Free Seminar: Fundamentals of Inventory Management

Every day, businesses invest thousands of dollars on inventory! If these businesses do not have these 4 KEY components: People ★ Processes ★ Procedures ★Technology, in place to manage this investment, how will that impact their company?

On Thursday, October 8, 2015, I’ll be presenting a FREE seminar on “The Fundamentals of Inventory Management”.  This seminar will be held at Forsyth Tech’s Small Business Center located at 525 Vine Street Winston-Salem, North Carolina 27101.

Please follow this link to register: Forsyth Tech Small Business Center

This seminar will outline all of the fundamentals necessary to keep your operations organized, productive and therefore profitable.

The topics that will be discussed are:

Shipping/Receiving Departments

Inventory Management and therefore Accuracy begins at the backdoor (your receiving area). If product arrives incorrectly and received as such, it will be WRONG all throughout.  At some point the error, whatever that may be, could be found but by the time it is, it’s generally way to late to fix it.

Warehousing

After the product has been received correctly, these items must be stored. All items must have their own “home” within your warehouse/storeroom. These bins, shelves, cabinets and even floor locations must be clearly marked. Think of it this way, if I were to visit your facility and you asked me to find something, how long would it take me? Another important part of your warehouse is how it’s organized. The old saying, “work smart not hard” definitely applies here. Group similar items, by supplier, by equipment, by usage

Warehouse Security

Limit access to your warehouse to those who are directly responsible for managing it. An OPEN warehouse is prone to “issues”.

Physical Inventory vs. Cycle Counting

Yearly PI’s are very time consuming, often requires a business to shut down entirely or just certain departments. PI’s are also not going to help you identity and resolve inventory issues. It’s difficult if not impossible to accurately fix an error that occurred in January when you conduct the PI at the end of the year. After a PI is completed, most inventories remain accurate for 30 days.

Policies and Procedures

It’s very important to have your Warehouse and Inventory Policies documented. This will have everyone literally on the same page. You can’t have all members of your team “doing their own thing”

Stock items vs. Non-Stock items (Spot Buys)

Stock items are tracked in your Warehouse Management System (WMS), Spot Buy items and generally NOT place in your WMS. However, a simple database can be created to track these purchases. Learn how to create such a database.

Warehouse Management Systems

There are literally TONS of options available to you.  From Pen/Paper, Excel, Access, Free, Low Cost options, internal systems in your company, industry specific.

If you’re looking for a WMS, learn which questions you must answer before you begin looking.

So, if you or someone on your team would like to learn more on how to maintain an accurate and cost efficient Inventory, please contact me at joecrews@jitsolutionsgroup.com or 336-624-6847.

Registration is required due to limited seating. So please follow this link: 

Forsyth Tech Small Business Center

About Joe Crews aka Inventory Joe & JIT Solutions Group, LLC

In 2006 I formed what has now grown to become JIT Solutions Group.  Our goal is to educate businesses of sizes and in all industries on how to manage an Accurate & Cost Efficient Inventory.  We are based in Winston-Salem, North Carolina but that doesn’t prevent us from educating and training businesses all across the county on the BEST PRACTICES of Inventory Management.

I hope you found this Post informative and if so, please share with others within your network.  Also, please be sure to select the “Follow” tab to ensure you don’t miss any future Posts.

If you have any questions or would like more information about our services, please visit, www.jitsolutionsgroup.com or Connect with me here on LinkedIn  

10 Easy Steps to Increase Warehouse Efficiency

What does your warehouse say about you? The erratic demands of customers, both internal & external, make maintaining a warehouse a never-ending battle, but here are a few tips I’ve found useful over the years:

Clean The Place

It is amazing what you’ll find in the warehouse when you just clean it on a weekly basis. Mystery inventory such as: returned goods, damaged goods and special buyouts won’t have any place to hide.

Beyond the ability to move more quickly in the facility, your team will begin to develop a greater sense of pride in their workplace. Remember, this is the place where all your cash is stored. You want a team that protects your cash from the outside threats of salespeople, truck drivers, and manufacturer reps.

Give your personnel their own identity

Your warehouse employees work with your cash all day long. Make shirts for them that say "Inventory Security Team" or something similar that signifies the importance of what they do.

This does a couple of things. First, it reminds them that inventory has value. Second, it helps identify those people who belong in the warehouse.

A key element in keeping a secure warehouse is to eliminate those folks who have no business being in there.

Increase The Receiving Area

When most people are designing a warehouse, they tend to cram as many racks of inventory into the space as possible. Usually as an afterthought, they carve out enough room for a little desk by the dock door, run a terminal to it and call it the receiving department.

Here’s the problem: Most inventory errors start in receiving. If you make a mistake here, 10 additional problems will occur in the company. Start by giving them adequate room to work. You’ll see your inventory adjustments decrease immediately.

Put Senior People In Receiving

Why do we always put rookies in receiving? As I mentioned earlier, mistakes in receiving cause multiple headaches down the line. Make sure you get it right coming in the door.

Pay your receiving clerks well, and encourage them to stay in the position. Remember, you’ll always have more product coming in than going out.

Receiving is your one place to get it right the first time so you don’t have to redo orders later because of receiving errors.

Create Signage

Don’t assume your newer employees can navigate the aisles. Help them out. Create colorful signs to direct them to aisles or bins. Warehouse maps are a great way to increase productivity immediately. Clearly label any and all landmarks.

Try this: Ask one of your friends to come into your warehouse and pick an order. If your warehouse is set up correctly, they should achieve a high success rate without asking questions on every item. It needs to be that easy.

Add Descriptions To Pick Tickets

Most item databases will allow you to add multiple lines of description to any SKU in the system. Use them and you’ll increase the order pickers’ chance of pulling the right product.

Put in physical descriptions like "the blue one" or "two wheel." This is especially critical when you’re talking about minimum quantities. Make it clear that the "each" actually refers to the pair that’s in the pack, not to one of the two.

This simple change will help you eliminate future dead stock. Don’t worry about killing a few extra trees. They grow back.

Double Check Orders

A really bad motto for a distribution company is "We fix our mistakes faster than anyone else in the business."

For the typical distributor, the cost to process an order is about $45. It costs an additional $100 to send it out the second time. None of us has enough margin to be able to absorb this cost on a regular basis.

In order to get it right the first time, install a method of double-checking using one of your seasoned veterans. This is especially important if you have new people picking orders.

Create Color Coded Labels

In order to make it easier for your delivery staff, develop a custom colored label for each of your most valuable customers. Make sure every package you deliver to that customer has that label.

Your drivers will be able to quickly identify those orders. You don't want to make mistakes on orders to your best customers.

Implement "Days Work In A Day"

Simply stated: "What is started today, must be completed today." If you receive it, it must be put away. If an order is put in the system and a pick ticket is printed, it must be picked and shipped or staged.

In order to make this happen, create cut-off times. Order processing must end at a defined time. We need to give the warehouse a chance to finish the day.

Implement Cycle Counting

Most of us know what it is. Some of us recognize the benefits. Few of us have made it part of our standard operating procedures. Cycle counting will increase the accuracy in your systems.

By examining inventory daily, you'll find those mystery items that have found their way to the shelves. You can correct items that have been put in the wrong place. You can rotate stock. The list can go on indefinitely.

Cycle counting is penicillin for distributors because it attacks so many little problems and solves them on a timely basis.
Good customer service begins in the warehouse. Sloppy procedures and a disorganized warehouse show what you think about your customers, you employees and the work you do.

 About Joe Crews & JIT Solutions Group, LLC

In 2006 I formed what has now grown to become JIT Solutions Group.  Our goal is to educate businesses of sizes and in all industries on how to manage an Accurate & Cost Efficient Inventory.  We are based in Winston-Salem, North Carolina but that doesn’t prevent us from educating businesses from across the county on the BEST Inventory Management practices.

I hope you found this Post informative and if so, please share with others within your network.  Also, please be sure to select the “Follow” tab to ensure you don’t miss any future Posts.

If you have any questions or would like more information about our services, please visit, www.jitsolutionsgroup.com or Connect with me here on LinkedIn. 

9 questions to diagnose your inventory health

As most executives know, identifying the right levels is vital to their organization since it not only controls costs but also serves as a key indicator of how their company's overall health.

So my question to you is….Do you know the Inventory Health of your company?

 

Take a moment to review and answer the questions below.  These questions are designed to assess the effectiveness of inventory reduction processes as well as the sophistication and extent of those efforts.  The answer(s) or lack of answers could be a major eye-opener!

1. Can you able to break down your operating inventory into the three major categories when reporting levels—safety, replenishment and excess or obsolete stock?

This breakdown makes it easier to make sound decisions about appropriate levels for each of these three areas.

2. How does your company calculate your safety stock levels?

Efficient operations use a standard statistical formula that looks at historical data for individual products.

3. Do you recalculate safety stock levels on a regular basis to ensure they are up to date?

A good rule of thumb is to review/update your calculations every 3-6 months.

 

4. Who decides key inventory-related policies such as determining the right balance between customer service and cost-effective product inventory levels?

Many decisions about inventory levels are strategically important. Do you have the RIGHT person making the decisions?

5. Who & What determines the optimal frequency for producing and/or ordering products?

Once again, do you have the RIGHT person in charge?

6. How do you determine the frequency for ordering inventory?

Do you have the systems in place that provide useful data?

7. Is the optimal reorder frequency reviewed and possibly recalculated on a regular basis as part of a continuous improvement process?

Once you've reduced inventories, you'll have to put new processes in place to lower them even more over time.

8. Do you have regular visibility into excess and obsolete stock, and is it linked to targeted action plans to sell off or reduce this inventory?

Inventory leaders establish processes to determine why excesses occur and have a action plan when they do occur.  Don’t let the fear of the write-offs lead to large a buildup obsolete inventory.

9. Do you apply the above practices to all parts of your inventory (finished goods, raw material, works in process and spare parts) and in all organizational entities?

One of the most common mistakes made by some companies is that they only look at small fraction of their inventory.  You must answer these questions and possibly more when you operate a manufacturing facility. 

After answering all 9 questions, the diagnosis of your inventory health sets your company up for significant opportunities to improve expense and asset effectiveness and creates potential for capturing missed top-line sales. 

About Joe Crews & JIT Solutions Group, LLC

In 2006 I formed what has now grown to become JIT Solutions Group.  Our goal is to educate businesses of sizes and in all industries on how to manage an Accurate & Cost Efficient Inventory.  We are based in Winston-Salem, North Carolina but that doesn’t prevent us from educating businesses from across the county on the BEST Inventory Management practices.

I hope you found this Post informative and if so, please share with others within your network.  Also, please be sure to select the “Follow” tab to ensure you don’t miss any future Posts.

If you have any questions or would like more information about our services, please visit, www.jitsolutionsgroup.com or Connect with me here on LinkedIn.

Got hoarders and squirrels? How to overcome hidden stock rooms.

If you spend any amount of time opening cabinets, drawers, toolboxes and looking behind locked doors in your facilities, I almost guaranteed that you will come across someone’s stash of parts, new & used. When you first begin a maintenance best practices or storeroom improvement program, one of the first things you’ll want to do is to go and collect up all of parts and materials that are squirreled away and return them the storeroom.  After all, there is a lot of money just laying around out there in those “hidden” stock rooms, right?

Well, before you go right to this step, you may want to stop and think on why the hidden storeroom(s) exists in the first place.

One reason that is always present with maintenance people is the thought process that says, “If I’m ordering one, then I better order two or three just in case one doesn’t work. After all, we don’t stock them, so if we needed it once, I’m sure we will need it again”.  The downside to this thought process is that you can’t afford to stock a complete factory on the side, not to mention that it’s money spent that may never be used or used for 10 years.

In many cases, they “squirrel away or hoard” these items because they don’t trust the storeroom or the entire inventory management process.  The stashes are “workarounds” for a perceived broken process so you must identify why your maintenance folks have that perception.  Once you have a clear understanding of their viewpoint, take your findings to the storeroom to determine if there are issues that should be addressed.  I’ve found that in most cases, all that is wrong is the lack of understanding the other departments’ processes.

This misunderstanding could be as simple as your maintenance staff can’t find the parts in the storeroom because the descriptions to look up parts are not accurate.  It could also be as simple the storeroom was provided the Preventative Maintenance (PM) schedules for the equipment and therefore didn’t realize how much to stock and when to have it in stock.

These are just a couple of examples that I’ve experienced.  Once the communication starts, many more issues/concerns can be revealed and that is a good thing.  You have to fix the system and the processes to eliminate the “hoarding” and those hidden stores. Once demonstrated and having earned the trust of the users, you can then be successful in collecting up the “hidden stores”.

What about your site? Do you have hidden stores? What are some of the reasons that your “hoarders” exist? What have you done to fix the issues?

About Joe Crews & JIT Solutions Group, LLC

 

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As an Inventory Consultant, my job is to education businesses on how to manage & maintain an accurate inventory but also a cost effective inventory.

 

I do this by analyzing 4 areas of their company: People, Processes, Procedures and Technology. Once this assessment is completed, I’ll implement the changes that are necessary to make them more Organized, Productive and Profitable.

 

Be sure to “Follow” me so my future posts will appear in your LinkedIn news feed.

For more information on my services, please visit my website, www.jitsolutionsgroup.com or visit my LinkedIn profile: www.linkedin.com/in/inventoryjoe/.

 

Visit & subscribe to my Blog: http://jitsolutionsgroup.blogspot.com/ for additional tips, techniques as well as other useful information.

Are You Keeping Obsolete Inventory?

Many of us are "pack rats," meaning we have difficulty throwing things away, even when we know we'll probably never use them. Unfortunately, companies that do this may be wasting a great deal of money, because there are very real costs associated with carrying inventory. The more inventory a company holds, the higher these ongoing costs will be, which is reason enough not to carry outdated, or obsolete, inventory.

Let's look at a few costs associated with carrying all types of inventory.

Labor: Time must be spent performing all of the activities required to stock parts, including putting stock away, picking, counting and relocating. The larger the inventory, the greater the number of transactions and the greater the number of people involved. There is also "support" labor required for all of the clerical tasks associated with managing inventory transactions. Any  labor spent on obsolete inventory is wasted.

Equipment: Equipment is required to load and unload stock as well as transport materials to their points of use. Typically, fork trucks, pallet trucks, tow motors and ladders are used for this purpose. In addition, you need racks and shelves for storage and possibly even pallets and skids for larger parts. Although you may not be transporting obsolete inventory very often, it is not uncommon to periodically relocate slow moving items.

Training: Although the training may be inexpensive, or in some cases free, employees taking time away from the job are real costs to any company.

Future Opportunity: All space used for storage is space that cannot be used for other purposes, such as a new product line, new machinery, expanded office space and more. Lack of available space for these purposes may cause a company to expand or relocate its facility unnecessarily.

The examples above are reason enough to eliminate obsolete inventory. There are many ways to address this, but the key is to develop some type of inventory obsolescence program, then stick to it.

Please watch for part 2 of this Post where I will review some ideas on how to eliminate obsolete inventory.

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As an Inventory & Operations Consultant, my mission is to help you find the “LOST” cash in your warehouse.  I accomplish this by developing customized solutions that will make businesses more organized, productive and therefore more profitable.

 

I always offer a FREE 1 hour consultation but now I’m offering a FREE Audit on your Inventory Management Process.  This $500 value allows you and your team to assess my services at absolutely NO RISK to you.

 

Be sure to “Follow” me so my future posts will appear in your LinkedIn news feed.

For more information on my services, please visit my website, www.jitsolutionsgroup.com or visit my LinkedIn profile: www.linkedin.com/in/inventoryjoe/.

 

Visit & subscribe to my Blog: http://jitsolutionsgroup.blogspot.com/ for additional tips, techniques as well as other useful information.

The 4 KEY components you need to manage inventory

All companies both large and small face the daily challenges managing the inventory for their Raw Materials, Spare Parts and Finished Goods.  Over the years, I’ve worked with several companies, most of which had me being the person responsible to managing inventory.  In that time I have identified 4 KEY components that will help any company overcome their challenges of managing inventory.

The 4 Key components are:

Policies

Procedures

People

Technology

All 4 must be in sync with one another in order for you to have a truly effective inventory management program.

Today I want to provide a brief overview of how these components can help your company become more organized, productive and profitable.

Policies/Procedures

A Companies Policies & Procedures drive their entire Inventory Management Program. Just like any other policy layout, this provides direction on how to receive and inspect product shipments, how the receiving paperwork is to be processed, by whom and when.  If the product is received incorrectly at the “back door” then the product(s) in question has the potential to be incorrect all thru the process of putting the product away, shipping and invoicing the item to a customer or in the case the item is used in-house, issued to a service person.  How discrepancies are handled.  This issue alone must be handled promptly. The longer it takes to notify a supplier about an issue, the less credible you become. 

A companies policy should also cover who is to remove product from is storage location. One major cause of inventory discrepancies is due to an uncontrolled warehouse/parts room.  A company can’t maintain control when everyone can help themselves to product.  One final area is a company’s policy/procedures on how and when to audit their inventory levels. 

When I begin working with a client, the first piece of information I want to know is their current inventory accuracy level. I want to see if they even know.  This will immediately tell me where we are starting from and how far we have to go.

People

A company can have a ton of policies and procedures but if they do not have the support staff in place or properly trained staff the program will fail.  Taking the time to properly train employees will provide you with the greatest ROI a company will see.  Training is not only for new hires but also for those who have been with the company for many years.  By training everyone, you are ensuring that all of your staff will be “on the same page”.  Once your manual has been created, make sure it is available to all to reference.  A printed copy should be available as well as an electronic copy, which is very beneficial for those companies with multiple sites.  Posting your manual on the company server and/or the Cloud will help keep everyone informed. 

These procedures should be audited yearly to determine where changes should be made or in some cases removed all together.

Technology

The technology available today can be extremely overwhelming to companies.  I often hear where companies say they can’t afford to implement any type of inventory system.  They are doing a quick analysis of what other companies are doing and they see price tags of $10,000 and immediately they determine they can’t afford any type of system.  However, if they would spend some time researching their options, they will find solid systems, anywhere from several hundred dollars up to $5,000.  This price range is very suitable for the clientele I work with.  Now, if these same clients can afford something in the range of $10,000, they can find industry specific programs that are pretty plug and play.

In other situations, I’ve seen companies that have some type of inventory management system in place, spent the $5- $10,000 BUT are not using the system.  They did not do their homework before purchasing it and now they can’t use it because they either bought software and/or hardware that will not work correctly for their particular situation or they simply do not have the time to fully implement it.

As with any form of technology, you shouldn’t get caught up in having the “latest and greatest” product.  You could end up buying features that you will NEVER use.

 

I truly hope this overview has been beneficial to you.  If you would like additional assistance with your specific challenges, please see the information below. 

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As an Inventory & Operations Consultant, my focus is helping companies overcome the daily challenges of maintaining inventory.  I accomplish this by developing customized solutions that will make your company more organized, productive and therefore more profitable.

 

For more information on my services, please visit my website, www.jitsolutionsgroup.com or visit my LinkedIn profile: www.linkedin.com/in/inventoryjoe/.

 

Visit & subscribe to my Blog: http://jitsolutionsgroup.blogspot.com/ for additional tips, techniques as well as other useful information.