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You might have a bad warehouse if... your cycle counting involves labels and a sharpie.

By Kate Vitasek | 09/14/2009 | 7:12 AM

My first blog on labeling with Post It Notes was such a hit, I thought I would share another good story involving creative uses for labels. The good news - these were at least permanent labels instead of Post It Notes!

This week's bad warehouse used labels and a sharpie marker system to "provide instant awareness as to the current inventory level and to help reduce the time spent doing cycle counts." The inventory control team would place a label on the boxes and pallets of product in each storage bin. The physical count of product would be written on the label allowing warehouse personnel to know at a glance how many units were contained in the box or on the pallet. As product was picked from stock, the picker would simply change the quantity on the label with a sharpie marker to keep a running balance of inventory. Some pickers would scribble through the old quantity, some would simply write a new number, assuming that the next person would intuitively know which number was the right one (maybe it is the one with the circle around it.)

The photos below are examples of these bad practices

Cycle count gone wrong - 1 

I strongly recommend that companies NOT have a physical count openly visible and associated with what should be in a bin location. Writing the count on a label introduces poor inventory count practices, basically telling your counters that accuracy is not important, not to mention the cost of labels and time spent marking them. Best practices recommend the use of "Blind Counts" where the individual performing the count does a physical assessment of quantity on hand.

Opened containers of product should always be re-counted, you cannot know how many hands may have had access to the contents. What's that you say? What if we do the count and then tape the box securely? You may be surprised at how often we see re-packaged boxes which do not contain the original count, or the count written on the box - or even the right product in the box! This is like letting somebody fiddle around with the contents of your bank account and expecting the balance to be accurate.

You can find a good guide to cycle counting at the Tompkins Associates web site. Look for the white paper "A Guide to Implementing a World-Class Cycle Counting Program."

Also check out Kevin Collins' blog entry on "Inventory and Warehouse Management Best Practices: Cycle Counting" on the SmartTurn website.

And of course, I always recommend the Warehousing Education and Research Council's "Warehousing & Fulfillment Process Benchmark & Best Practices Guide" available from the WERC Online Store. WERC provides simple a benchmarking tool to help you understand how your Storage and Inventory Control Processes stack up.

I'd love your feedback - and would love your help in sharing more bad warehouse stories to help educate the profession on what NOT to do. If you've got an example of a bad warehouse practice, send me your story and photo(s) to [email protected] . If I feature your example in one of my blogs, WERC will send you a free copy of the WERC Warehousing & Fulfillment Process Benchmark & Best Practices Guide ($160). Your submission can be anonymous if you like so you don't get your boss or company in trouble! I'll be collecting examples all year and the winner will receive a free warehouse assessment by Supply Chain Visions, a $10,000 value. The runner up will win a free conference registration to the WERC conference ($1,375 value).

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About Kate Vitasek

Kate Vitasek

Kate Vitasek is a nationally recognized innovator in the practice of supply chain management. Vitasek is founder of Supply Chain Visions—a boutique consulting firm specializing in supply chain management. She is also a faculty member at the University of Tennessee's Center for Executive Education. A prolific writer, Vitasek has authored the Council of Supply Chain Management Professionals' best-selling mini-book series, Supply Chain Process Standards, and has contributed to other management books as well. Along with Karl Manrodt of Georgia Southern University, she co-leads WERC's popular annual benchmarking study.

About Steve Murray

Steve Murray

Steve Murray is a Principal Consultant and Chief of Research for Supply Chain Visions, a boutique consulting firm specializing in supply chain management. Prior to joining Supply Chain Visions he held a variety of functional and management roles in the distribution and manufacturing sectors, including 15 year managing an IT consulting firm. Steve has been instrumental in development of the Council of Supply Chain Management Professional's "Supply Chain Management Process Standards", the Warehousing Education and Research Council's Warehousing & Fulfillment Process Benchmarking & Best Practice Guide" and the WERC "Warehouse Certification Program". He is lead auditor for the WERC's Certification Program.


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