The on-hand inventory balances in the computer must be 95 percent accurate, at a minimum. Do not attempt to implement the planning and scheduling tools of ERP (master scheduling, Material Requirements Planning, Distribution Requirements Planning, plant scheduling, supplier scheduling) without this minimum level of accuracy.
The inventory balance numbers are vitally important because they represent the starting number for these planning processes. If the balance for an item is not accurate, the planning for it will probably be incorrect. If the planning is incorrect for a given item, such as a finished product or a subassembly, then the erroneous planned orders will be exploded into incorrect gross requirements for all of that item’s components. Hence, the planning will probably be incorrect for those components also. The result: large amounts of incorrect recommendations coming out of the formal system, a loss of confidence by the users, a return to using the hot list, and an unsuccessful implementation of ERP.