When last we met, we discussed some keys to reducing inventory costs. We talked about 6 of them and how to implement them, though we also pointed out that there were quite a few more.
Another way to lower inventory costs is to insure our inventory counts are correct. OK, when you stop laughing, give me a chance to explain. It’s possible. “Sure.” You may be thinking. But – let’s talk about it.
I have an example from my past work life – having worked for the # 1 golf ball company in the world. That would be… Titleist! When all of the balls were manufactured in 2 plants about a mile apart in Massachusetts, we made somewhere in the range of 28 million dozen balls per year.
That, my friend, is a lot of golf balls.
While I didn’t work in inventory control, I knew the accuracy count of that many balls was extremely high. If one company and 2 plants can keep track of that many things that bounce and roll; you can get better at keeping accurate inventory!
Here are some tips to help you do that. And if you’re ever in Florida, come see us. We’re inventory mad-men! (Yes, and women). And we’d love to tell you how we do it – better than most.
Start with Cycle Counting – I was also fortunate to have worked at one of the oldest manufacturing mills in the country that converted (cut) and ink-jet coated paper. So the main inventory items were comprised of – paper, boxes, chemicals. Lots of all of them. The company had semi-annual cycle counts to physically count inventory and match it to what the system says we have. It’s a way of knowing how bad (or good) you are and from there, take steps to get better.
Have (Good) Inventory Procedures – “Chuck, go count the spindles on rack 21” is NOT what I would call good inventory. The important thing to remember is to ensure that EVERYONE does inventory the same way. Not, Jimmy does it this way and Max does it like that. Once you have consistency, you can move to optimization.
Put Ice on the Sore Thumb – The one major problem that keeps occurring. Find it, research it, fix it! Whatever the biggest inventory issue is. Attack it and get it fixed. If it’s one item that spoils, gets over-counted, or is the problem-child of your accurate inventory, Get it straight. Celebrate. Move on.
“Are You Sure This Goes Here?” – You know that’s never something you want to hear. Some of the other things you don’t want to hear: “Jeff – Why is that pallet there?” “Did you already count them?” “What was it last time we counted?” And more… Make sure items are stored and moved strategically. Take the time to do it right the first time. You know if you hear comments like these, it’s time to make some changes.
Burn the Spreadsheets! – OK, we don’t really want to start a fire in your warehouse – especially if the spreadsheet is on a computer… But just as we need to have consistent procedures, we also need consistent methods of tracking and counting. It’s OK if your inventory is done on a template that you made up and printed. As long as… anybody??? – That’s right. As long as everyone else counting uses the same template. Ahhh… Nirvana.
Land of the Misfit Toys – Wow! A Christmas reference (Rudolph the Red-Nosed Reindeer anyone?) In a warehouse, the land of the misfit toys can be half-finished products, the infamous WIP, obsolete inventory. Did you ever here this during inventory, “Fred, do we count all of this stuff over here in the corner?” “No Pete. That’s obsolete inventory. Remember we’ve talked about it the last 6 months?”
Sorry to say, but if you have misfit toys as the above. Get your accountant. Bring him or her over. And tell them to start writing stuff off as you dispose of it. It may sting (for the bean counters), but everyone will be happy next month when the crap, er, stuff is gone.
What do you know? Another 6 tips – this time for accurate inventory counts. Like with ways of reducing inventory counts, there are certainly more ways to get an accurate inventory count.
Give us a call and let us know if we can help. And if you see any bouncing or rolling golf balls around that are not on a golf course – I guarantee they’re not Titleist’s.