3 Steps to Reducing Inventory Shrinkage

The year-end physical count often reveals inventory losses you were not expecting to incur.  That shrinkage can be the result of flawed receiving processes, mislabeling of products or even theft.  It can be tempting to focus only on accuracy, but productivity must be considered as well.  Here are 3 simple steps to implement that will help you to increase both accuracy and productivity while eliminating any year-end surprises:

  1. Track your put-away location. As items are received into your ERP, it’s easy to make the mistake of assuming the product has been put away in their default put-away location.  But what if the warehouse staff puts the product in another bin due to overflow?  Recording your put-away location can give you greater visibility into the placement of your inventory and may lead to unexpected productivity improvements. For example, your fastest selling items may be stored near the back and should be brought closer to your shipping dock.  Knowing what you have and where you have it can prove invaluable.
  2. Cycle Count by Bin. Once you know where your items are stored, you can begin counting them more frequently.  Institute a schedule of weekly or even daily counts of a specific selection of bins to ensure that the items reflect the quantities in your ERP system.  Counting more frequently and systematically will give you real-time visibility into your inventory levels and warn you of a possible shrinkage issue before it becomes a huge problem.
  3. Pick by Location. It is easy to create a pick list by order but the true productivity and accuracy improvements come from picking by bin.  Most ERP systems have the ability to print a pick list in bin location order.  Simply print the pick list with one order or a group of orders then deliver that to your pickers via paper or handheld computer.  The picker will be directed through the warehouse in the most efficient path and is asked to pick from specific bins.  This type of picking helps orders ship quickly and tracks your inventory levels closely.


Learn more about Putting Your Warehouse to Work for you. Attend a FREE Webinar and learn more about reducing shrinkage while maintaining productivity by tracking your put-away location, including cycle counts and picking by location.

June 22, 2011
1:00PM – 2:00PM Eastern Time
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