The Bar Code Implementation Guide: Using Bar Codes in Distribution
Section 4.7.1 Inventory reduction In most systems, a significant amount of money is tied up in "fear stock." There are two types of fear stock: (1) that held due to the uncertainly of demand and (2) that carried to "cover-up" discrepancies between what the computer says is in stock and what actually is. Bar code can eliminate the latter of these two. When bar code is used, inventory accuracy of 99.99% is attainable. This second type of "fear stock" can often be eliminated completely. In many situations, it's as much as 10% of the total inventory value. This means a company with a $1-million inventory would reduce it by $100,000. At a 30% carrying cost, $30,000 would "free up." For a company with a 5% pretax profit, that's like finding the profit from a $600,000 customer.