Tag Archives: Fire Prevention

Stop Fighting Emergency Fires in Five Steps

Whenever I find myself spending most of my day fighting fires, I try to step back and understand why. A great framework that I like to use comes from the Malcolm Baldrige Performance Excellence Program. The firefighting example takes a process through five steps, going from “emergency crisis mode” to “no problem mode.”

The Malcolm Baldrige Performance Excellence program is a government sponsored award that focuses on promoting quality in US organizations. You can see the images below and other great resources on their graphics page.

Step One – Running and Reacting

1The first stage is where most of us start when we think of fighting fires. We react to emergencies that pop up by dropping everything and running to what’s urgent. If this only happens once or twice, then it might not be worth the effort to improve the response. However, the problems that occur frequently or have large impacts are the ones that need to move beyond step one. Focus on those problems for moving them through steps two through five.

Step Two – Running Less and Reacting Quicker

2If fires pop up in the same places frequently, then installing extra hoses in that area can really help. Likewise, if you repeatedly face the same emergency, making additional resources available in those areas can cut down the size or length of an emergency. Taking a few minutes to create simple, small countermeasures makes reacting easier.

Step Three – Response Game Plan

3Once countermeasures are in place, how can we get everyone on the same page? When the next emergency strikes, who contacts whom? Addressing these issues by making a game plan can make the response much more effective. More importantly, getting others involved makes the emergency less dependent on you. If you can’t ever leave the office because you’re the only one that knows how to handle certain problems, then this step can free you from that burden.

Step Four – Automated Response System

4Just like a sprinkler system automatically dousing flames, you can build a system that handles emergencies automatically. Basic computer automation or alerts can take care of many problems that frequently pop up. Emergencies that are more complex may require some IT investment, but many of those solutions are worth the price tag. Conversely, significant investment may not be necessary if a manual response system will work just as well.

Step Five – Innovate Emergencies Away

5This final step is not “brainstorm how this emergency doesn’t happen again.” That type of thought should happen at any stage. Instead, this is a systematic change in the design of work flows, products, and systems so that unexpected problems are less common and less damaging. A product’s cost can often be reduced by 70% when the designers’ goal is to make the product easier for manufacturing. Similarly, perhaps 70% of your emergencies could be avoided by focusing on internal customers and avoiding downstream emergencies. Of course, balancing the needs of internal customers with those of external customers is difficult. Nevertheless, keeping the needs of both customers in mind will help reduce emergencies for which you can’t plan.

How to Use the Five Steps of Firefighting

Whenever a problem arises, I look at where in the five steps my response to the emergency is. Based on the size and frequency of the problem, I can then look at options for moving the response to the next level. Few fires need all five steps; such investment would be overkill. However, simply knowing at what stage each of my problems is helps me prioritize my improvement efforts. Soon the categorization becomes second nature, and process improvement becomes easier, quicker, and more effective.

Best of all, there’s less fires to fight. And the fires I still have to fight are easier to put out.

At what stages are the recent emergency responses you’ve initiated?

[Images Source]

Build an Awesome Vendor Scorecard Program in 4 Easy Steps

Vendor scorecards measure and track supplier performance on various dimensions that are important to your organization. At first, I was reluctant to start a scorecard program because I thought our company was too small and too busy. However, after eventually beginning our program, I saw powerful results that freed up time and helped the company grow.

Vendor Scorecard Example

Vendor Scorecard Template with ExamplesVendor scorecards strengthen supply chain relationships and help focus your suppliers on what matters most to you. Scorecards set goals for your vendors to reach for so they can become your vendor of choice. You can clearly see where each vendor ranks against each other, which helps you decide which supplier to work with on complex projects. This article outlines the four steps I took in building our company’s vendor scorecard program. I have attached a Excel Vendor Scorecard Template that I put together as a starting place for your own scorecard.

1. Decide What Matters

The first step in creating a vendor scorecard program is to define what your ideal vendor would look like. For me, it would be someone that communicated clearly 100% of the time, shipped quality products for free, and had a lead time of 15 minutes. Although those requests are a bit ridiculous in my industry, it does highlight what matters to me in my vendors: communication, quality, pricing, and lead-time. Together with my team, we took my brainstorm farther and came up with four categories that matter most to us with our vendors:

  • Pricing/costs, including payment terms
  • Production and Supply chain, including communication and lead-time
  • Quality
  • Product Development

Essentially, if our vendors could continually improve on these four points each year, our organization would benefit immensely.

2. Measure the Metrics

Having defined the broad categories, we now have to build the nitty-gritty of the scorecard. You need to build specific, measurable metrics for each category. Specifically, what exactly will you measure, and more importantly, how? For example, a pricing metric could be a comparison of costs between all capable vendors. A quality metric might be the percentage of orders with quality defects.

Good scorecard metrics should clearly define what is good, acceptable, and bad performance in each dimension. Your metrics should be a score for how your vendors are doing in aspects that matter most to you. They should be easy to understand, and if possible, easy to calculate. Unfortunately, building the perfect metrics often takes some deep thought to get them right.

Nailing the Details is Key

Many metrics were much more complicated to fully define than I thought they would be. For example, lead time is an excellent metric that I use. Tracking the time from when you place an order to when it gets delivered is a great way to compare vendors and encourage reductions in lead time. However, measuring this can be tricky when you get into the details. Should you track the time until delivery at to your location or delivery at port? If you ask a vendor to delay a shipment, will their lead-time artificially inflate?

For most quantitative metrics, your accounting system should have the records you need. However, based on the specific things you want to measure  you also might need to start tracking new events or information. For both of the above lead-time questions, I had to change our receipt processes to account for how we wanted to measure that metric. Despite the added work, tracking more data allowed us to trust our metrics and better compare our vendors apples to apples.

A Note on Subjective Scores

When hard data is unavailable or impossible, use a subjective grade. For example, “This Vendor is Flexible in Requests to Alter Production” is a difficult metric to track in our ERP system. Instead, at the end of each quarter, our supply chain team fills out a survey for each vendor that rates them on several dimensions such as flexibility. Rating vendors on a scale is the best way to get a good score from a soft metric. Even better is when the survey has an example for a top, middle, and bottom score for the metric so that scoring is more consistent across teammates. Recording everything in a free Google Form that you send out to your team is even better.

Google Doc Questionnaire 2

Weight What Matters

Once you have the metrics you want to measure (I have 4-6 in each category), it’s time to weight them. Start by rating the overall categories. The pricing category may be 25% of the total score, quality 40%. When your categories equal 100%, weight the individual components of each category. For example, if the quality category is weighted at 20% and has three metrics, then those three metrics could be 5%, 12%, and 3%, which adds up to 20%. The Vendor Scorecard Template shows my weighting.

Example Weighting

Pull Out the Gradebook

Maybe it’s from the report cards I received every semester in public school, but the A through F scale carries a lot of significance to me. That’s why I like to use that scale for each of my metrics. Some can only receive an A or F, or A, C, or F, but they all have the same percentage score. Based on their grade, vendors receive a percentage of that metrics weight as follows:

  • A – 100% A metric with 10% of the total scorecard weight would be 10% with an A
  • B – 75% (7.5% with the same metric)
  • C – 50% (5%)
  • D – 25% (2.5%)
  • F – 0%

Color-coding the scale adds the final touch of understanding so that it translates well and conveys the message clearly.

Example Weighting

Build the Document

Finally, once you’ve figured out your categories, metrics, and weighting, put it all together in a spreadsheet scorecard. You can use my template as a starting point to build your own.

3. Roll Out the Program

Once your scorecard is complete, implementation is your next bull to lasso. You’ll need to devise a plan to clearly communicate what, why, and how you are measuring your vendors. Depending on your suppliers, your experience could be much different, but here’s what I did.Why a Vendor Scroecard?

First, I put together a presentation with one or more slides explaining the following. It was detailed and thorough so that our vendors could clearly understand each score. Specifically, the document had the following:

  • A detailed explanation of each category and metric
    • For complex calculations, I included an example slide
    • Explanation of weights were also included
  • Reasons why we were beginning the vendor scorecard program
  • The implementation schedule (trial and full launch)
  • Our commitment to our vendors

Armed with a document that clearly defined the program, our CEO emailed the presentation and the scorecard spreadsheet to the leadership of our key suppliers. He asked them to review it and then meet with us in a video conference discussing the program. During the meetings with our six key suppliers, the CEO expressed support of the program and our supply chain team explained the details. Most vendors appreciate being measured on more than just price, and so all of our vendors were excited about the program as a chance to prove their holistic value to our company.

We designated the first month as a trial period where we would track performance, iron out issues, and report scores but not take action based on their results. After meeting at the end of the first month to discuss the trial run, we began the program in earnest.

4. Review and Reward

What will make your vendor scorecard program truly succeed is your diligence after implementation. I strive to send out scorecards on-time at the end of every quarter. My team schedules meetings via Skype or in person to review the scorecard each quarter and discuss ways to improve. The communication is two-way – we want all our vendors to reach perfect scores. That is why we council openly about what each of us can change to improve the metrics.

Another big decision to make is what you’ll do because of the scores. Will vendors with consistently high scores obtain a preferred status? Will quality checks or audits happen less frequently? Will you distance yourself from vendors who are very cheap, but fail in every other category? Will you reward contracts based on scores?

If you find yourself rewarding higher scores with more business, then your weighting is probably correct. However, if more and more business is still going to vendors with lower scores, then consider revising your scorecard to better reflect your company’s true priorities.

A great and relatively inexpensive way to encourage scorecard improvement is a vendor of the year program. This could involve a personal meeting, dinner with the CEO, and a plaque for the winning company. When I watch the “Walmart Vendor of the Year” award go to one of my competitors, I find new motivation to improve. Your suppliers may feel the same.

Bonus Step – Survey Your Vendors for Improvement Tips

If your vendor scorecard program is chugging along, then consider asking your vendors to score you. Sending a quarterly feedback survey to your vendors to discuss at the same time as their scorecard can bring insights into how you can be a better customer. Some questions could be:

  • What good practices do your other customers do that you wish we did?
  • What can we do to help you reduce lead-time?
  • What was an example of a project that went well? What about that experience can we recreate for all future projects?

If you make it clear they won’t be penalized for honesty, then you may be lucky enough to get great feedback on how to truly improve. Becoming a better customer can help your vendors better service you. In addition, you may pick up some best practices from their other customers or resolve root causes of your own deep problems. Address these issues in the scorecard review meetings and make commitments to improve when possible. We received a lot best practice tips from our vendors when we said, “we’re really bad at forecasting, so we’ve brought on staff with forecasting experience and invested in the software we needed.” They detailed how their other customers forecast and recommended we try the same.

Final Thoughts

As I talked about in my article on supply chain gamification, games have a way of bringing out our passion and motivation. A vendor scorecard brings the power of game mentality to supplier relations. “Just keep everything green and keep out reds” becomes the goal of your vendors. “Work with the highest scoring vendors” becomes your vendor selection shortcut. Measuring progress brings improvement that both your vendor and you will enjoy.

From the success I’ve seen from the program, I wish I had started it years ago. This quickly brought to mind the mantra of a friend of mine in process improvement. “There’s two good times to plant a tree: twenty years ago and now.”

If you haven’t started a program yet, begin today. If you have one already, take a look at how you can improve. Either way, share your experience in a comment below.

Update – Learn More about Vendor Scorecards in our Podcast

In our podcast interview with Mark Kosiba (former VP of Operations at Skullcandy), Mark talks about vendor scorecards and their effect on his company. The above model was based on his help, so it definitely applies to anyone wanting to implement a vendor scorecard program similar to the above.

Check out the podcast to learn more: How Skullcandy Rocked S&OP (and Vendor Scorecards)

A Great, Inexpensive Way to Recognize your Employees

I am fortunate enough to work with a large group of high-performers every day. Without the support of my team, coworkers, and vendors, our supply chain and operations would end quicker than a diet in a fudge shop. I thank people around me often, but sometimes I feel they deserve even more recognition than a quick “thank you.” However, with budgets being so tight, it’s difficult to give them anything of extrinsic worth. As I have tried to be creative in my methods of recognizing people in a way that will be meaningful to them, I have found a superb way of showing appreciation that only costs a dollar. Because of the significant intrinsic value in this method, it has quickly become one of my favorite HR tools.

Recognition for a Dollar

Fire Truck Award

Some time ago, a team I was on had worked tirelessly to successfully launch a new product line with a key customer. The day after the launch was complete, the brand manager, who was armed with a secret box, gathered the entire company together. From his box, he pulled out a fire truck that he had purchased at a dollar store and called up a team member to give it to her. He talked for a minute to all gathered about how this team member had stayed very late for several weeks to put out fires. He thanked her publically, and she kept the fire truck to proudly display on her desk.

Continuing with his secret box, the brand manager next pulled out a microphone. This was for the team member who was always voicing concern and helping come up with solutions. The manager also presented a hairbrush to the designer who had helped to make the product beautiful. Next was a game of jacks to the employee who was a “jack of all trades” and kept up with broad details.

The meeting was a hit; everyone felt appreciated and had a good laugh. Following this tradition, I’ve seen quite a variety of unique dollar store gifts of appreciation:

  • A thermometer – keeping cool under stressful situations
  • Bouncy balls – Always staying on the ball and steadily working on long tasks
  • An inflatable sword – “The Sword of Accuracy” for making sure orders are complete and correct when they ship
  • A bath toy boat – Helping keep orders shipping on time – and doing great at managing logistics
  • The Hulk Action Figure – Tirelessly wrapping pallet after pallet and doing much of the heavy lifting
  • Glow sticks – Keeping the team upbeat and making stressful work more fun
  • Magic wand – Ability to magically solve problems
  • Giant Dollar-sign Glasses – Catching small detail problems to help save money

Almost anything can creatively be turned into an award; you might even be able to just collect a few unneeded items from your home.

This method of recognition is effective because it’s memorable and fun for everyone involved, not just the people being recognized. The entertaining prizes keep everyone engaged (imagine how much better the Academy Awards acceptance speeches would be if the awards were something fun like oversized novelty hats the recipient had to wear). After the fun recognition meeting, each team member wants to see the others’ toys and hear again the special importance attached to them. Making them funny, but also putting serious thought and appreciation behind the awards will give them meaning. Recipients will be sure to tell their family about the fun award, and they’ll likely hold onto it for some time.

The best way to carry out this method of recognition is to go to a dollar store and wander the toy section until creativity strikes you. When examining a specific product, think “what could this represent?” or “what funny play on words could I make with this?” Have fun and stretch the meaning as far as you need to – the words you’ll say mean much more than the object you’ll give.

Be sure to make a detailed list of who the award is for, the meaning behind the award, and several specific examples of what that individual has been doing for the company. Without a list, I usually stumble and forget the details behind the award during the presentation. It’s embarrassing to be holding a Frisbee and completely forget the meaning behind it.

A Couple Disclaimers

Appreciation at work is extremely important to employee retention and motivation. However, this should not be a substitute for fair wages and increases when appropriate. Additionally, do not overuse this method – using it every week would quickly diminish its novelty and usefulness.

Other Effective Methods

Here’s a Dollar

The school my wife works at uses dollars in a different way to recognize outstanding teachers and staff. At each faculty meeting, the principal has five $1 bills at the front of the room. At a specific point in the meeting, anyone in the meeting can go up, take a dollar, and then give it to someone and explain to everyone what that person did to deserve recognition. This is a great way to encourage recognition that has the additional benefit of having team members recognize each other instead of relying only on recognition from supervisors (who may not see all of the great things that an employee is doing.)

Call for Appreciation

Another effective method of recognition is something I saw when visiting O.C. Tanner. Every morning, teams meet for a morning stand-up huddle. After reviewing key metrics and the day’s priorities, the meeting leader calls for appreciation. Anyone who has noticed someone doing something good steps to the center and compliments the person. If the person isn’t there, his or her manager makes note, and both the person offering the compliment and the manager make sure to recognize the person that day.

Smokey the Bear

Smokey Bear Vintage Tin Sign from Amazon

Emergencies and fires plague a lot of companies. Employees who prevent fires are often unnoticed despite the great good they play in the company. To encourage fire prevention, I know a company that bought Smokey the Bear memorabilia as awards. These items, such as a vintage “Only You” sign or a Smokey Bear Coin, became coveted trophies that helped recognize and encourage fire prevention. Suddenly the heroes of the company aren’t just those who solve problems, but those who avoid them before they break out.

Final Thoughts

No matter what you do, take some time to recognize your team. Systems and processes are great, but it’s the people that make companies work. When the work day is over, 90% of your company’s assets walk out the door. Appreciation, whether with the fun dollar-store method or some other way, goes far in keeping your team happy and the supply chain running.

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Your Spreadsheet is Lying to You

I love Excel spreadsheets. There’s nothing more satisfying than turning a blank Excel grid into a fountain of data and conclusions. Invite over pivot tables, external data, and macros, and suddenly you have an entire business analysis party. You can confidently make big dollar decisions from small and simple cells – or so we think.

Excel Lying

Knowing my dependence and appreciation of spreadsheets, a good friend sent me a very interesting Wall Street Journal article, 88% of Spreadsheets Have Errors by Jeremy Olshan. In the article, Olshan exposes how almost all spreadsheets have at least one error in them, and large spreadsheets are usually filled with mistakes. We often are so rushed to get the calculated conclusion to other people that we don’t take time to check our formulas and have someone else proofread our work. Miscalculations and mistrust of analysis can often be the result. The article mentions major economic research that drew incorrect conclusions based on flawed spreadsheet formulas. Likewise, I’d like to share a story of how incorrect cells can wreak havoc on supply chains.

Barcode Blunder

I still shudder to think that a simple, one-sheet spreadsheet completely ruined two weeks of my life.

My company uses a barcode printing program that pulls its information from a simple spreadsheet. The spreadsheet allows users to easily enter the item number they need, and the close-by thermal printer quickly spits out the barcode stickers. I had set up the spreadsheet to pull all the necessary information, including the 12-digit barcode and description, from external sources when the item number was typed in. The formulas worked great, and the spreadsheet seemed perfectly self-explanatory. Or so I thought.

Because the interface was so easy to use, more and more employees began to use it to print barcodes. This was great for me because I was not called out seven times a day to print the stickers. However, the lack of standardized training and safeguards eventually created a problem. Seeing the UPC column, someone replaced my formula that calculated the UPC with a static 12-digit UPC number for the item they needed. Having been saved with the incorrect number, the spreadsheet now printed the same, incorrect UPC barcode for every item. However, because the description was correct, no one caught the error. Worst of all, that week we had a big project that required a large number of labels.

One of our customers increased their orders significantly for an item that we had to label individually. This amounted to over 50,000 incorrect barcodes stickers that we put on, and then shipped without knowing the error. They went out the door on time, and the problem wasn’t fully realized until the product was already set in thousands of retail locations.

Was the Spreadsheet to Blame?

So who or what can we really blame for this mistake? After lots of pondering, I couldn’t blame anyone but myself – the creator of the spreadsheet. I don’t know who changed the cell, but it really wasn’t that person’s fault. Whenever I create a process, program, or spreadsheet for others, I need to make sure it’s error-proof. To fix it, I immediately locked down all the cells and rewrote the spreadsheet to be much harder to incorrectly edit (some simple poka-yoke, or in English, error-proofing). Just as important, we added a barcode-check step in which we scan the barcode and get a second pair of eyes to approve it. So, when the malevolent spreadsheet decides to strike again, we’ll be able to catch it.

While this may be a story more on the need for better processes, it also illustrates the devastating power one spreadsheet cell can conjure.

In the end, the retailer was able to change their computer system to accept the incorrect barcode, so the effect on end consumers was very minimal. The real pains were internal as we identified our process problems and worked to correct them. Of course, I lost some sleep and worked under heavy stress for a couple weeks, but as a result, I learned some important lessons – not the least of which concerns spreadsheets.

Five Tips toward Error-free Spreadsheets

Even if the world is plagued by lying spreadsheets, we can still personally become sources of accurate and correct data analyses. Here are five tips toward more accurate spreadsheets.

1. Get Someone to Proof Your Work and Make You Explain Your Formulas

If you do nothing else, please do this: Ask someone to look through your spreadsheet and test all your assumptions and formula logic. Have them examine key calculations closely and confirm everything is calculating correctly. Offer to do the same for your friend’s spreadsheets in return.

2. Trace Cell Relationships

excel trace function

Excel’s trace functions, found under the formula tab in Excel 2007 and 2010, are excellent ways to make sure all the cells you think are included in a calculation actually are. Trace precedents will point arrows to all the cells that feed into the cell you’ve selected. Trace dependents show all the cells depending on the selected cell. These help you catch problems of cells sneaking in or out of formulas – as well as seeing what might happen to other cells when you change the current cell’s value. Plus you feel pretty smart when there are hundreds of arrows all over your screen, “Wow, I can make some intense calculations.” Note that this step would probably have helped me catch the error in the story above.

3. Verify Links

Update Links

External data, especially from other spreadsheets, can be very tricky. Excel isn’t the best database system in the world, so links sometimes break or don’t update. To avoid problems, verify and update links through the edit links button on the data tab. This tool let’s you ensure links are active and correct. I’ve had many links break for no apparent reason, so be vigilant on checking this frequently.

4. Address background error checks

Background Error

Those little triangles in the top left corner cells are signaling that Excel thinks something might be wrong. Address them all, since often they are true problems. Only ignore the error if you’re sure it’s not an error, and the triangle will disappear.

5. Force Excel to Calculate

There are several reasons Excel stops calculating formulas. Usually it’s because calculations are turned off, but sometimes big files have quirks that hamper calculation – especially when VBA is involved. To recalculate all formulas and update all links, press Ctrl + Alt + Shift + F9. If you have external data, you’ll want to use the Refresh All command. If you have pivot tables that pull from External Data, you’ll want to refresh the pivot tables after you Refresh All (or Refresh All twice). Pressing Refresh All twice, then pressing Ctrl + Alt + Shift + F9 will refresh and calculate everything possible.

When You Need to be 100% Accurate, Rebuild from Scratch

Although these tips will help you catch many errors, there are still chances of problems. Several third-party vendors offer error-checking software. I’ve never tried them, but I do have a pretty strong technique to ensure high accuracy. For very important spreadsheets and decisions, I often recreate the entire project from a blank workbook to confirm everything is correct. I don’t copy and paste, but instead retype the formulas to make sure everything matches. Quite time intensive indeed, but duplicating my work usually takes a fraction of what it usually takes to create it. In fact a two-week spreadsheet took only an hour to completely rebuild from scratch because I knew exactly what to do. Having rebuilt it, and with everything matching perfectly, I feel confident that my spreadsheet is accidental-error free. Of course, whether my human assumptions are correct is an entirely other issue.

So the next time you find yourself in possession of a breakthrough calculation in Excel, I hope you’ll be a bit more leery that your spreadsheet is likely lying to you in some part. Encourage honest spreadsheets by error checking and proofreading so we can all avoid painful spreadsheet problems.

10 Tips to Make Physical Inventory Counts Less Painful and More Accurate

Warehouse Physical Inventory Count

Given the option of getting a voluntary root canal instead of physically counting inventory, many of you would likely being calling your dentist right now. Certainly, physical inventory can be a painful process, especially for the many small businesses doing their best just to get orders out the door. However, accurate inventory can help reduce a long list of problems with which many small businesses are familiar:

  • Wasting time looking for items
  • Holding extra inventory as a safety stock against inaccurate numbers
  • Avoiding orders for older items because you’re not sure you still have what your system says you do
  • Expediting reorders because you suddenly can’t find any more of the product

Below are ten tips that will make physical inventory counting much smoother, so you can quickly get back to helping your company make money.

1 – Make Inventory Accuracy a Higher Priority than Order Fulfillment

Raising the priority of accurate inventory is perhaps the most important, yet most difficult, step in inventory accuracy. Many inventory problems arise from pushing a transaction through the system with the intent of going back and fixing the numbers later. In the rush of other emergencies, however, we often forget to go back and correct the numbers in the system. This leads to missed production entries, negative lines of inventory, and a whole mess of other problems. Only by putting systems in place that will prevent an employee from moving forward without the necessary system transaction can you effectively keep accurate records of inventory.

One example of success that my team recently implemented was changing our accounting system so that it will not process any shipment that contains more inventory than we have on hand. For example, if we’re trying to ship 15 of an item, but our system says we only have 5 in stock, then an alert will pop up and force us to fix the problem before moving forward. This helps us address problems before the product goes out the door. By forcing us to address missed production entries before the product leaves, our modified system helped us eliminate most of our major inventory issues.

2 – Put Everything in a Marked Location

When the time comes to count inventory, having everything in a marked location is a necessity. Those loose boxes and stray pallets without a home are often the problems that come back to haunt you while you try to reconcile. Even if you must make new, temporary locations for the duration of the count, put everything in a well-marked and defined place, and leave it there.

3 – Reduce Inventory as Much as Possible

Do all you can to count as little inventory as possible. Whether it’s holding up an inbound shipment a couple days, or shipping extra in the days prior to the count, counting less means fewer chances for mistakes. You’ll also want to be sure to not receive or ship any product during the count, since this can easily cause discrepancies.

4 – Count Overstock Locations Beforehand

Even before the count has started, counting the overstock locations beforehand can mean much less counting on the days that inventory is frozen. Fully stocking the picking locations first, then wrapping and marking the count of overstock location can drastically reduce the stress on count day. However, be sure that if inventory is taken from the overstock location, the count tag is either removed or adjusted to the lower quantity.

5 – Be Visual with Counts

With so many people counting, keeping track of what has and has not been counted can often be difficult. To avoid confusion, be extra generous with visual labels and controls. Large count tags, bright colors, and unmistakably clear signs can save you hours of confusion later on. Especially if you are bringing in employees or temps unfamiliar with your product, erring on the side of too big and obvious can be well worth the expense. If something is not in inventory, mark it so even those with the poorest of eyesight can easily understand to not count the product.

6 – Have Someone Familiar with the Product on Every Count Team

Another problem that I often encounter is the unit of measure of items to count. Is an assortment of 24 items in inventory as 1 pack or 24 eaches? While box markings can help, nothing replaces an experienced team member. If you bring in additional people to help count, be sure to include someone who knows the products well on each team. Partnerships with one experienced person and one new work well.

7 – Be Quick and Creative with Immaterial Counts

Weighing Immaterial Items

Some small items aren’t worth the effort to count individually. Whether its tiny plastic bags, plastic hooks, tons of grain, or gallons of chemicals, physically counting out the amount is often not worth the value of the product. For large quantities of small items, a sensitive scale is the best method. Weighing out a sample and then calculating piece count from the total weight is accurate enough for an inexpensive component. For large quantities that are difficult to weigh, calculating volume by lead lines and extrapolating is preferable to simply guessing.

8 – Audit Counts Right After the Count Starts

Auditing counts are essential to ensure each team is counting the products correctly. However, if you wait until all the counting is done, you can’t do much but go back and recount whatever that team counted. Instead, auditing counts from each team soon after they start gives you an opportunity to correct any problems and train more to avoid future miscounts.

9 – Discipline Yourself to Regular Cycle Counts

As your to-do list grows, taking time to cycle count is likely to slip to the very bottom of your priorities. However, installing incentives and consequences to ensure regular cycle counts happen will not only reduce the pain of a complete physical count, but also give you more confidence in your system’s numbers throughout the year. Whether you schedule your cycle counts based on ABC analysis, items likely to have problems, or some other method suited to your business, rotating through items helps catch inventory issues before they become larger problems.

10 – Review Problems and Change

Finally, after you’ve recorded your last counts and everything is reconciled in your system, take a few minutes to reflect. Gather the team together and review what problems you encountered. What went well? What caused problems? Most importantly, what can you put in place to avoid these same problems in the future? Each small change you put in place today can save your team headaches in the future.

What other tips do you have for making physical inventory counts smooth and painless? Share your comment below, and be sure to subscribe to receive our future articles.