How far do you live from your nearest grocery store? I am 10 miles from mine, but I never answer that question by referring to miles. My answer would always be in minutes. Either answer is correct, but one is more important. Do you really care how many miles you are putting on your vehicle when you get groceries? If you’re like me, the time it takes out of the day is more important.

Now, let me ask a different question – how accurate is your inventory? Usually, the answer is in terms of a percentage. But is that percentage based on value or pieces? When you do an inventory check your finance team needs to know a dollar amount to adjust. It affects the Balance Sheet and the P&L. You might compare that adjustment to the value of your on-hand inventory and calculate a percentage of accuracy. That’s normal, but measuring pieces will help you more than measuring dollars.

Your parts team should be more concerned with the number of pieces that were misplaced. Here’s the reason: “It doesn't matter if the part costs 50 cents or $5,000, losing either one will stop a job or disappoint a customer.”

You have to take note of the value adjustment and pass it on to the finance department. After that is done, use pieces to calculate your accuracy percentage. It will make you better. It also sends a message to your Parts Team – we care about all parts, not just the expensive ones. If you are only concerned about keeping track of expensive parts you have made a horrible career choice.

This value thing raises its ugly head every time I do a full Physical Inventory. Before we close out the process, we typically investigate the errors. It is smart to double-check our counts and look for missing parts. We put great effort into the expensive parts while inexpensive parts are typically adjusted with less effort and investigation. I get it. I’ve been that guy counting parts till late at night. You have to triage the situation and focus your time. It is one reason I recommend Cycle Counting over a full Physical Inventory. You have more time to investigate and improve your processes.

I don’t care how many miles we are from the grocery store, I care how long it takes to get there. While I care about the dollar value of the parts you’ve misplaced, I care more about how many pieces you’ve misplaced. Focusing on dollars drives you to concentrate on a few expensive parts; focusing on pieces forces you to improve accuracy across all parts.

Measure inventory accuracy in pieces instead of dollars – you and your customers will feel the difference.