If your organization is still taking a multi-day break once a year to tackle the much-vaunted annual physical inventory, there’s a good chance you haven’t discovered your Warehouse Management System’s (WMS) support for a cycle count program as an alternative to the annual event.

WMS’s Cycle Count

Have you discovered your WMS’s Cycle Count functionality? (Part 1)

Once a year is way to seldom to reconcile reality with what your WMS says you have in inventory, especially for the fastest moving or highest valued items you carry. Because you aren’t doing it often enough for personnel to develop sufficient proficiency with the process, errors are bound to occur. And there’s a good chance it will be 365 days before you discover them. In the mean time, the organization resorts to extra safety inventory to avoid stock outs, and suffers the added carrying cost of doing so.

Cycle counting is the alternative to counting just once a year; you’ll do some counting several days a week. With cycle counting your organization will develop a much more accurate inventory, weed out and dispose of dead stock more frequently, find and fix errors such as mislabeled raw materials or finished goods and uncover unit errors, like thinking you shipped 50 widgets when you really shipped five. Cycle counting gives you regular confirmation of actual on-hand quantities and enables the warehouse to better serve both its internal and external customers.

Your WMS can manage the entire process for you, and when you link it to bar code readers and RFID tags, the process is speeded up considerably and accuracy soars as well. In Part 2 of this piece, we’ll look at ways WMS can help classify different items in inventory so that it can determine what items to count and how frequently.

One of the benefits of cycle counting is that it raises organizational awareness of the importance of maintaining an accurate inventory. Rather that a one-day event, counting inventory is part of the daily workflow. Purchasing, warehousing and manufacturing departments become active participants in continuous improvement of the process. It also greatly improves you ability to indentify and fix inaccurate data, such as mislabeled, lost or misplaced stock. Supply chain operations become tauter in light of accurate inventory numbers, and inventory analyses by the factory, accounting or even linked in suppliers becomes more actionable. Out of stock SKUs become a thing of the past, and error in receiving, put away, replenishing, packaging, returns and fulfillment are virtually eliminated. Inventory turns increase because you can more accurately measure what’s in stock and what’s on its way out the door. Bottom line: Customer service improves and the warehouse reduces both operational and inventory carrying costs.

Cycle counting is one of the major business process changes that can reinvigorate an entire organization. Once you’ve begun the process, warehouse personnel will be counting for an hour or two several days a week, in a highly disciplined manner prompted by the WMS.  Automated readers that wirelessly update inventory records accurately and instantaneously will replace old-fashioned paper-based methods of jotting down SKUs and quantities, then having someone else key them into the system at a later time.

So how do you implement a cycle counting program? On to Part 2.

Written by :

pamelarichards