lost sales simulated in the most degraded scenario without cycle counting
remaining picking productivity in the same highly unfavorable scenario
Lower productivity: the hidden cost
The study by Destro, Staudt, Somensi and Taboada analyzes Inventory Record Inaccuracy using a system dynamics model. It shows that phantom inventory forces pickers to travel to locations where the product is supposed to exist but is not physically available. This search time reduces preparation productivity and turns a data error into a daily operational loss.
Silently lost sales
The model distinguishes phantom stock from hidden stock. Phantom stock can generate orders that cannot be fulfilled, therefore lost sales. Hidden stock produces the opposite effect: the system believes product is missing when it physically exists, triggering unnecessary replenishment and space saturation. In both cases, false data produces a costly decision.
A warehouse running in degraded mode
The simulations compare five warehouse performance levels, from Major Opportunity to Best in Class. Without cycle counting, inaccuracy deteriorates in every scenario. Already high-performing warehouses can also be strongly affected if no continuous correction mechanism is in place. The study therefore emphasizes an often overlooked point: employee productivity is not enough as an indicator if the quality of system stock is not monitored.
KPIs to monitor
The authors track three main outputs: picking productivity, lost sales and warehouse capacity utilization. These indicators must be read together. High capacity utilization may look positive, but if it comes from hidden stock or unnecessary replenishment, it masks a problem. Teams should therefore monitor IRI, service rate, lost sales, picking errors and correction frequency.
Access to the full text
This source is available in open access on SciELO under a Creative Commons Attribution license. The summary above remains intentionally reformulated for quick reading; the full article, its simulation tables and its methodological assumptions are available through the source link.
The operational impact of inaccurate stock is diffuse but permanent. It does not always appear in a single accounting line, but it erodes productivity, commercial reliability and decision quality. Cycle counting and real-time validation are not administrative tasks: they are warehouse performance levers.
Original summary based on the open access SciELO article "The impacts of inventory record inaccuracy and cycle counting on distribution center performance" published in Production in 2023 under a Creative Commons Attribution license. The text is reformulated; the source link provides access to the full article.
Original sources
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The impacts of inventory record inaccuracy and cycle counting on distribution center performance
Iuri Rafael Destro, Francielly Hedler Staudt, Karine Somensi, Carlos Taboada, 2023
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