What would cause a company to lose $2,000,000 a year in inventory adjustments seven years in a row? That was the question the company’s auditors called us in to answer.
The Acuity consultant began by interviewing the CFO, and then analyzed the way the company was using the PeopleSoft kitting feature in conjunction with labor, inventory, work orders and sales orders. The analysis showed that components were being double issued from inventory, and that labor costs weren’t being properly included in finished goods.
With the problem resolved, inventory adjustments are at a minimum, and the company enjoys about $2,000,000 more profit at the end of each year. As to where all that double issued inventory was going—we hear they’ve expanded warehouse space at Area 51.