Why Is Quality Important in Inventory Management Systems?

Quality’s importance in inventory management systems hinges on increased profitability. Inventory management systems exist to replace inventory as it is depleted. Quality in inventory management means ease of access for workers, better control of your inventory, lower inventory costs and lower upkeep costs. An inventory management system that achieves these three goals provides collateral benefits, as well, including accuracy, greater liquidity and better organization.

Toyota is famous for manufacturing efficiency and quality. One part of their system is called a kanban card. A simple as a paper card, it tells workers that the stock on the shelves or the production line is low. A worker who needs stock for shelves or parts for production takes the kanban card to the storeroom or warehouse. The worker trades the card for a box of the goods or a full bin of the parts named on the card. Some inventory systems use radio frequency identification tags attached to parts to link inventory to computerized programs -- in place of paper kanban cards -- to track inventory usage.

When workers on a production line need parts to keep working, they must locate the parts immediately, without having to search a warehouse. Standardized locations for individual parts or goods in your inventory make it easier for your workers to locate and distribute parts or stock to the proper location. This standardization means your workers spend more time in moneymaking activities than in searching a warehouse or stockroom for parts or products. Poor-quality inventory management systems may not provide information on warehouse locations or allow several inventory items to collect at the same location in storage

Inventory management systems tell you what you have on hand, how much inventory you’ve used and when to reorder, whether your inventory system is a complex, computerized system or as simple as kanban cards. For example, if you subtract the number of kanban cards turned in from the last order you placed, you know how much inventory has sold since you ordered. If you have “standard order,” you also know when and how much to re-order. A poor-quality inventory system doesn’t offer this simplicity. Such a system may even lose items from inventory, causing your purchasing department to procure parts or stock unnecessarily.

In addition to helping you track inventory, an inventory management system should help you maintain control of how much you tie up on inventory on-hand. Any inventory you have on-hand costs you money until it’s sold. Inventory management systems of poor quality can cause you to commit too much inventory, and result in inventory that will remain unused for the foreseeable future. By minimizing the amount of inventory you must have on hand, a quality inventory system saves on the cost of the inventory, and it saves on the cost of space for inventory’s storage and its upkeep.