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Warehouse Management

5 Reasons Cycle Counting is Awesome!

By Marc Kepler, Warehousing Product Manager, Lanham Associates

 

When disruptions or problems occur in your supply chain, business can be interrupted, customer service levels can go down, or money can be lost. To prevent this, distributors strive to streamline business processes in order to improve the overall efficiency of the entire organization.

A warehouse management system can help streamline operations through the scanning of items and bin locations using handheld devices allowing inventory to be handled in real time. Unfortunately, regardless of how robust a company’s standard operating procedures are, humans are capable of making mistakes. There are a number of ways the physical bin location balance can get out of sync with the systematic bin location balance. Inventory can be physically placed into the wrong bin; it can be damaged, stolen, or moved with the best of intentions. A handful of insignificant mistakes can eventually grow to become a serious problem.

The overall efficiency of a warehouse is based on the number of orders that can be picked, packed, and shipped. Consequently, in fulfillment operations, the most important role in the warehouse is usually the picker. A picker needs to have confidence that when they go to a bin to pick inventory, the inventory will be there. Any time a picker has to wait for inventory to be corrected, or additional inventory to be delivered, the overall efficiency of the warehouse goes down.

Cycle Counters to the Rescue!

The main goal of a cycle counter is to perform periodic counts and maintain accurate inventory. Cycle counting helps ensure that the physical inventory balance matches the systematic inventory balance by bin location. While physical inventory counts may temporarily provide accurate inventory for a short period of time, what happens next week or next month? The act of cycle counting is not only reactive to the mistakes made by warehouse employees, but it can also be proactive by maintaining accurate inventory for the overall fulfillment operation.

Here are 5 benefits to having a cycle counting process in place:

#1: Cycle counts are less disruptive to daily operations than a full physical inventory count. They allow you to continue to receive materials, fill orders, and remain in operation.

#2: They provide an ongoing measure of inventory accuracy. Knowing how much inventory is in each bin location can decrease the following:

  • Time it takes to get orders out the door
  • Amount of emergency replenishments when you have less inventory than expected
  • Number of accidental replenishments when you have more inventory than expected
  • Number of ad hoc inventory adjustments to correct inventory placed in the wrong bin/location

#3: Cycle counting can help identify inventory procedural issues and improve standard operating procedures, including the following:

  • Bad employee behavior caused by:
    • Poor material handling practices
    • Consistent picking or stocking mistakes
    • Theft of goods
    • Sales and marketing personnel removing inventory without following procedures
  • Identifying and addressing damaged inventory before the item gets picked or allocated to an order
  • Inventory stored incorrectly:
    • Heavy material placed on high racking
    • Inventory stacked too high
    • Violations of the company’s allergen and quality control plans
  • Timely stock rotation:
    • Rotates inventory regularly
    • Helps identify and address expired inventory
  • Trends – for example, consistent issues with specific items or bin locations, etc.

#4: Counts can be tailored to focus on items with higher values, higher movement volumes, or areas that are critical to the business process.

#5: Cycle counts provide your company with the confidence that your physical inventory matches your systematic inventory. Having that peace of mind across all parts of your organization, from accounting, to demand planning, to warehousing, to sales, is invaluable to the overall efficiency of your supply chain operations.

Don’t let cycle counting take a backseat to the other operations in your warehouse! It is one of the most important tasks you can implement in your warehouse to help uncover mistakes and to maintain accurate inventory.

If you are struggling to find the time to implement a cycle count, check out these 3 Ways to Simplify Cycle Counting. Or send us an email: education@lanhamassoc.com.

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