Inventory Accuracy

A common calculation is:

Stratify SKU’s: (annual usage X standard cost)

  • A items= items representing the top 80% of total dollars
  • B items= items representing the next 15% of dollars
  • C items= items representing the bottom 5% of dollars

Cycle count items (usually daily) using a random sample, within the following groupings:

  • A items = 4 times per year
  • B items = 2 times per year
  • C items = 1 time per year

Items considered accurate if the actual on-hand quantity matches the perpetual inventory quantity, within the following tolerances:

  • A items = plus or minus 1% quantity variance from perpetual balance
  • B items = plus or minus 3% quantity variance from perpetual balance
  • C items = plus or minus 5% quantity variance from perpetual balance

Target should be absolute minimum of 95% for MRP/DRP to function effectively; 99% for best-in-class.

SUPPLY CHAIN MANAGEMENT METRICS