordered.
• Label every location and keep stock in its location. A pallet put in the wrong bin creates two wrong records at once.
• Use one unit of measure per item in the system and on the shelf, or make the conversion clear on the label.
• Count blind and recount differences before any adjustment.
• Keep a list of causes. Each time a difference is explained, note the cause. The causes that come up most often show which process to fix first.
• Write off damaged and expired stock promptly, with approval, so the system follows what is on the shelf.

Cycle counting

Instead of counting everything once a year, cycle counting checks a small part of the stock regularly. Many sites count fast-moving and high-value items more often and slow, low-value items less often. Tracking accuracy after each cycle shows whether processes are improving, and points to the areas or processes that cause the errors. The guide to cycle counting covers the methods, a worked schedule and the steps to run a count.

Common questions about stock accuracy

How do you calculate stock accuracy?

Count a set of items, compare each count with the system quantity, and divide the number of items whose record is right (within your tolerance) by the number of items counted. Multiply by 100 for a percentage.

Is inventory accuracy the same as stock record accuracy?

Yes, the names are used for the same measure. Check whether a figure you are given was worked out by item, by units or by value, because the results are very different.

Can stock accuracy be more than 100%?

Not when it is measured by item, because each record is either right or wrong. A net unit figure can go above 100% when there are more overs than shorts, which is one more reason not to rely on it alone.

How often should stock accuracy be measured?

After every cycle count, so you can see the trend. A figure measured once a year at stocktake comes too late to trace the causes.