Performed on an annual or biannual basis, physical inventories require a lot of time and manpower. Often there are advance preparations such as tags and forms to ready. The actual counting requires freeing a large number of personnel for a long period of time in every inventory location. In many instances production is at a halt during the days of the inventory, adding even more expense. Clerical staff has to enter the hand-written information into the appropriate program. Because the records are handwritten, verification of any illegible entries adds additional manhours. The clerical process of entering the data is also prone to errors.
Physical inventories are an annual necessity to satisfy tax regulations, insurance requirements, and book validation. They involve contracting third party auditors to verify the inventory and certify its accuracy. All the collected data is analyzed by the auditors and in-house personnel. A special audit count is done on selected parts of the entire inventory to verify the accuracy. If there are discrepancies the auditor may actually count the items himself.
Cycle Counting inventories provide vital in-house cross-checks on how your company is performing. By identifying quantities on hand, and matching them to current records, any discrepancies are caught and analyzed. It is a powerful tool for catching problems before they can become monumental.
Benefits of Applying Technology:
The most noticeable benefit of automating the inventory process is the reduction in time needed to do the job. Overall time drops to approximately one fifth of the time currently spent. For plants that shut down production during a physical inventory that means getting the line up more rapidly. That means revenue coming in that much faster. The cost savings of doing the job alone are profound. Not only is the time involved cut, but crews to do the actual counting can be reduced from two or three to one. All clerical transcribing duties are eliminated completely. The need to verify illegible information is gone. Supervisory time verifying information is cut. First count accuracy is improved approximately 98-99%. Because the count information is obtained so rapidly, the cost of outside auditors is reduced by approximately a fifth. With just one physical inventory, and the cost of the automation is typically covered.
Technology in Action:
Although each company will have its special needs, the general automated inventory process will be similar. Prior to the actual inventory, the cartons are all bar-coded with the item identification number, description, unit of measurement, and quantity. The amounts of items in each complete pallet or carton are pre-recorded in the program. The counting crew is supplied with hand-held data-collectors with built-in scanners. They may also have a small printer on hand to replace missing or damaged tags. The person scans the location, item, unit of measure, and quantity. If there is an open carton the items are hand-counted, and the count entered on the handheld computer. They then move onto the next carton.
Depending on the technology of choice, there are two basic procedures. With the non-radio frequency hand-held computer the information is stored in batches, which are uploaded periodically during the counting effort. At that time the program compares the new information for item accuracy. The counters usually mark the items counted with a small sticker to avoid re-counts.
If radio-frequency hand-held computers are used, the information is sent instantly to the main computer, where it is immediately verified. If something is awry the counter receives a message to rescan. All the counts are recorded as they are entered, so if an employee attempts to enter a previously scanned item he is told it has been done.
In both cases reports and/or inquiries are available during the actual counting process. Once all the actual counting and verifying is completed the data is then made available for posting to the perpetual inventory.
Our applications are designed specifically for the needs of our clients. The above is a general description of a typical situation. For specific case samples please see the Success Stories section of our web site.