Inventory Accuracy SLA: What to Demand From a 3PL and How to Measure It

An inventory accuracy SLA sounds like legal language, but it is really a business survival tool. If your inventory is wrong, everything gets expensive. You oversell, you short ship, you pay for replacements, and you waste labor chasing inventory that is technically on hand and practically missing. A clear inventory accuracy SLA is how you turn "we try our best" into something measurable, enforceable, and improvable.

Brands often sign 3PL contracts that focus heavily on shipping speed and carrier rates, then discover the hidden killer: accuracy. A warehouse can ship fast and still ship wrong. A portal can look clean and still be inaccurate. An SLA forces the provider to define what accuracy means, how it is measured, how often it is reported, and what happens when it is missed.

Why inventory accuracy SLAs exist in the first place

Inventory accuracy is not only a warehouse metric. It is a revenue metric. If your system says you have 50 units and you really have 5, your storefront sells 45 promises you cannot keep. If your system says you have 5 units and you really have 50, you pause marketing and lose sales for no reason. Either way, inaccurate inventory is a tax on growth.

Connor Perkins, Director of Fulfillment at G10 Fulfillment, described what customers often bring with them when they switch providers: "One of the pain points our clients have experienced with previous 3PLs is inventory accuracy." He also described what that pain looks like in dollars. They were "losing money by shipping wrong items or wrong quantities of items." An SLA exists to prevent that loss from becoming normal.

In practice, an SLA is not about punishment. It is about clarity. It creates a shared definition of acceptable performance and a shared process for improving when performance slips.

What "inventory accuracy" should mean in an SLA

The first trap is vague language. "Accurate inventory" is not a definition. Your SLA should define exactly what is being measured. Many brands start with on-hand accuracy: the degree to which the WMS record matches the physical inventory. That is important, but it is not enough. You also want location accuracy, because inventory that is in the wrong place is functionally unavailable.

Strong SLAs also clarify what inventory states are included. Is accuracy measured only for sellable inventory. Does it include quarantine, returns processing, and damaged goods. Does it include allocated inventory. If a provider counts inventory in staging as available, your on-hand number might look great and your fulfillment might still fail. Accuracy without status clarity is a setup for oversells.

Why the WMS and scan discipline determine whether an SLA is achievable

Some 3PLs will agree to an accuracy SLA on paper while running workflows that make it impossible. If people move inventory without scanning, the system cannot maintain truth, and accuracy becomes luck.

Connor described the baseline that makes accuracy measurable: "You want everything to be scanned in the warehouse, nothing done on paper." A scan-based operation is what turns accuracy from a promise into a trackable output. If the warehouse is not scan-based, the SLA is a piece of paper with no enforcement mechanism.

On the system side, Bryan Wright, CTO and COO of G10 Fulfillment, described what the WMS has to do to support real accuracy: "A good WMS tracks inventory through the warehouse at every point that you touch it." If the WMS only updates at a few checkpoints, inventory can drift in the messy middle. Drift is what causes SLA misses.

Bryan also gave a vivid example of why tracking depth matters: "At any point in time, I know that Bobby has this product on fork 10 right now, and if I needed to go find that product, I just got to go find Bobby on fork 10." If a provider can locate inventory that precisely, they are far more likely to keep location records accurate, which is a core part of inventory accuracy in practice.

How to measure inventory accuracy in a way that does not get gamed

The second trap is measurement design that can be manipulated. A provider can claim high accuracy by counting only easy items, counting only slow movers, or counting only after adjusting records. A good SLA defines the sampling method and the audit method.

Cycle counts are often the most practical measurement tool because they happen continuously and they reflect real operating conditions. The SLA should define cycle count frequency, selection logic, and how variances are handled. You can require higher frequency for high velocity SKUs, high value SKUs, and known problem locations. That is how you keep the SLA focused on the inventory that actually drives revenue and customer experience.

When variances occur, the SLA should require investigation, not just adjustment. Adjustments fix the number. Investigation fixes the process. If the SLA does not require root-cause work, accuracy will slip again.

What targets are realistic in an inventory accuracy SLA

Targets depend on your products, your velocity, and your complexity, but the principle is consistent. The SLA target should be high enough to protect customer promises, and the measurement should be credible. Many operations aim for high accuracy, but the real question is whether they can prove it and sustain it without manual heroics.

Joel Malmquist, VP of Customer Experience at G10 Fulfillment, described a performance benchmark that reflects disciplined execution: "We have over 99.9% ship accuracy of these orders." Ship accuracy is not the same as inventory accuracy, but it is a strong signal that verification and process discipline are in place. In a well-run warehouse, high ship accuracy and high inventory accuracy tend to travel together because both depend on scan-based workflows and reliable location truth.

Reporting and visibility are part of the SLA, not an extra

If your SLA exists but you cannot see performance, it will not protect you. Reporting should be defined: how often accuracy is reported, what the report includes, and how disputes are handled. You want to see accuracy by SKU, by location, and over time, not just an overall percentage.

Customer-facing visibility also matters because it reduces ticket noise and interruptions. Interruptions lead to missed scans and errors, which harms accuracy.

Maureen Milligan, Director of Operations and Projects at G10 Fulfillment, described the value of real-time access: "What these real-time portals provide our customers is 100% visibility." She also described what that enables: "They can actually watch those progressions going on." When customers can see inventory and order progress, the warehouse stays focused on execution, and SLA performance becomes easier to sustain.

What to include in the SLA beyond the number

A good SLA also defines response times and remediation. How quickly must the provider investigate a reported discrepancy. How quickly must they provide transaction history. How quickly must they correct inventory records when needed. Accuracy is not only a rate. It is also how the provider responds when accuracy is challenged.

This is where audit trail requirements matter. Bryan described the traceability strong systems provide: "We have portals that show you the data. We have history that shows you all of that tracking." If a provider can produce that history quickly, you spend less time arguing and more time fixing.

Finally, SLAs should define how changes are handled: new SKUs, packaging changes, seasonal volume spikes, and channel expansion. Accuracy requirements do not disappear during peak. If anything, they matter more because the cost of errors rises with volume.

How G10 approaches inventory accuracy SLAs

G10 focuses on scan-based execution, transaction-level tracking, and customer-facing visibility so inventory accuracy is measurable and sustainable. Connor summarized the baseline: "Having a 3PL and WMS that is 100% scan-based is crucial." Bryan described the tracking standard behind that baseline: "A good WMS tracks inventory through the warehouse at every point that you touch it." Maureen connected visibility to fewer interruptions and cleaner data: "What these real-time portals provide our customers is 100% visibility."

If you are considering a 3PL, an inventory accuracy SLA is one of the fastest ways to protect your business from quiet operational drift. When accuracy is defined, measured, and reported with credible audits, you can sell confidently, plan promotions safely, and stop learning about inventory problems only after customers do. If you want to compare SLA approaches and see what inventory truth looks like when it is tracked at every touchpoint, you will get more value from one direct conversation than from a month of guesswork.