In practice, there is a standard approach to measuring accuracy once a stock check has been done:

  1. The items are classified by their turnover value into three or more classes. This takes into account the cost and usage rates of the items.

 

  1. Next, the size of the discrepancy is measured as a percentage of quantity

% Discrepancy = Quantity on record – Quantity in stock (100) / Quantity on record

  1. To back this up there is a limit on value discrepancy for each line, where:

Value discrepancy = Unit stock value X Quantity on record – Quantity in stock

If the value discrepancy is greater than a figure agreed by the accountants, then it is treated as a problem.

Some stock will be greater than the record quantity and some lower; as the errors compensate, the financial view of stock accuracy is more positive than the operational view.

The process for measuring stock accuracy is therefore to create records of significant discrepancies regularly, using either picking or inventory checking as a basis (or both), and to measure the quantity and size of inaccuracies observed. These should be totaled by category so that an overall figure of accuracy can be measured.

 Tony Wild

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