Electronics Components Distributor: Inventory Accuracy Improvement
Industry: Electronics Components Distribution | Service: Sage 100 Inventory Management / Consulting
The Challenge
An electronics components distributor serving contract manufacturers was running persistent inventory variances — Sage 100 showed on-hand quantities that regularly differed from physical counts by 10-15% across fast-moving SKUs. Monthly cycle counts required significant manual adjustment postings, and the adjustments didn't prevent the same variances from reappearing the following month.
The finance team was spending approximately two days per month on inventory reconciliation and adjustment postings, and the sales team had learned not to rely on Sage 100 availability figures when quoting lead times to customers.
Our Approach
We audited transaction history for the highest-variance SKUs across a 90-day window and identified two root causes accounting for the majority of variance: shipments being entered before receipts for the same purchase order (creating brief negative on-hand conditions that distorted FIFO cost layers), and a persistent open batch of warehouse adjustments that had been left unposted for weeks at a time.
We implemented a receiving workflow change that required PO receipts to be posted before the corresponding sales orders could be shipped from the system, and established a daily batch close discipline for warehouse adjustment entries. We also worked through the existing adjustment backlog to bring the open batch current.
For the highest-velocity SKUs, we set up weekly targeted cycle count reports in Sage Intelligence to give the warehouse team a focused list rather than trying to count everything monthly.
Results
45% Reduction in Inventory Variance
Cycle count variance for high-velocity SKUs dropped by approximately 45% within 90 days of the workflow changes.
Inventory Reconciliation Time Reduced
Monthly inventory reconciliation effort dropped from two days to approximately half a day, with adjustment postings reduced significantly.
Sales Team Confidence in Availability Data
The sales team resumed using Sage 100 availability figures for customer lead time quotes within 60 days of the workflow changes taking effect.
Related Services
Sage 100 Inventory Management, Sage 100 Distribution, Inventory Accuracy Best Practices, and Sage Intelligence Reporting.