And not being a reliable supplier is the best way to increase your competitor s sales. There s little doubt that management realizes the importance of inventory accuracy. Provide economic incentives for maintaining accurate inventory. Their paychecks are not dependent on how well they perform their jobs. It is imperative that all of your employees, from the guy who sweeps the floor on up, realize that your company makes money by buying material at one price and selling it to other companies or individuals at a higher price.
Gross profits are the primary source of funds the company has to pay expenses.
And, the company is pressured by customers and competition to keep prices low, resulting in small gross profits. One category of expenses is wages, benefits, and salaries. In fact, when material is broken or lost, money must be taken out of the pile to pay for replacement material. In a perfect world, all of your employees would realize that their future is tied to the success of your company, and they would protect your inventory and other assets as if they were their own. But the world isn t perfect.