A Guide About Inventory Accuracy

Inventory Management


LAST UPDATE: Mar 7, 2023

8 minutes reading

Inventory Accuracy


To let customers, know which of your products are available and which are not, it’s critical to keep track of stock. Inventory Accuracy also enables you to make plans for anticipated shortages and needs. You can account for current items and determine when you need to produce more by keeping track of your manufacturing stock and raw materials.

Your inventory counts should be as accurate as possible because inventory Accuracy is essential to business operations. While some businesses prefer simple counting systems, many employ programs like inventory management systems to keep track of their inventories.


What Is Inventory Accuracy?

Inventory accuracy measures how well your inventory management system’s records match the goods that is really on hand at your store or warehouse. In other words, it’s the discrepancy between what’s on the shelves and what’s on your records.

Usually, inventory accuracy is expressed as a percentage. A 95% inventory accuracy rate indicates that the majority of your records are accurate. 20% inventory accuracy indicates that the majority of your stock or records are missing. Aim for accuracy that is as near to 100% as feasible.


The Importance of Inventory Accuracy

The Importance of Inventory Accuracy

Accurate inventory information is crucial for both current and upcoming business transactions. Accurate inventory counts improve your company’s productivity and customer satisfaction.

Here are a few instances of how inventory accuracy helps your business:

Keeping Inventory Levels for Customers

When your inventory records are precise, you can maintain accurate stock counts both online and in-store. You’ll know you have enough inventory to fill an order when a customer orders or wants a certain item. You can mark an item as out of stock and let your customers know. Overall, inventory accuracy keeps consumers happy by preventing last-minute order cancellations.

Correctly Estimating the Cost

One of the most important advantages of accurate inventory management is accurate revenue projections. It’s critical to maintain the highest level of accuracy possible because investors and suppliers rely on accurate financial reporting. Maintaining accurate inventory counts helps you maintain your balances current and avoids any financial complexities brought on by inaccurate predictions. With the right financial records, you may also anticipate your company’s demands and make long-term plans.

Happy Clients

Happy customers are informed consumers. Customers are far more likely to have a pleasant experience with your business when stock counts are kept up to date. Customers will appreciate the swift response times and accurate inventory’s contribution to order efficiency. They might then tell their friends about your company in return.

Improvements in Productivity

You can maintain organization in your warehouses and stock bins by performing regular inventory counts. To make counts easier, many inventory procedures recommend sectioning off your merchandise. Employee identification and item shipping are made simpler by the same organizational strategies. With the correct inventory management, it’s possible to keep shipment times the same or even enhance them.


Methods for Estimating Inventory Accuracy

Companies often calculate inventory accuracy using two key methods. While some people like to hand count and compare supplies, others utilize a formula to take precise inventory counts.

Manual Count

Employees physically count each item in stock during a manual count, then compare the results to previous records. Although this strategy can easily become time-consuming, if you have a tiny organization and modest order volumes, the procedure is rather simple.

To calculate a physical inventory, take the following calculation:

Make a thorough inventory count: Do a detailed inventory count of all current stock first. Depending on the type of your firm and how you generally maintain inventory, this number may comprise finished goods or raw materials. Don’t forget to take into account the latest orders and how they can affect the counts now in place. To keep track of the number, you can either utilize a tracking system or just a clipboard to make it strictly manual.

Everything should be recounted: Ensure that several persons carry out the same manual count, comparing the results until everyone’s counts agree. Multiple calculations will allow you to ensure that you are counting precisely even though human error is inevitable.

Compare it to your inventory records: Once you have a complete count of your products. Check to see that the number you entered corresponds to the one in your registration. If it does, the product you are using has flawless accuracy. Mark it as a discrepancy if it doesn’t. Follow these steps for every item or area you counted.

Analyze your findings: You should be able to determine the correctness of your inventory after comparing your counts with your records. If there are any variances, look into the areas where they were more prevalent and make a plan for how you will deal with them moving forward.

Physical inventory counts function best when they are performed often. The most effective technique to monitor inventory fluctuations is with a weekly count.



Some companies determine their inventory accuracy using a formula rather than a manual count. You will have a quantifiable figure for your inventory records if you use this method. To calculate your inventory using an equation, follow these steps:

Starting with the quantity of objects in your physical inventory:  Calculate your physical inventory. This number can be retrieved from a database or obtained manually.

Determine the quantity of units recorded: Utilize your data to locate the registered inventory number. How many products should be on your shelves is indicated by this figure.

Take the recorded number and divide it by the physical inventory: Subtract the number in your records from the amount in your physical inventory.

The answer should be multiplied by 100:  Your percentage of inventory correctness is the final figure.

Examine the percentage after analyzing the results: Your inventory calculations should ideally be within 1% of 100%. If your outcome is substantially less favorable, you might need to investigate the causes and locations of the errors.


Most Common Issues with Inventory Accuracy


Most Common Issues with Inventory Accuracy

You could still experience issues even with the accuracy that comes with accurate inventory records. To maintain high accuracy percentages, it’s critical to be aware of and as far away from these concerns as you can. Even slight issues can have a big impact in the long run.

A reduced accuracy measure could be brought on by any of the enumerated inventory accuracy problems.

Transacting Problems

A frequent reason for erroneous inventory records is transactional issues. It can take some time for your inventory system to appropriately reflect the departing stock after customers buy your products, whether they do so physically or online.

Other transactional issues that may impact the accuracy of an inventory include:

Entering inaccurate amounts:

Typing the incorrect number is a common human error, whether it occurs on the buyer’s or seller’s end. A consumer might plan to purchase 12 things but enter in 120, or you can mistakenly record a transaction of 1,000 units when it was really just 100. Although widespread, this makes it more difficult to accurately count inventory. It could take weeks or even months for someone to recognize they made a mistake, and even longer to fix it.

Processing problems

Similar to human errors, digital ones can happen. Transactions may be processed erroneously by digital systems or not at all. Failure to complete a sale will make it more difficult to inspect the merchandise subsequently.

Issues with measurement

The quantity you use to count your goods is known as your unit of measurement (UOM). You might use a UOM of one box, for instance, if you offer bottles that come in boxes of 12.

Although you can use any physical unit to measure your UOM, it’s imperative to utilize the same UOM when speaking with suppliers and customers. List your bottles as boxes rather than cases or single units on your website if you ship your bottles in boxes. Different UOMs might cause issues, such as confused clients placing incorrect orders or your buyer buying the incorrect number of supplies.


New G Solution

How Can New G Solution Help?

We at New G Solution are aware of how crucial inventory accuracy is. Since the beginning of our business, we have devoted ourselves to offering inventory management solutions. While we offer these services to all companies, we especially like working with start-ups and expanding enterprises.

Here are more exciting features of New G Solution’s services:

barcodes Help:  UPC or QR codes can be generated by New G Solution for your products. Our label maker ensures that each item has a sufficient tag because it is user-friendly and customizable.

Accounting duties: We provide you with a thorough report on your financial situation through our accounting systems. The piece moves to indicate your improved financial situation after each purchase.

Warehouse Reports: New G Solution offers a variety of warehouse reports that give you access to all warehouse information, including the amount of stock that is currently available along with the average cost of the products

Commission Calculator: Every user can give his or her own users a commission % thanks to the New G Solution.

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