Supply Chain Blog

Top tips to improve 3PLP cycle counting & avoid suffering stock shock

Posted by Dave Jordan on Mon, May 31, 2010

Stock counting is such a pain that it is lucky you are only required to count your stock once per annum under most jurisdictions. If you really think it is "lucky" then you are fooling yourself. Count your stock once per year and you are asking for a huge and unexpected hole in the stock level and value. In most cases it really is "your stock" so you need to ensure you play a full part in the 3PLP process of keeping your stock under control.

Stock countingAn annual stock counting policy leaves your stock integrity open to prolonged genuine errors and more deliberate stock adjustments. This is not all about stock loss; it is more about stock accuracy. If your system indicates a stock of 100 pieces and a client orders 100 pieces but it is not there then that is a lost sale and an unhappy customer. Potentially you have also lost the value of the actual stock (plus VAT in most countries), a real triple whammy!

You need to be counting something on a daily basis if sku numbers are high, e.g. FMCG. The discipline of caring and counting for stock is not something that can be switched on and off. The 3PLP must display rigorous care and attention on a daily basis; night and day; rain, hail or shine and yes, even while the World Cup is on!

Do not be afraid of cycle counting. Initially it may sound daunting and laborious but in the long run it will help the 3PLP to keep your stock level and accuracy under tighter control than is possible via a sole annual count. The system requires counting of different sku's, or brands or aisles or columns repeatedly over a period of time. The 3PLP must ensure the fastest moving and highest value sku's appear more frequently in the count. Do not waste time counting very slow moving stock as few transactions will gave taken place since the last count.

The 3PLP must be organised to do this professionally or it will do more harm than good. Count the stock on a rolling daily basis four times a year and you will have a reasonably accurate stock record prior to the legally required count. Inevitably errors will still occur but by cyclic stock counting you can check back to the last count and you will have a far better chance of finding the error over a much lower number of transactions.

Stock counting teams must be 100% honest and reliable. For cycle counting they can be made of one 3PLP employee and or more Producer employees. The Producer employees do not have to have Logistics or Warehouse experience and some of the best stock counters are unsurprisingly in Finance roles.

For the annual stock count you need to apply more rigour. To ensure impartiality the teams must be made up of at least three parties; a Warehouse Operator, a Producer Logistics representative plus a Financial colleague who has the overall authority and responsibility for booking the derived data. (To engage in a little team development you can even task your Marketing and HR colleagues to join in!)

Avoid stock-shock by getting on your bike and insisting yourStock accuracy trough  improved cycle counting 3PLP follows cycle counting.



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Tagss: Logistics Service Provider, Dave Jordan, CEE, Traditional Trade, Inventory Management & Stock Control