Anyone involved in warehousing knows the challenges, headaches, and embarrassment that can come from not having incorrect stock balances. Not having inventory in stock that has been promised to customers, replenishing stock too early or too late, and buyers and salespeople not being able to trust your data and reporting are all symptoms of inaccurate stock balances.
Jon Schriebfeder, president of Effective Inventory Management, Inc., lays out four key ways to ensure that your stock balances are accurate and stay that way:
1. Record Any & ALL Movement of your Material
People are good at finding excuses to go around a system put in place to guide them. Many times, when a material transaction is not properly recorded, it is because an individual found a reason to go around the system. However slight, any material-related transaction needs to be properly documented in order to keep your stock balances up-to-date. Schriebfeder recommends working with all of your people to develop a manual or guide that describes step-by-step how each inventory-related transaction MUST be documented. Once the manual is in place, make sure it is enforced with strict penalties!
2. Put the Right People in the Right Roles
Do not underestimate the importance of the individuals handling receiving and stocking! Receivers must be able to identify products, differentiate between similar looking products, and ensure that the amount and quality of the products received are suitable. Therefore, that task should only be given to experienced personnel who have an intricate knowledge of your inventory. The same goes for the individuals who stock your warehouse. It is also imperative that your warehouse managers are capable of delegating responsibility and ensuring that the tasks that they delegate are completed to your exact specifications. Filling these three positions with experienced and knowledgeable personnel will help to ensure that your policies are upheld and your stock balances are accurate.
3. Consider a Bar Coding Solution
By implementing a bar coding solution, you can verify that the correct items are being picked and put away. Bar coding also enables instant updating of your distribution management software solution while eliminating manual errors that can result from “keying” in information.
4. Replace Your Annual Physical Inventory with a Regular Cycle Count
Conducting an annual physical inventory is not nearly as efficient or effective as counting a few products each day of the year (also known as cycle counting). You can select the items you are going to cycle-count randomly or based on their geographic location in your warehouse, but the most effective way to maintain accurate stock balances is to rank your products based on which are sold most often and count them the most frequently. This means that slow-moving and dead-stock items would still only be counted once annually. While implementing a regular cycle-count can be challenging, it is well worth the effort to know exactly how much of your most profitable products your have on hand each day of the year.