A mentor CFO told me many years ago that “Inventory is cash.” If the inventory is cash, then it follows that “the warehouse is the bank.” You can bet that banks want to know where all their cash is, all the time. They have robust procedures and policies for managing their money and their staff are well educated and trained. Build the same governance and capability in your warehouse.
If you don’t have proper procedures for material issues, put away, and receiving, your warehouse integrity will be at risk. You will be losing track of your money.
The following issues are clear indicators that warehouse governance is lacking:
• Operations and maintenance will physically check “on-hand” before beginning a work order because they can’t trust what the warehouse system says.
• Squirrel stores, undocumented ad-hoc storage areas only a few people know about, are stashed around the site.
• First count accuracy is below 80%