You do a stock count. You look at your records. The numbers don’t match.
This happens to every distributor. The question is: does it happen a little or a lot?
Small differences are normal. Big differences mean something is wrong. Here’s how to find the problems and fix them.
Why accuracy matters
Inventory accuracy isn’t just about counting things correctly. It affects your whole business.
When your numbers are wrong:
- You sell things you don’t have
- You buy things you don’t need
- You disappoint customers
- You waste money
- You can’t trust your reports
If you can’t trust your inventory numbers, you can’t make good decisions.
Common causes of discrepancies
1. Receiving errors
Goods come in, but they’re recorded wrong.
What goes wrong:
- Wrong quantities entered
- Products recorded against wrong SKUs
- Received goods never entered at all
- Damaged items counted as good stock
How to fix it:
- Count everything at receiving
- Match against purchase orders
- Use barcode scanning to reduce data entry errors
- Train receiving staff on proper procedures
2. Shipping errors
Products go out, but records don’t match reality.
What goes wrong:
- Picked wrong items
- Wrong quantities shipped
- Shipments not recorded
- Multiple people picking same order
How to fix it:
- Double-check picks before shipping
- Scan products as they ship
- Have clear ownership of orders
- Compare shipped quantity to order quantity
3. No real-time updates
When your system isn’t updated in real-time, numbers get stale.
What goes wrong:
- Sales recorded at end of day instead of immediately
- Receiving batch processed hours later
- Adjustments made but not entered
- Multiple transactions happening before updates
How to fix it:
- Update inventory as transactions happen
- Use mobile devices for real-time updates
- Don’t batch process if you can avoid it
- Make sure your software updates instantly
4. Damage and returns
Products get damaged or returned, but records don’t reflect it.
What goes wrong:
- Damaged items still counted as available
- Returns not processed promptly
- No separate tracking for damaged stock
- Write-offs not recorded
How to fix it:
- Have a clear process for damaged goods
- Process returns the day they arrive
- Track damaged inventory separately
- Regular review and write-off of unusable stock
5. Theft and shrinkage
Yes, it happens. But it’s usually less than you think.
What goes wrong:
- Employee theft
- Customer theft (if you have retail)
- Products walking out during chaos
How to fix it:
- Security cameras in key areas
- Controlled access to warehouse
- Regular cycle counts to catch discrepancies early
- Clear accountability for inventory areas
6. Poor organization
When your warehouse is messy, things get lost.
What goes wrong:
- Items stored in wrong locations
- Products buried behind other products
- No clear location system
- Stock in “temporary” spots for months
How to fix it:
- Assign fixed locations to products
- Label everything clearly
- Put away stock properly every time
- Regular cleanup and organization
How to find the problems
Do a full physical count
Yes, it’s painful. But you need a baseline.
Count everything. Compare to your records. Find all the differences.
This tells you how big your problem is.
Analyze the discrepancies
Don’t just fix the numbers. Understand why they were wrong.
- Are the differences positive or negative?
- Which products have the biggest gaps?
- Are there patterns by location, product type, or time?
This tells you where to focus.
Check your processes
Walk through each process that touches inventory:
- Receiving
- Put-away
- Picking
- Shipping
- Returns
- Adjustments
Where could mistakes happen? Where are the gaps?
Watch it happen
Spend time in the warehouse watching how things actually work. Not how they’re supposed to work.
You’ll see things you didn’t expect.
Getting accurate and staying accurate
Implement cycle counting
Instead of one painful annual count, count portions regularly.
How it works:
- Divide inventory into groups
- Count one group each day or week
- Investigate and fix discrepancies immediately
- Over time, you count everything multiple times per year
Benefits:
- Catches problems early
- Less disruption than full counts
- Keeps accuracy high year-round
- Easier to find root causes
Use barcode scanning
Human data entry creates errors. Scanning reduces them.
At receiving, scan products to record what arrived. At shipping, scan to confirm what’s going out. For counts, scan instead of manually entering numbers.
The investment in scanners pays off quickly.
Create accountability
Every section of the warehouse should have an owner. Someone responsible for accuracy in that area.
When there’s a problem, someone investigates. Not later. Right away.
Track accuracy metrics
Measure your inventory accuracy regularly:
Accuracy % = (Accurate Items ÷ Total Items Counted) × 100
Track it over time. Set targets. Celebrate improvements.
Train your team
Everyone who touches inventory needs to understand why accuracy matters. And how their job affects it.
Train on:
- Proper receiving procedures
- Accurate picking and packing
- How to record transactions correctly
- What to do when they find problems
Use better software
Spreadsheets make accuracy hard. Batch updates make accuracy hard. Manual processes make accuracy hard.
Good inventory software:
- Updates in real time
- Supports barcode scanning
- Enforces proper procedures
- Makes it easy to do things right
What accuracy level should you target?
Perfect is impossible. But you can get close.
- Below 90%: Crisis mode. Stop and fix this now.
- 90-95%: Problems. Needs focused improvement.
- 95-98%: Good. Keep improving.
- 98%+: Excellent. Maintain it.
Check your accuracy every quarter at minimum. After big improvements, check monthly.
A simple action plan
Week 1: Baseline
Do a full count or sample count. Calculate your current accuracy.
Week 2: Analyze
Investigate the top discrepancies. Find root causes.
Week 3-4: Fix processes
Implement changes to address root causes. Train staff.
Month 2: Cycle counting
Start a regular cycle count program. Build the habit.
Month 3+: Monitor and improve
Track accuracy. Investigate problems. Keep getting better.
The bottom line
Inventory accuracy isn’t magic. It’s discipline.
Count properly. Record transactions correctly. Investigate discrepancies. Fix root causes.
Do these things consistently and your numbers will start matching reality. Then you can actually trust them.
Want better inventory accuracy? Get a demo and see how Magnofy helps you keep stock counts accurate in real time.
