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You Might Have A Bad Warehouse If... Your Cycle Count Takes 23 Years

By Kate Vitasek | 05/10/2010 | 12:05 PM
A few years ago Steve Murray and I did a project which assessed warehousing processes for one of our client’s at 15 US locations. Although this client used a corporate database to define acceptable standard processes and work instructions, most locations actual practices varied greatly from the standards. This was quite obvious when we reviewed the cycle counting process at one Midwestern facility.

The company built and maintained some very large complex products. This location had in excess of 80,000 individual SKUs / Part Numbers in their inventory, many of which were repair parts that did not have much movement. Their practices for cycle counting involved starting at the front of the warehouse and counting bins until they had counted 15 bins, then they would stop, reconcile physical count to book inventory and make any appropriate adjustments.

They felt that with current staffing levels and workloads for receiving and picking that this was the daily limit they could devote to cycle counting.

We did the quick math and determined that with 5 day work weeks it would take roughly 23 years to complete the cycle count. The inventory manager responded that this was not a problem because they did a complete wall-to-wall inventory every 6 months and the cycle count program was used primarily to satisfy corporate requirements that they had one. We noted that the corporate standards suggested a frequency for counting – the manager said “ya, but it’s not a requirement”

We asked what happened after they completed the semi-annual wall-to-wall. The manager said that they would start the cycle count over again at the front of the warehouse! Well, at least they didn’t have to spend a lot of time walking back to the far corners to count parts.

You should review your standard practices to ensure that there is not too much gray area between the letter of the law and the spirit of the law. Clearly this cycle counting practice was mostly a waste of time. The “front of the warehouse” items which were counted every cycle were not even necessarily fast movers, the bins were organized in sequence by part number.

So what is the right approach for doing cycle counts? There are many good books and references on setting processes for cycle counting, but most involve looking at frequency of movement and value of the item to get an “A, B, C” Pareto breakdown for determining appropriate cycle frequency. And, all methods emphasize ensuring that every part gets counted sometime.

For those wanting to learn more on setting safety stocks, I suggest the following resources:

I really love your feedback - and love your contributions to share those bad warehouse stories to help educate the profession on what NOT to do, and maybe what to do if you’re not doing it.

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 (a $160 value).

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 (a $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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