Inventory accuracy has always been critical to the smooth operation of a distribution center. Without reliable and up-to-date information, DCs face significant hurdles in their quest to fill orders swiftly and accurately, or achieve much success with their demand planning.
Lately, however, inventory accuracy has been receiving even more attention than usual. Both the move toward omnichannel retailing and an upsurge in regulations mandating that companies be able to track and trace their products (particularly in the food and drug industries) have raised the stakes where inventory accuracy is concerned. Sound real-time inventory data are also necessary for the effective functioning of programs like Lean or Just-in-Time production and for meeting ever-mounting demands to ship product faster. "It all puts a premium on inventory accuracy and inventory control practices," says Mark Wheeler, director of supply chain solutions for the mobile technology company Zebra Technologies.
For many companies, cycle counting has replaced the traditional physical inventory count, which involves shutting down a facility or bringing people in during off hours to conduct a count. Although physical inventory counts are still favored by some auditors, they are tedious, time-consuming, labor-intensive, and inevitably inaccurate.
By contrast, cycle counting involves validating inventory accuracy on a continual basis, by counting a portion of the inventory at regular intervals. Cycle counts typically entail recording the type of product, the location of the product, and the quantity. They can also be expanded to include information like expiration dates, serial numbers, and lot numbers. The frequency of those counts will vary based on the velocity of the product and sometimes the value, according to Jeff Ross of Forte. Generally, it makes sense to count faster-moving and/or more valuable items more frequently.
To determine the optimal frequency for the counts and keep the database updated, most organizations rely on sophisticated software. This might be a warehouse management system (WMS) or a warehouse execution system (a hybrid of an WMS and warehouse control system) that can not only see what is on hand but also forecast demand for a particular item, according to Michael Howes, vice president of software engineering at Forte.
In many operations, particularly larger DCs, cycle counting is performed by a specialized inventory control staff whose full-time job is to count inventory each day.
As a result, there has been a renewed interest among companies in improving their process for counting inventory, the most common of which is inventory cycle counting. (For more on cycle counting, see the sidebar "Cycle Counting 101.") A 2013 study by Motorola (now part of Zebra Technologies), Warehouse of the Future, showed that 41 percent of warehouses use manual cycle counting to keep track of inventory levels. But that method can be slow, labor-intensive, and inaccurate.
One way around that is to conduct cycle counts using mobile technology, such as bar-code scanners, handheld computers, and voice systems. Just under one-third (32 percent) of the warehouses in Motorola's study were using real-time warehouse management system (WMS)-enabled mobile devices for that purpose. However, the number of users is expected to soar; the white paper predicts a "seismic shift" to automated and mechanized inventory solutions in the next few years.
BENEFITS OF GOING MOBILEThose predictions of a seismic shift are not surprising, as the benefits of using mobile devices for cycle counting are many. Consider just a few:
1. Inventory information can be updated in real time. When cycle counts are performed manually with paper, the information is updated in the system in batches. "Any accuracies that you may gain are after the fact," says Bruce Stubbs, director of industry marketing at Honeywell Scanning and Mobility. Mobile technology, however, allows inventory information in the WMS or warehouse execution system (WES) to be updated immediately, enabling operations to be adjusted accordingly. "With mobile technology, you can make corrections right there at the pick face or inventory face so operations can continue with an understanding of what is happening in real time," says Michael Howes, vice president of software engineering at the integration firm Forte.
2. Counts can be made "opportunistically." While a "true cycle count" occurs when a worker is specifically tasked with counting all of the items in a specified zone or product line, mobile technology also enables counts to be made "opportunistically"—which occurs when an associate is asked to confirm how much inventory is left at a location where he or she is already working, according to Jeff Ross, vice president of consulting at Forte. A common example is a "zero confirmation," which occurs when the system shows an order picker has picked the last item in a slot and asks the picker for a simple yes or no confirmation. While opportunistic counts don't eliminate the need for other kinds of cycle counting, they do reduce overhead and improve asset utilization by allowing workers to conduct counts on the spot instead of making a separate trip. However, Ross suggests that these types of counts only be conducted for "low threshold counts," which he defines as two items or fewer. "You don't want the order picker counting 50 items, that would only slow him or her down," he says.
3. Problems can be researched and resolved more efficiently. Cycle counting doesn't end when the count is completed. According to Wheeler, it also involves researching and resolving problems discovered when the count doesn't match what's in the warehouse management or execution system. This might involve searching adjacent locations for the product, looking into where else it could be stored, or determining who was the last one to touch it and where it could have gone from there.
Mobile technology, such as a rugged handheld or industrial tablet, can help with this process by sending queries to the WMS to figure out where to look first to solve the problem—and doing it in real time. That's important because while this search is being carried out, the location will have to be "frozen" (meaning no product can enter or leave), according to Wheeler. "Any time you freeze a location, you are disrupting the flow of materials in the operation and you may be impacting customer orders, so the more quickly you can get things resolved, the better," he says. Mobile technology can help speed up the process.
CHOOSE YOUR DEVICEAs for what technology to use for cycle counting, all of the mobile devices currently employed in the warehouse—handhelds, wearables, voice units, and tablets—can be pressed into service, with each having its strengths and weaknesses. The type of organization, product, and who is conducting the count will all factor into the choice of mobile device, according to Chase Sowden, supply chain architect at Barcoding Inc., a supplier of mobile technology. What follows is brief description of the types of mobile devices that can be used and some of the advantages they offer:
- Handheld devices: Mobile computers with bar-code scanning capabilities allow the user to scan bar codes for both the location and item, and then key in the count. The scanning ensures that the worker is counting the right item at the right location.
In addition to bar-code scanning capabilities, some companies configure their handhelds so they can perform RFID scanning as well. When it comes to counting items swiftly, nothing beats RFID because RFID doesn't require line-of-sight reads, according to Wheeler. Stubbs, however, believes that RFID scanning is best reserved for special circumstances, such as cases where you are picking "eaches" (individual items) and an RFID tag is already associated with each item for tracking purposes. - Wearables: Scanners that are worn on the wrist or finger (as opposed to being carried) also work well for cycle counting. Among other advantages, you never have to set the device down, and you can reach into a location or slot to move items around while you count, Sowden says. He does warn that wearables tend to have a small display, limiting the amount of information you can see. But Wheeler doesn't see that as an insurmountable obstacle: a wearable can always be connected by a tether to a handheld or by Bluetooth to a handheld or tablet device, he says.
- Voice: Voice systems are considered to be particularly well suited to cycle counting, especially when the cycle counts are being interleaved into the picking process. Counts can easily be confirmed with a voice command, eliminating the need to type in quantities and reducing the chances of data entry errors, according to Jay Blinderman, director of product marketing for voice system developer Vocollect. Also, because workers are not holding a device, they're more likely to reach into the slot to conduct their counts, making it less likely they'll miss an item. And because they're not looking back and forth between a screen and an item's location, they're less likely to count items in the wrong slot by mistake. Voice can also be used in conjunction with scanners and handhelds if companies need to confirm information such as lot or serial numbers, says Howes.
- Tablets: Recent advances in industrial tablets—especially with regard to their scanning capabilities—have made them much more suitable for cycle counting than they've been in the past. "The advantage of a tablet is it has a bigger screen so it displays more information," Sowden says. "And if you want to look something up or check something in another program, it's easier to toggle between cycle counting and other software on a tablet than on a scanner or handheld."
According to Wheeler, tablets are especially well suited to conducting research associated with problem resolution, as they can quickly send unstructured queries to the WMS to help determine the root cause of errors.
No matter what device you employ, it's crucial not to overlook the most important element in effective cycle counting: the employees themselves. Sowden cautions that it's easy for employees to dismiss cycle counting as busywork and not take it seriously. Companies need to ensure that people on the warehouse floor buy into the process and understand the business case.
"It doesn't matter what the technology may be," Sowden says. "If people don't take ownership and understand the impact of inventory accuracy on the business and how it affects them, they won't get it right."
Senior Editor Toby Gooley contributed to this report.
Gartner, Inc.