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From Chaos to Clarity: How to Achieve 95%+ Inventory Accuracy with a Health Check

Updated: Sep 1

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Inventory accuracy starts with organization and discipline.

Inventory Accuracy Health Check

Inventory is the heartbeat of any manufacturing or distribution operation—but when processes break down, that heartbeat becomes erratic. From inaccurate stock levels to costly fulfillment delays, even small inefficiencies can ripple across your supply chain and erode profitability. The challenge? Most businesses don’t realize their inventory process is underperforming until it’s too late.

This Inventory Accuracy Health Check is designed to help you proactively diagnose weak spots, uncover hidden costs, and align your operations with best practices. Whether you're implementing a new ERP system or still using a legacy one, this guide provides a structured approach to assessing data integrity, fulfillment accuracy, and inventory control, enabling you to make informed decisions and drive sustainable growth.


Inventory Data Integrity

  • [ ] Are item master records complete (UOM, costing method, categories)?

  • [ ] Are SKUs standardized and free of duplicates?

  • [ ] Are inactive or obsolete items properly flagged or archived?

  • [ ] Is inventory valuation consistent with accounting records?

Receiving & Putaway

  • [ ] Are receipts matched against POs with quantity and cost validation?

  • [ ] Is putaway tracked by location/bin with real-time updates?

  • [ ] Are discrepancies logged and resolved promptly?

  • [ ] Is supplier performance tracked (on-time, accuracy)?

  • [ ] Do you label all incoming inventory with your own standardized labels?

Inventory Counting & Accuracy

  • [ ] Are cycle counts scheduled and executed regularly?

  • [ ] Are variances analyzed and root causes addressed?

  • [ ] Is there a documented process for recounts and approvals?

  • [ ] Is inventory accuracy above 95% across key locations?

  • [ ] Are counters properly trained?

  • [ ] Show or hide quantity on hand (Blind Counts) ?

Inventory Movements & Transfers

  • [ ] Are internal transfers tracked with audit trails?

  • [ ] Are location-to-location transfers reconciled in real time?

  • [ ] Is inventory movement visible across all warehouses?

  • [ ] Proper use of Inspection and MRB locations?

Demand Planning & Replenishment

  • [ ] Are min/max levels or reorder points configured per item?

  • [ ] Is historical usage driving replenishment logic?

  • [ ] Are lead times and safety stock levels reviewed periodically?

  • [ ] Is forecasting integrated with sales and production plans?

Order Fulfillment & Picking

  • [ ] Are pick lists generated based on real-time availability?

  • [ ] Is picking optimized by location/bin sequence?

  • [ ] Are backorders tracked and communicated to sales?

  • [ ] Is fulfillment performance (accuracy, speed) monitored?

  • [ ] Is your warehouse logically laid out and labeled?

Inventory Costing & Valuation

  • [ ] Is the costing method (FIFO, average, standard) aligned with business goals?

  • [ ] Are landed costs captured accurately (freight, duties, handling)?

  • [ ] Are cost variances analyzed and reported?

Reporting & KPIs

  • [ ] Are inventory turnover and days on hand tracked?

  • [ ] Are slow-moving and excess inventory flagged?

  • [ ] Are shrinkage and write-offs monitored and minimized?

  • [ ] Are dashboards available for real-time inventory visibility?


In Summary

A healthy inventory process isn’t just about keeping shelves stocked—it’s about enabling smarter decisions, reducing waste, and driving profitability. By regularly auditing key areas, such as data integrity, receiving accuracy, cycle counts, and costing methods, manufacturers and distributors can uncover hidden inefficiencies and align their operations with strategic goals. Regardless of your ERP platform, this checklist provides a practical framework to ensure your inventory processes are not only functional but also optimized for growth.

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If you would like to discuss your situation, please schedule a free, no-obligation consultation with us by using the link below. We can even visit your facility on-site and spend a day there.



Roger Pujol, CPIM, CSCP, the founder of Champion Business Solutions, LLC, is an ERP consultant & advisor specializing in ERP Business software for the manufacturing and distribution industries. He shares insights and experiences on assisting small and medium-sized businesses (SMBs) to enhance their operations.


© 2025 Champion Business Solutions, LLC

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