Two Counting Techniques for Better Inventory Accuracy

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By Jennifer Taylor October 24, 2016

The current generation of warehouse management systems (WMS) can eliminate inaccurate orders, help to allocate labor, and correctly project future demand. But if inventory on the shelf doesn't match the database's numbers, no piece of software can deliver on these goals every time.

The solution, of course, is inventory counting. Periodic comparisons between physical SKUs and their digital representations will uncover any inconsistencies, ensuring that the WMS' data is actually based in reality.

So what's the best way to count inventory? There are two dominant counting strategies at work in today's warehouses and distribution centers. The size of a given operation, its labor capabilities, and the availability (or lack thereof) of downtime all help to determine which option will yield the best results.

Forklift Work Platform (FWP)

    1. Physical Inventory Counts

    This is what most warehouse employees think of when they hear the word "inventory." It's a comprehensive physical count of every SKU on every shelf in the facility.

    It's not hard to imagine how time-consuming and labor-heavy this process is. Still, there's no better way to get a snapshot of what's really going on with warehouse inventory.

    The keyword here is "snapshot." Physical inventory counts are ideal for checking the WMS' ability to stay accurate during high-stress periods, like holiday rushes. These comprehensive counts can help improve projections for the next year's demand. However, managers may have to weigh those benefits against the production drain that inevitably occurs when a huge part of the workforce is busy counting stock.

    Managers can reduce downtime during physical inventory counts by ensuring easy access to all SKUs. Depending on shelving unit heights inventory managers may require a personnel-lift, such as the Forklift Work Platform from Solus Group. Once staff has effortless access to inventory, barcode scanners or other mobile devices will help them count quickly and accurately.

    2. Cycle Counting

    Rather than conducting a single massive count every year, why not count a little bit every day? That's the idea behind cycle counting.

    To get the most out of cycle counting, managers have to find the best way to divide up inventory for each stage if the count. Some decide to count one aisle — or even a single shelving unit — per day. Industry publication Material Handling & Logistics offers an interesting alternative.

    The 2015 article credits warehouse-management consultant Don Benson for the concept. Rather than conducting cycle counts based on location, Benson recommends ranking SKUs and counting them as follows:

    • Inventory that falls within the top 80 percent of sales value, ranked "A," should be counted six times per year.

    • Items in the next 15 percent of sales value are ranked "B." Benson says they should be counted three times per year.

    • Items ranked "C" fall within the next 4 percent of sales value, and should be counted twice annually.

    • Items in the bottom 1 percent of sales value, or SKUs that don't sell at all, are ranked "D." They should be counted just once a year.

    The idea behind this technique is simple. Items that move more often are more subject to error. By devoting more staff time to SKUs that are more error-prone, you're more likely to uncover illuminating discrepancies.

Like physical inventory, cycle counting depends on easy, clear access, which often involves trips to the top of a very high system of stands. Again, Forklift Work Platforms are ideal for this task. They lock securely onto lift truck forks, effectively converting your existing material handling device into a safe, OSHA-compliant personnel lift.

There are advantages to both methods of counting inventory. Cycle counting provides ongoing oversight of actual inventory. However, because it takes place over time, it doesn't provide a detailed portrait of the moment like physical inventory counting does.

If you can't decide which is right for your facility, you can always use both. After all, plenty of leading warehouses conduct both cycle counts and annual physical inventory counts.

References:

McDougal, John Mark. “Cycle Counting Exposes Inventory Ills.” MHLNews. Penton, 11 July 2013. Web. 24 Aug. 2016.

Rubinger, Jack. “Counting Techniques to Improve Accuracy in the Warehouse.” MHLNews. Penton, 16 Sept. 2015. Web. 24 Aug. 2016.

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