Typical warehouses achieve inventory accuracy of 98%* and inventory variance of 2%, which at first glance might not seem like a huge issue. But an inventory variance of any amount should be treated as a problem, as persistent stock losses mean written-off profits (particularly if a warehouse is dealing in high value items) and customer service implications.
Issues such as miscounts or oversupply (due to human error), unreported product damage, incorrect labelling or locations, and sometimes even theft can all contribute to inventory variance levels. Unfortunately for many warehouses the problem lies dormant, only becoming realised when it’s too late; usually when the WMS system shows enough stock to fulfil an order when there’s not enough stock in the warehouse. This results in either a short order fulfilment when delievering items to customers, or production delays within a pick-for-production environment, particularly if there are long lead times further up the supply chain.
Plugging the gap
In an attempt to combat inventory variance, many warehouses verify stock levels as they arrive at goods-in. This practice avoids short supply by ensuring the number of items arriving from a supplier match the number stated on the invoice. However, this procedure only tracks inventory up until it leaves goods-in, and once stock makes it to the racking, problems such as over picks and theft are not accounted for.
Almost every warehouse and distribution centre manager has gone through the painful task of taking a physical inventory. Usually held to coincide with the end of a reporting period, all warehouse activities are frozen while every piece of inventory is counted, causing huge amounts of inconvenience and cost.
A less disruptive alternative to physical counts are cycle counts which involve counting a small subset of inventory in a specific location on a specific day, until all the stock has been counted over time and the counting begins again.
Some warehouses have added technology to their cycle count process, to ensure the highest possible amount of count accuracy. The Mobile Picking Solution from Avery Weigh-Tronix provides all the tools needed for fast, accurate inventory management thanks to its database of PLU’s, scanning technology and high accuracy counting scale.
The Mobile Picking Solution changes the dynamic of inventory management by allowing pick operators to verify inventory levels in real time and compare them with the stock levels in the WMS. This is done as part of the natural pick process by periodically adding an inventory pick instruction to pick orders being generated from the WMS. The frequency of these picks can be set so that over time all parts within the warehouse are checked. The Mobile Picking Solution carries all the tools and technology to make this process quick, easy and accurate - saving the time and cost involved in shutting down operations to do a physical count and freeing up perpetual inventory (PI) teams to focus on picking.
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*Tillman, J., Manrodt, K., and Williams, D. (2018), WERC DC Measures: 2018 Trends and Challenges, Warehousing Education and Research Council, USA