You have counted your entire inventory, posted your variance report and made all the necessary adjustments…and it only took a month to do it. We hear that scenario from distribution companies all the time as they struggle to complete their physical counts. They pull in employees from every level, provide fresh doughnuts and pizza then settle in for a huge amount of data entry. However, it doesn’t have to be that difficult.
We have learned a few tricks over the years to help ease the pain of a physical count. Whether you count your inventory every week or once a year, you will be able to gain something from these simple strategies.
- Assign Locations. There is a saying that goes, “Everything has a home” and that kindergarten lesson carries into your warehouse space as well. Determine which items you sell the most and store them closest to your shipping and receiving areas. Make sure that your employees know exactly where an item belongs and record that location in your Enterprise Resource Planning (ERP) software. It’s unrealistic to think there will always be enough room in that location so assign overflow bins as well. These bins can be buckets, shelves, pallets or even aisles depending on the size of the items you inventory. The location should be labeled with a picture so that it is easy for even your newest employee to place inventory in the proper location.
- Divide and Conquer. Segment your warehouse and assign sections to a team of people. Each person should know the exact area they are counting to minimize duplicate efforts. Spend time planning who will be in each section and make sure a supervisor is in each team to handle any questions that arise during counting. The supervisor should be familiar with the inventory being counted. This will reduce the amount of time your people are stopping the count to find out the answer to a question. Also devise a system that will show which items have already been counted. Some of our customers utilize a tag counting methodology while others simply place a sticker on a box once to show that it has been counted. Use whatever system works best for you.
- Consider Automation. People, even at their best, are not perfect. Barcoding systems have come a long way in helping small to medium sized businesses complete a physical count quickly. Studies have shown that barcode scanners can reduce physical count time by 75% or more. They do this by eliminating errors and data entry. A manual count is generally an easy process but the data entry can get overwhelming. It often involves many trips back out to the warehouse to check a count that seems off or to verify a possible handwriting error. An automated system lets you simply scan all of the items in your warehouse then post that count directly to your ERP system. Variances are checked and the count is updated without any tedious data entry.
Interested in more tips for increasing the efficiency of your warehouse? Download “Warehousing- The Foundation of Distributor Profitability.”