Wednesday, December 22, 2010

Invalid Data and the Losses Created

Invalid Data and the Losses Created.

Does your perpetual inventory match what is on your shelves?  Do your suppliers or customers have access to your inventory levels?  Do they make decisions based on this information?

What is invalid data?  Sometimes it is as simple as the computer value reading 1000 units, 998 or some other amount is actually on the shelf.  If the difference is large enough, do you disappoint your customer by not having enough or do you purchase too soon or too much by ordering the wrong quantity?

Invalid data is sometimes a wrong customer address or contact information.  What happens if your products ship to the wrong location?  Who pays for the return?  Who pays for the expedited replacement?  Who calculates the lost labor time?

Is your data duplicated in separate systems or files and how do you ensure they stay in sync?  Which is the “real” data?

How does this happen?  Inaccurate recording of transactional quantity.  Is the quantity correct, but unit of measure invalid?  Someone have a bad day, maybe more than once?  Picked the wrong quantity?  Inventory put away or recorded in the wrong location?  Time delay in posting the transaction?  Software or program error?  Equipment failure?

Garbage-In, Garbage-Out.  Invalid data passed along the system.  When do we find out about the bad data?  Are the audit controls sufficient?  Spot checks?  Does anyone ever figure it out?  Is it the system or the people or the data itself?

What is to be done?  We can start looking for bad data, we can look for the signs of bad data, we can run audit and cross checks to make sure everything balances.  Physical inventory without pre inventory fixes so real accuracy can be calculated.  Customer feedback.  Training personnel how to tell if a number is reasonable.

Clean the data.  Take a proactive approach.  Empower and reward employees for spotting errors.  Ask your customers to review their information. 

Are your problems small or large?  It should not just be business as usual.  Do not let: “It has always been that way, it is a cost of doing business” mindset ruin your profit.  Do not migrate it to a new system.

Find the problem.  Fix the problem.  Do it before someone else does.    

Click the linked words to find out how Dolvin partner VAI use their S2K Enterprise (ERP) software solutions to help companies streamline their operations, reduce costs, and become more profitable.

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