Causes of Warehouse Stock Record Inaccuracies and Ways They Can Be Minimized Research Paper

Pages: 6 (1922 words)  ·  Bibliography Sources: 4  ·  File: .docx  ·  Level: College Junior  ·  Topic: Business

Warehouse Stock Records: An Analysis

Business stock is important because it is widely used as an asset to generate income and revenue. Causes of stock inaccuracy are many. Therefore it is vastly important that stock be carefully stored and watched to prevent inaccurate record keeping. In this paper, the writer examines some causes of warehouse stock inaccuracies and ways to minimize them. Businesses can only be successful by minimizing stock loss and controlling its distribution and replenishment. There are several key ways to help maximize accuracy in stock records while also helping to increase employee efficiency and productivity. Many of these efficiency tools are very low cost and only require a business to become more aware of its employees' work dynamics as well as the characteristics of storing and managing their stock in a warehouse setting.

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One of the most important tools a business has is their inventory system (Sheppard and Brown, 1993). The type of inventory system they have can make or break their record keeping abilities and either helps make a business profitable or keep it from flourishing. If an item is out of stock but in demand, the business could potentially lose revenue. On the other hand, if the item is overstocked and the business cannot move the product, it becomes a waste of space and money to keep so many unwanted products in the warehouse. Proper record keeping and maintaining of stock levels is a balance between knowing the products the business is marketing and knowing the customers. Supply and demand is often tricky to predict, and the ultimate goal of every business venture is to become as profitable as possible. Warehouse stock inaccuracies are the enemy of profitability. Inaccuracies cost money, and businesses that can reduce them can save valuable time and money.

Human Error

TOPIC: Research Paper on Causes of Warehouse Stock Record Inaccuracies and Ways They Can Be Minimized Assignment

One of the biggest causes of warehouse stock inaccuracies comes from basic human error. Workers either miss-scan or miss-pick items, causing the records to become inaccurate or potentially resulting in lost time and money (DeHoratius and Raman, 2008). In order to cut down on human error, some companies have used some simple tricks to remedy this problem. Some businesses employ a computer-based, real time scanning program where orders are picked and filled via scanners and computer verification. Depending on how this software is set up it can be very difficult to make a mistake when a computerized program is backing up the decisions and actions made by human workers. Some businesses have eliminated human workers altogether and insist on using robots or other automated warehouse picking solutions (DeHoratius and Raman, 2008). This eliminates human error but it also creates a situation where if a modification to a shipment needs to be made it can be quite fruitless to expect a robot to be able to think on the fly and make a decision. Humans have the unique ability for error but they also possess something that robots do not, free will.

Interestingly enough, items that are expensive are far less likely to be miss-scanned or miss-picked and therefore are less likely to contribute to warehouse record inaccuracies (DeHoratius and Raman, 2008). The simple fact that expensive items cost more money to replace or miss-ship helps explain why this is true. Companies that have a vast array of items from expensive to cheap often see these results reflected in their warehouse records. It is impossible for warehouse workers to have the same considerations for cheap products as they do for expensive ones, and this remains one of the biggest reasons for human error. The more regular scrutinization of records involving expensive products also helps to cut down on record inaccuracies with these types of products. Perhaps a company that is looking to cut down on warehouse record inaccuracies should scrutinize smaller, cheaper orders just as much as the expensive ones.

Inventory Density and Variety

Inventory density is another major cause of warehouse record keeping inaccuracies. Warehouses that are busier and more full are far more likely to report record discrepancies than ones that are not (Ernst, Guerrero, and Roshwalb, 1993). This happens mainly because it is harder to see if a product has been miss-labeled; miss-scanned, or miss-picked the more items there are in the warehouse. It's more than just a simple case of numbers. Warehouses that handle more distribution orders also have higher levels of record inaccuracies. High-density warehouses are also closely associated with high workload levels (Ernst, Guerrero, and Roshwalb, 1993). These high levels of workload in turn generate unnecessary workplace pressures and demands that cause the warehouse workers to make more mistakes. Product variety in a warehouse also directly affects record keeping. It is logically much easier to keep track of a smaller variety of products than it is to keep track of a large variety. This basic fact helps businesses to better understand and successfully implement warehouse strategies and solutions. Businesses that stock a wide variety of products often have different warehouses for different product categories, or, at the very least, logically separate their wide variety of products in their existing warehouses (Johnson, Leitch, and Neter, 1981). It can be extremely beneficial for a business to have multiple warehouses or distribution centers.

Inventory mistakes can be costly, and business can help cut back on them by making sure that there are an adequate number of warehouse employees for the density and demand of the product. The cost of hiring one more worker is often much lower than the cost of losing a higher percentage of inventory due to record inaccuracies (Ernst, Guerrero, and Roshwalb, 1993). Many companies, when growing from small to large, are unaware or unable to come to terms with this fact. While smaller staff levels usually help to boost efficiency, at least revenue wise, these small numbers can also be harmful to the work environment if there are an inadequate number of employees for the job. Also, by separating products into different categories or locations in a logical and practical manner, they can reduce the number of mistakes associated with a high-variety work environment. Sometimes it is not practical for a business to have more than one warehouse, but multiple locations that handle multiple product groups or categories can help to vastly cut down on inaccuracies.


The notion of standardization is often one that is lost in the nuts and bolts of running a warehouse or a business. Standardization, however, is one of the most powerful tools a business can possess in helping to eliminate both inefficiencies as well as stock inaccuracy. Workers who are properly trained and who have standard working protocols and behaviors are less likely to make basic mistakes that could lead to inaccuracies in warehouse record keeping (Johnson, Leitch, and Neter, 1981). As an example, the most powerful militaries in history have been some of the most standardized. Each action and reaction is finely choreographed, practiced, and performed in an effort to eliminate anomalies and inefficiencies. Businesses that give their workers clear performance expectations through proper standardization stand a much lower chance of suffering from inaccurate record keeping, especially at the warehouse level. Workers need to comply with the standardization and understand why they are doing so. Therefore it is also very important to properly train employees. Businesses who want the most performance from their employees clearly understand this.

Besides serving as a tool that helps in reducing inefficiencies and inaccuracies, standardization functions to create a forum for understanding when, how, and why warehouse record inaccuracies occur (Johnson, Leitch, and Neter, 1981). If a function or process is highly standardized and well understood, it is easy to figure out where it has failed, or where an efficiency bottleneck has occurred. In this way, standardization helps to illuminate where problems with inaccuracies occur so that they can be dealt with accordingly. It is very hard to fix a problem if it cannot be properly pinpointed and diagnosed. Standardization allows for both of these to occur.

Audits: Frequencies and Definitions

The frequency of audits is directly related to warehouse record inaccuracies. If workers know that audits are not going to be carried out very often, or that the audits will be announced ahead of time, there is less direct incentive to keep accurate records. If, on the other hand, employees understand that audits can be spontaneously conducted, and that they are conducted in a regular manner, businesses will benefit from higher accuracy rates (Sheppard and Brown, 1993). While it may seem like basic common sense, auditing has a lot to do with accurate record keeping. However, audits that occur too frequently often contribute to low employee morale as well as hurting the efficiency of the warehouse and distribution system. Care must be taken to strike the proper balance between over-auditing and lack of proper business oversight.

Audit definitions, or the way in which the audit is carried out and the expectations are delivered to employees also directly affects the audit and the stock record accuracy. When all levels of management and… [END OF PREVIEW] . . . READ MORE

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