Chuck LEAN Business Consultant
The Warehouse is your Bank. There is MONEY in it. Not pallets, parts, items, bins or boxes, but the company's MONEY. Protect it. Care for it. It has to be secure. There has to be genuine discipline and teamwork to meet the goal of 98-100?curacy daily.
The inventory: Any part number or commodity is money in the bank. You probably know how much money is in your wallet. If you opened your wallet and NO money was there, what would you do? You would figure out where it went (root cause).Goal: The on-hand number in the warehouse equals (=) the on hand number in your ERPWMS or computer software 98-100% of the time.
Is your inventory 98 ?curate?
If so, how did you do it?
Cycle count the computer-generated items provided daily by part number (with no on-hand balance showing) from the ERP/computer software system. It is imperative that you count the warehouse on hand amount first in all locations and then compare it to the ERP/computer on hand amount. This is known as a "blind count." Knowing the ERP/computer on hand balance while you are counting the warehouse on hand balance, will jeopardize the cycle count and influence your counts. You can cycle count by location daily until you do the entire warehouse, use the A, B, C inventory value classification of items or the 80/20 Pareto principle wherein 20 items out of a list of 100 are 80% of the total. Cycle count ONLY when warehouse, or any transaction, activity is frozen. Post today's percentage accuracy on the cycle count board/inventory accuracy report to track progress to the 98-100% goal.
The distribution warehouse cycle count team divides the number of CORRECT items by the total number counted to obtain your accuracy figure for the day: 4 correct out of a 10 count equals (=) 40?curacy for the day. This percentage is not good. Any variances that occur between the on-hand balance in the warehouse and the ERP/computer indicate the need to find the root cause of the variance.The root causes may be:
Both numbers should be the same. When you tell a customer you see 100 on hand on the computer, the warehouse on hand also must be 100 units.Once the root cause is found, a Standard Operating Procedure [removed] It is one of the foundations that must be in place for world-class distribution/warehousing. It cannot be taken for granted.
Don't say we have "90% + accuracy in the warehouse" - KNOW THAT YOU HAVE 98-100?curacy by daily cycle counting and root cause analysis.