Some Key Performance Indicators (KPIs) can be misleading, if you only see part of the picture of inventory health.

Inventory reporting as a financial matrix is required by shareholders and, in most cases, by the laws of business operation. But only reporting inventory value (which is an accounting average of overage and underage) can have disastrous consequences. Reporting a benchmark financial value of 98% accuracy is of little concern to operations and maintenance if a critical part is not available when needed.

A better alternative is an Inventory Accuracy Count. This asks three key questions: is the quantity correct, is the part in the location the computer system says it is in, and is the part in usable condition? There is no offset for having more than is reported. If all these conditions are not met, it is recorded as a non-conformance condition and needs attention. If 100 parts are counted but only 95 meet the above conditions, then the Accuracy Count is 95% regardless of overages and financial considerations.

Storeroom Service Level is another effective KPI. If the inventory system shows a part is available was the part actually delivered when requested? This benchmark can and should be 100%.