The Financial Impact of Manual Inventory Record Errors

This qualitative case study investigated how the most common inventory errors in a manual manufacturing environment impacted the financial health of the business. All classes of inventory are an equally important asset and are accounted for as money on every business’s balance sheet. The senior leaders of manufacturing businesses are obligated to protect the possession of inventory and to develop strategies to ensure items are converted to revenue. Knowledge of the phenomenon was gained through interviewing and observing participants in their natural setting to discover potential themes and solutions. Inaccurate inventory amounts, waste from utilizing incorrect components in production, and the wrong pricing on all classes of inventory were the most frequent inventory errors accounted for by the participants. The participants felt the senior leadership’s fear of change and automation costs would continue to stunt efficiency and delay the strategies to minimize inventory errors. Observations showed the gaps in the security of the controls and the lack of traceability on the inventory movement. Documentation from various departments reflected the inheritance of the manual inventory errors through increased expenses and financial loss. The findings led to themes revolved around inventory controls, inventory management, sales and profitability, and executive decision-making, which all coincide with inventory errors. In addition, this study provided a deeper look into manual inventory operations inefficiencies through previous scholarly literature, possibilities to overcome the inventory issues, and opportunities for further research