Year-End Physical Count Got You Down? How to Minimize Warehouse Disruption

October 3rd 2024 09:34:44 AM

“It’s time for a physical count.”

It’s probably the least desirable phrase a warehouse ops director wants to hear — akin to a 7-year-old hearing “Time to visit the dentist!” The mere mention conjures terrifying, dreadful thoughts of the impact on business output.

Shut plant operations down while your entire staff performs a painstaking physical count of every piece of inventory in the building? How much would you stand to lose in productivity? Using an average $100K RPE (revenue per employee) metric, a 100-employee manufacturing company would produce $10M in annual sales. Now think about productivity grinding to a halt for even three days for a physical count. Assuming your operation closes for 30 days annually (allotting for major holidays, select weekends, and plant shutdowns), that’s a sales loss of nearly $30K per day — or almost $90K for a 3-day physical count. Stretch that time to seven days to count and reconcile inventory manually and you’re looking at nearly $210K in lost revenues. Now double these losses if your annual revenues are $20M.

These estimates will surely strike fear into any manufacturing, warehousing or distribution owner, operations manager, CFO or controller. In fact, some companies believe a physical count is such a chore that they’ve been known to write off their inventory rather than undergo the process. However, there are resources that will help make your physical count:

• LESS intrusive to your operations
• Command FEWER down hours between productivity
• MORE accurate in capturing your inventory
• Lead to a STRONGER bottom line

Here are some clear benefits that barcode scanning, multi-bin, real-time counting and more from a trusted automated Warehouse Management System (WMS) can bring to lessen the negative impact of your inevitable physical count (either at year-end or other) and maximize your cash flow.

1. Precise Inventory Control

Automated, real-time barcode manufacturing scanning pinpoints exact counts, identifies excess and low-stock SKUs, and can be used to track equipment, trucks, supplies, satellite warehouses, and more. This allows for better planning, decision-making, and prediction of future product performance.

2. More Accurate Tracking & Traceability

Scanco’s scanning and bin control record exactly which locations house specific stock, minimizing errors (and wasted labor) and increasing inventory accuracy rates from a 65-75% industry average to upwards of 90-95% by:

• Preventing manual errors (miscalculations, double-entries, et al.)
• Identifying discrepancies
• Permitting more staff to count in real-time
• Simultaneous collecting while scanning
• Tracking inventory quantities, under-/over-stocks, and locations

Moreover, Scanco’s Sage manufacturing dashboarding system tracks who specifically performed the count for optimum traceability.

3. Reduction of Waste

Warehouse automation reduces waste and excess inventory (optimizing both costs and operations), and champions environmental sustainability. The latter can make a great success story, as many companies now look for a ‘commitment to environmental impact’ in their partners.

Additional ways Scanco’s warehouse management solution can help reduce waste in your operation: realizing efficiencies in packaging and shipping, minimizing excess and slow-moving inventory, minimizing downtime during physical counts, and helping you purchase only the materials you need with no overage.

4. Faster Data = Quicker Adjustments

Barcode warehouse scanning automation yields quick access to accurate data, helping you make changes seamlessly according to existing inventory, buyer demand, shelf life, and more. It also cuts time spent making adjustments—in some cases, as much as 75% in terms of time savings.

Scanco’s Sage mobility solution allows you to count inventory using a mobile device, eliminating the need for paper counting and data entry. Fully integrated with Sage 100, this solution enables users to find up-to-the-minute quantities by looking up specific items, scanning barcodes, and sending counts directly into Sage 100 in real-time.

5. Improved Cash Flow

Precise inventory control increases efficiency and lowers costs — boosting margins and freeing up cash for reinvestment into other projects. With elevated production, heightened efficiency and reduced costs, a manufacturing or warehousing business will continue to see stronger margins right through the payback period, no matter the scale.

Labor is the major wild card in warehouse productivity, making up the bulk of costs (typically ranging from 55-70%, per the U.S. Bureau of Labor Statistics) in manufacturing and distribution centers. As labor costs rise (Food Logistics Magazine recently reported that the hourly rate for warehouse staff has increased to $16.95 in 2024, which is +7% higher than 2023 and +13% higher than 2022), warehouse automation is more valuable than ever. Regardless of where you look in the industry, the trend is migrating towards an automated, integrated warehouse to minimize these increasing costs.

According to warehouse and industrial systems management company Cisco-Eagle’s 2024 State of Warehouse Productivity Report, companies that deploy a Warehouse Management System (WMS) report a +25% productivity increase over those that don’t. Taking things a step further, Supply & Demand Chain Executive Magazine published a report by the American Productivity & Quality Center (APQC) indicating that warehousing companies using barcode warehouse scanning and inventory accuracy & deployment tracking (all features of Scanco’s solutions) scored significantly better in operational cost per $1,000 in warehouse revenue. Nearly 80% of the study’s ‘Top Performers’ reported utilizing a WMS, and their collective cost per $1,000 was -2.5 times lower than Median Performers….and nearly -6 times lower than Bottom Performers.

We hope our observations gave you a few things to consider when planning and executing a year-end physical count. Remember: while it might not be the most pleasant chore, putting it off — like putting off that dentist — is only delaying the inevitable, and chances are the longer you wait, the worse the impact. Implementing automation can make the entire process smoother and more efficient.

Is staying on top of accurate and timely inventory cycle counts a concern for your business? Are you looking for an effective and immediate solution? We can help. Contact us online or call (330) 645-9959 today to make an appointment with a Scanco Solutions Expert to take the first step toward a more streamlined and efficient warehouse inventory operation!