Warehouse managers know that conducting a physical inventory can be a cumbersome, labor-intensive and disruptive process.
"We used to hire 35 people to come in on a Saturday, once every quarter, to do an inventory,” says Thom Raddatz, warehousing manager at Seaquist Closures (Mukwonago, Wis.), a designer and manufacturer of dispensing closures and systems. “Normally, we run 24/7, 363 days per year, except when we have to shut down to perform a physical inventory.”
However, physical inventories are becoming increasingly rare, and may soon become extinct at Seaquist’s Wisconsin warehouse, where it manufactures closures that allow consumers to easily pour, squirt and spread everything from sports drinks and grape jelly to toothpaste and laundry detergent.
More Accurate and Less Disruptive Cycle Counting
Instead of conducting quarterly physical inventories, Seaquist Closures now uses rugged mobile computers from Glacier Computer (New Milford, N.H.) on its 14 Toyota and Raymond lift trucks, and warehouse management software from SAP (Newtown, Pa.) to perform cycle counting, an inventory management procedure that systematically counts a different subset of inventory every day.
Take, for example, the situation where a lift truck operator is performing a pick operation at a particular pallet that is scheduled for cycle counting. After the bar code for that pallet is scanned, the Glacier system will request a count of the number of boxes remaining on the pallet. If the number that the operator enters on the touch screen is different than the number recorded in the database, the computer asks, “Are you sure?” and the operator performs a recount.
In this way, Seaquist Closures has a continuous audit of the accuracy of its inventory numbers. Unlike the traditional physical inventory process, cycle counting has the advantage of providing ongoing feedback to the warehouse operation, so that any procedural problems can be quickly addressed.
“By acting on this feedback, we have been able to consistently achieve better than 99% accuracy, which means that we rarely encounter any variance between the physical inventory and the book values,” Raddatz says.
As a result, Seaquist has gone from quarterly physical inventories to a single year-end physical inventory. Because the year-end checks have verified the accuracy of the cycle count for the past five years, Raddatz expects that the accounting department will no longer require any physical inventories. The cycle counting procedures also meet the stringent reporting requirements of the Sarbanes-Oxley Act.
More accurate inventory management is just one of the benefits that Seaquist Closures has achieved after automating its finished goods and raw materials warehouse. In the five years since the Glacier lift truck computers were installed, productivity has improved significantly. The Seaquist Closures’ warehouse facilities now handle 35% more inventory with no additional staff or equipment.
Automation has also dramatically improved service. For example, once a lift truck operator presses “yes” on the touch screen to confirm that a truck is loaded and ready to go, the billing processes starts automatically. A legend with barcodes for each of the top 25 freight companies makes it easy for the operator to generate a PRO (pick up record) number for the truck driver. If the customer calls a minute later, a customer service representative can respond immediately with the status of the order and detailed shipping information.
Seaquist Closures is currently installing its second generation of rugged personal computers. “We originally chose Glacier because they were the only company that was capable of providing both color touchscreens and CPU processing capability that could support the SAP graphical user interface. They were also able to meet our tight delivery schedule,” Raddatz says. “It would have been a disaster if our SAP system was up and running but we lacked the wireless computer terminals on our forklifts to take advantage of the new system.”
Seaquist Closures upgraded to the Glacier model GX-1200 that has a soft-shutdown capability. The GX-1200 also has an internal uninterruptible power supply to power the computer when lift truck batteries are being replaced.
“The Glacier PCs are extremely reliable and easy to use.” Raddatz says. “Our cycle counting procedures and other automation initiatives have succeeded because out people are happy using the Glacier computers and they can perform tasks quickly, easily, and accurately--all of which is good for employee morale and good for business.”