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Archives for January 2012

You Might Have a Bad Warehouse If…Your Inventory Count Is Too Good

By Kate Vitasek | 01/23/2012 | 5:00 AM

This bad warehouse item from Gary King, founding partner and chief consultant at Business Fit Associates, tells us that when the inventory accuracy rate is always at 99.9 percent, it’s probably time to investigate.

As Gary explains it there was a 3PL that was known for bragging about a 99.9 percent inventory accuracy rate. “Me being one who is always in search of best practices, I inquired to the operations manager as to how they were able to maintain such a high accuracy rate month after month, year after year.” The man replied that it was a “trade secret” that allowed them to remain competitive and although many had inquired, he was sworn to secrecy. Cyclecount

Later in his audit, Gary came across a standard operating procedure that pertained to the 3PL’s petty cash process and noticed that "they kept an unusually high dollar amount in their petty cash."

When he asked the administrative assistant responsible for administering the petty cash why such a high amount was needed, “without hesitation she answered that 'when we come up short with our cycle counts, our cycle counters can run to COSTCO or wherever they need to go to buy product that were missing.'” Whoops! “And she added, ‘You should see how much money I have to give out when we do a complete inventory. That’s when my job gets really crazy!’”

She had no idea she had revealed the company’s big trade secret, along with a really awful inventory control practice.

That’s a SOP you won’t find listed in the WERC Best Practices Guide. An inventory control system must have well-documented and well-defined processes, and cycle counts are supposed to determine inventory accuracy and identify problems that need attention.

As the guide says, inventory is money and “you should keep track of inventory as you would money.” The reverse of that is just wrong – you should never use money to keep track of inventory by gaming the cycle count process to inflate accuracy rates.

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 Kate@scvisions.com. 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 WERC Warehouse Certification 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).”

You Might Have a Bad Warehouse If…The Receiving Dock Is On the Second Floor

By Kate Vitasek | 01/09/2012 | 5:00 AM

Let’s get the New Year off to a rousing bad warehouse start with something I personally witnessed, a two-story receiving operation.

The receiving dock in question had a second-story mezzanine. On its face this doesn’t seem like a very workable or efficient operation (and it wasn’t), but the rationale I heard for it was that the warehouse was “space constrained.”

Mezzanine-storageBut think about the result: Off the truck. On a pallet. On the forklift. Up to the 2nd floor. Off the pallet to receive. Back on the pallet. Back on the fork lift. Back to the main floor. It’s reminiscent of a Chinese fire drill!

Any best practice warehouse will have a steady and efficient flow into and out of the facility. It stands to reason that from a cost and efficiency standpoint the fewer touches, the better. As the WERC Best Practices Guide says, “some of the most valuable square footage in the warehouse is dock space.” It becomes much less valuable—and a logistical problem—if the receiving dock is upstairs!

The guide continues: “Docks in today’s warehouses must be more flexible and must support a variety of receipts that are coming in at a faster rate and in greater frequency and with just-in-time and VMI programs, smaller quantities and mixed pallets.” In addition, inefficiencies on the dock “cause extra costs from trailer detention fees, excessive trailer moves to support new arrivals or higher priority shipments, and in additional handling of materials on the dock.”

There are also hidden costs if a receiving dock is disorganized. Product or materials can be lost or misplaced in the rush, receiving transactions uncompleted, errors can multiply, and in the confusion materials are moved when they should not.

There might have been a good use for that mezzanine, say for storage, but not as a receiving dock.

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.

I need a fresh batch of your stories! If you've got an example of a bad warehouse practice, send me your story and photo(s) to Kate@scvisions.com. 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 WERC Warehouse Certification 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).”

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

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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