We all know that exercise is an essential part of a healthy lifestyle. And, we know that cycling is a great form of exercise that can improve cardiovascular health and physical condition. But, did you know that cycling can also be healthy for your warehouse?
In an article on the Distribution Team’s web site, titled Cycle Counting: Penicillin for Distributors, Scott Stratman outlines why he believes that cycle counting is like antibiotic medicine for your warehouse. (You can download the complete article here.)
We’re going to expand on his points specifically for Eclipse users, and also take his analogy one step further. We agree that cycle counting can be an effective cure for an ailing, inefficient warehouse; but, it should also be thought of as an ongoing necessity to running a healthy, cost-effective operation … much like exercising (or cycling) regularly is to having a healthy body.
Scott’s article starts out by noting the average operational cost of a correctly processed order. He estimates that to be somewhere between $35 and $45 each. That’s the cost of doing business, right? Right. But, what happens if you’re absorbing that cost not once, but twice; or, even three times. We see it all of the time when we’re consulting with Eclipse users; and, Scott sums up the result perfectly: “Errors cost distributors nightmares in terms of poor customer service, unpaid receivables, lack of trust in the computer system data and, most of all, hard cash.”
In Eclipse, it can be a never-ending déjà vu (like we mentioned last month). Your warehouse team keeps trying to pull the same item multiple times from the same ticket, and they don’t even realize it. That’s because in Eclipse, after you try to pull an order and backorder it, the ticket prints again. But, often times, someone else gets the ticket and the cycle repeats itself.
So, how do you avoid all of this repetitious, error-iffic nonsense? Surprise, surprise: go cycling! When you cycle count, you’re basically checking up on your inventory on a regular basis, so what Eclipse says you have in stock is actually what’s in the warehouse. This way, you won’t be trying to ship product that doesn’t exist; and, quite possibly, items will actually be in their proper places most of the time. Cycle counting also eliminates the need for you and your team to slug through a stressful and difficult annual physical inventory.
Scott provides several steps to executing the cycle counting process, which should be done each day. Here are his suggested steps, along with some specific Eclipse menu items that we’ve added:
- Stop the paper flow before you count.
- Find someone reliable to count.
- Get a cycle count sheet from your system. In Eclipse, you go to Cycle Count Queue: Generate Print, Generate Control File, Print Count Sheets.
- Count from sheet to shelf, starting with primary locations and moving to secondary and overflow locations.
- If desired, use cycle counting as an opportunity to restock.
- Note discrepancies between the actual stock and the system. In Eclipse, you can use the Count Variance Report for this.
- Adjust the system to reflect actual stock. Eventually, you shouldn’t have any discrepancies. In Eclipse, you use Update Physical Onhand to do this.
Scott recommends you count each item at least quarterly. By taking the number of days you have to count in a year and dividing it by four, you’ll come up with a number for your daily count.
From an Eclipse perspective, we agree with Scott’s suggestions; but, they apply mostly to paper warehouses (vs. RF). For RF, the cycle count is even simpler. For example, you can skip step 1 because the system can count in real time. It will also track additional information, such as improper moves and negative items.
Eclipse cycle counting works in two primary ways. It tracks what is short shipped through the warehouse. So, if you ship 10 but needed to pull 12, then the item goes to a count. Thus, you can count the short picks. You can also manually generate a row or counts by priceline. Or, you can do them at random via the Generate Random Counts option. Cycle counting also forces users to count items when they have been overcommitted. If an item is unavailable at the time the ticket is invoiced or printed, this item will go into the cycle count queue to be counted.
Because Eclipse has built-in cycle counting functionality, it’s very straightforward and inexpensive for you to begin these steps. Typically, your location/s should only require a few system tweaks and some minimal training. For the benefits you’ll see from cycle counting, this minor investment can pay for itself in a matter of days. If you started cycling for exercise, it would take much longer than that to see results! Yet, you might be shocked to find out how many distributors don’t practice this key to overall warehouse health.