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Welcome back to Warehouse and Operations as a Career, I’m Marty and I appreciate you listening in today! Everyone know what FIFO is? It simply means first in first out when we’re dealing with product. I heard about an employee losing his position because he pulled 30 cases from the newest pallet received, a pallet that had just been received that day. Now he knew that wasn’t best practice, as a matter of fact he knew he was not supposed to do it. He was pulling an order for will call, the pick location was on the other end of the warehouse, that pallet was right there by him on the dock, so he stopped and picked them. It didn’t take inventory control long to determine they had 47 cases about to go out of date, actually it only took them about 2 hours as that item was being cycle counted that day. He knew it was wrong, against the rules, but he made a bad decision. And to top it off, he was mad about getting terminated? At the end of the week it was determined that’d been a about a $3000 error. I understand being upset about losing our job, but he’d kind of terminated his self. It would have taken him a few more minutes to run over and pull the product from the pick slot, in rotation, but he was getting paid for his time and we’re paid to follow direction, too right?
Let’s talk about Inventory management for a minute.
https://en.wikipedia.org/wiki/Inventory The scope of inventory management concerns the balance between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space, quality management, replenishment, returns and defective goods, and demand forecasting. Balancing these competing requirements leads to optimal inventory levels, which is an ongoing process as the business needs shift and react to the wider environment.
Inventory management involves a retailer seeking to acquire and maintain a proper merchandise assortment while ordering, shipping, handling and related costs are kept in check. It also involves systems and processes that identify inventory requirements, set targets, provide replenishment techniques, report actual and projected inventory status and handle all functions related to the tracking and management of material. This would include the monitoring of material moved into and out of stockroom locations and the reconciling of the inventory balances. It also may include ABC analysis, lot tracking, cycle counting support, etc. Management of the inventories, with the primary objective of determining/controlling stock levels within the physical distribution system, functions to balance the need for product availability against the need for minimizing stock holding and handling costs.
As receivers, order selectors, forklift drivers and warehouse men and ladies we probably don’t think about our days on hand of inventory, our turns, meaning on average how many days it takes to ship all of the received quantity of an item or the cost of storing a quantity of left over or aging inventory.
We’ve spoken about the cost of real estate, or our pick locations before. I guess it was back in the late 90’s when I heard about Just In Time receiving. Our merchandisers we’re tasked with keeping as little inventory on hand as possible. Especially with products that local vendors had readily available at all times they’d wait until almost every on-hand case was sold and shipped before they brought in another quantity or pallet. In theory you’d bring in just 1 pallet, put it in the pick location, no reserve slots would be utilized, and you’d reorder just in time, or when the slot would be empty. A great cost savings move. Our warehouses wouldn’t need as much square footage, we wouldn’t need tall stacked racks to accommodate all those reserve slots, shoot, we wouldn’t need as much racking or pick slots all the way around. Like I said, a great plan. But I think, or at least in many instances, that lost buying power or buying in bulk, ended up offsetting some of those savings. Inventory Management is much more involved than just those two words.
We’ve talked about Inventory Control and Cycle Counting before. A lot of our warehouses use a WMS or warehouse management system these days. As we’ve learned, in our worlds, Inventory control may be 2 distinct departments, a warehouse side and a financials side. It’s their jobs to keep track of all that inventory. They have to keep the machines counts straight, shrink out all the damages, spoilage or out of date product, plus in any customer returns and counts that have been recouped or damages that’s cleaned up and ready to place back into stock. They have to keep up with lot codes, country of origins and make sure we’re following a strict FIFO program if that’s our company’s policy and procedure. Cycle counters make sure our WMS knows what’s actually in the building and where it’s located. Those are both really tough jobs, neither of which was I ever really good at.
In todays expense driven environment, I think everything’s at the item level. When just in time procurement is feasible, that’s the choice. And when bulk buying can pay off it’s better to rack and store it for future purchases.
But again, as Warehousemen, we have to follow our companies’ policies. The gentleman we were speaking of earlier did error, a large and costly error. One that each of us have probably done or complemented at one time or another. When willingly doing wrong, we kind of have to expect and accept the consequences! I’m sure none of that was part of his plan!
Speaking of our plans, how’s everyone coming along with their 2nd quarter planning and goals? We only have 3 more weeks left. I’m way behind on mine. I’ve had to take on a few more responsibilities, do some additional tasks for one reason or another, people moving on, a little additional business coming on and to be honest maybe I was a little aggressive with my Q2 planning. And that’s ok, I may not accomplish or landed where I wanted too but I’m only halfway through my yearly plan. I’m going to think it through, reorganize and I am going to end the year as I wanted! So how are you coming along? Keeping those daily journals and planning ahead for the next day? That’s the key lady and gentlemen! If you don’t mind, send me an email to host@warehouseandoperationsasacareer.com and share how your plan is coming along. Let’s hear about some of those success stories out there! We’re going to start a discussion about 2nd quarter planning on our Facebook and Twitter feeds too, you can find us there using @whseandops. We’ll I ended up way off topic today, I hope you enjoyed it though and have a few thoughts about Inventory Management, there’s a lot of information on the web and it’s a really interesting topic, with a lot of Career Opportunities within it as well. Until next week, lets all look at our planning and goals and above all make sure we return home Safe each day, those loved ones are counting on it!