Probably the most ongoing challenge to improve and maintain the productivity and quality performance of your distribution center is through the quality of the inventory data you use to operate it. In this column I will suggest additional ways you can keep your system data accurate and clean.
Every time someone touches the inventory, there is an opportunity to have movement without an appropriate data adjustment. I once had a client who was so concerned about inventory accuracy and the problems they had experienced that they installed a security device that required hand-print verification to allow entrance into the warehouse. No one except warehouse staff was allowed into the warehouse unescorted.
While I have known others who wished they could install that level of security and control, most of us have to work every day to correct the inventory problems that we all create, those of us who work in the warehouse and those who come from the office to do the right thing, by getting a sample for sales, another for the lab, or for a customer in the lobby, or who pick up a piece to look at it and place it into another location, etc., without recording the movement. It happens and we need to implement ways to correct these errors in a timely way.
There are several ways to approach maintaining inventory accuracy, and as in most of what I have been writing in these columns, the key difference between them is often that some we treat as events and we implement some as processes. Specifically, event decisions are the times we decide to do something when it is necessary or timely, and processes are what we implement to operate every day or week without any further discussion or decision. For something as important to your operation as data quality, I recommend that you have some of both.
Probably the most common event to maintain inventory data quality is to count each piece of the inventory and compare/reconcile the result with the values in your records, in total and for the more advanced systems, by location. Over the years most companies have scheduled this “Inventory” event to occur once a year, usually near the end of the fiscal year. Some do this count twice a year. Many companies have moved or are transitioning to replace this inventory counting event with a process called cycle counting -- to count portions of the inventory throughout the year. There are many ways to do this work and I recommend you do a Web search or talk with your accountants about what would be best for your company. I recommend the change to cycle counting. I have written about one approach in Implementing cycle counting you can find on the Affordable Change page at http://www.warehousecoach.com/. The process can cost less and provide a higher daily inventory accuracy level.
I also recommend that, depending on the number of SKUs or the size of your inventory, you create an inventory control position to maintain the accuracy of your data. We have found that the net improvement in productivity will typically pay at least for a part-time position.
There are probably many other approaches that may work for you. Please let me know your approach. I look forward to writing another article describing several options from your feedback.
Don Benson, P.E., has been consulting to retail, wholesale and manufacturing organizations for more than 25 years. His practice focuses on improving the effectiveness of warehouse and distribution operations. His office is in Oakland, California. He can be reached at [email protected] or 510-482-3436.