Inventory inaccuracy is a nightmare for any warehouse. If left unchecked, inventory inaccuracy can lead to a negative feedback cycle of declining productivity and increasing inaccuracies. A downward spiral where warehouse productivity declines and feeds even more inaccuracies in the system.
Left to itself, inventory inaccuracy erodes profitability and warehouse efficiency in a big way:
- Poor customer service when a wrong product is shipped to a customer or a wrong delivery date is promised
- Increase in Backorders, because ATP system thinks there is plenty of stock
- Lost productivity when operators run around looking for missing products
- High product obsolescence when the missing products are “found” but too late to be of any use
- Direct hit to profitability when there is an inventory write off
- High inventory levels because people need the extra safety stock to hide the inaccuracies
- Inefficient warehouse usage when people need to stop warehouse operations to carry a physical count in order to satisfy auditing requirements
Naxtor Technologies’ Warehouse Management System (WMS) offer few tips to improve the warehouse Inventory accuracy, which include the following:
Use RF devices to transact on the spot. This is the simple way to improve inventory accuracy. When transactions are recorded on the spot in real time, there is less chance of error. This means going paperless and using task management in WMS to convey pick instructions to operators.
Train Warehouse Personnel to follow documented procedures when exceptions occur in the warehouse. The warehouse workers should be familiar with the procedure when an exception occurs e.g. if a product is not found as suggested by the system or damaged, the operator should know how to log exception and follow the steps.
Find and fix root cause when exceptions occur in the warehouse. Task execution using RF is a better way to record exceptions in real time as they occur. Analyse exception data in warehouse control board to see where and why exceptions are occurring. Are more exceptions being recorded for certain items or certain employees? Why? If a shipment of wrong product was detected, where did that pick come from and was the inventory corrected for the original item? Was wrong putaway the cause for a pick exception?
Storage Policy of items in the warehouse also impacts accuracy. To avoid picking the wrong items, make sure that items similar in appearance are stored apart from each other. Commingling items in the same locator is also a recipe for shipping inaccuracy. People also need to make sure that locators properly marked and physically distinguishable. When slotting items in the locator make sure that the locator corresponds to the item velocity and has enough space to store the maximum quantity of item specified. If a locator stock is overflowing into warehouse aisle, it is usually not a good sign. If people have negative inventory allowed flag enabled in their warehouse, they need to question really hard as to why it is needed.
A counting policy is a must for every warehouse. Cycle counting is an ideal way to gradually improve inventory accuracy. While eliminating yearly physical count is a noble goal, it can only be achieved when the warehouse has reached a certain threshold of accuracy level.
Bar codes or RFID are good auto-ID technologies to improve accuracy. Barcodes have an error rate that is significantly lower than human data entry. Additionally DFI feature in WMS can further improve accurate data entry.
Checks in warehouse processes to ensure accuracy. Example of such checks could be an additional packing step to scan items prior to putaway or shipment, a weighing scale linked to a diverter to weigh and compare standard and actual weight of LPNs bound for storage or staging, etc.
Check Digits is another way to improve data entry accuracy. When people dispatch an operator to a suggested locator, they should make sure that the picks are coming from the suggested locator and not from any warehouse locator. Locator check digit is a great way of ensuring that operators perform picks and putaway at the same physical locator as the data entered in WMS.