Innovation Through Integration

This month Declan Cheasty "Keltech Warehouse Manager" discusses stock accuracy. Keltech is a Contract Manufacturing partner specialising in the supply of integrated metal assemblies with a focused level of expertise in: Acoustic Enclosures, Reservoir Tanks and Cabins/Over-Head Guards. Keltech supplies OEM’s based in Ireland, the UK, Europe & the USA.

How does Contract Manufacturing work? In a nutshell instead of Keltech supplying a piece part (like just the tank fabrication) to an OEM to be used in the final assembly of their machine Keltech now supply the fully integrated part (Plug & Play)! We manage multiple line items including filters, gauges, manifolds etc, the below tanks are a perfect example of this integrated solution.

Just over a year ago, I was appointed as a Warehouse Manager at Keltech. There was a steep learning curve as I had come from a Process Engineering background with no previous experience in supply chain or management. However, my six months working within the company as a Process Engineer had allowed me to gain a good understanding of the products and how the company operates. This provided me with a good starting point and allowed me to grasp the concepts and learn very quickly. During this learning process, I have come across various issues that I have had to deal with and correct in order to improve the overall stock accuracy in the warehouse. I will detail some of these issues below and the systems I put in place to overcome these issues.

This is by no means a one-size-fits-all guide to improving stock accuracy in every warehouse. Each company will vary as each will have their own methods of maintaining a high level of stock accuracy. However, some of the underlying concepts I will cover here will still apply.

1. Delivery Schedule
The best place to start is with the products that are arriving into the warehouse and will make up your stock. With large volumes of various products coming from a multitude of different suppliers, this proved to be a challenge in the beginning. The best way to tackle this is in steps. First of all, it helps to know what products you are expecting to receive at the beginning of each day. This can be easily organised by getting your suppliers to provide you with a delivery confirmation once they have dispatched their products. You should then create a spreadsheet with the various suppliers and their transport times. This will be very easy to maintain for suppliers with same day or next day delivery. For suppliers with longer transport times, you will have to track these over a number of weeks. You will then begin to see a correlation, e.g. if after a number of weeks of tracking a suppliers’ delivery time it varies from between 7-10 working days from when you have received confirmation, you should put it on your list of expected deliveries for the seventh day so that your staff will be expecting it. If it comes in on the seventh day then great, if not you will put it on your list for each subsequent day until it arrives. This will help plan for the deliveries you are expecting, will help in ensuring all delivery dockets are accounted for at the end of each day and will allow overdue deliveries to be tracked and managed.

2. Incoming Deliveries and Delivery Dockets
This step is the most vital for a warehouse’s stock accuracy. If done incorrectly a few transactions can lead to huge discrepancies in stock accuracy. Once the deliveries arrive, they must be put away and the dockets booked in at the earliest possible convenience. The sooner this is done the sooner the stock is accurate. It is essential that the parts are put away in the correct location. If parts are put away in the wrong locations it will lead to issues with the stock accuracy and worse, the incorrect part could go to a customer. An issue I had when I first began this job was delivery dockets going missing before they could be booked in. This was tackled by implementing the following process: when a delivery arrives it must first be taken in; it is then checked to ensure that the goods delivered and quantities on the docket match; if everything is correct, the docket is signed and dated by the person who checked it; and finally, the docket is left in a collection area where it is collected at intervals throughout the day and booked in. The best practice I have found to ensure stock is accurate at the end of each day is to implement a process where all parts must be put away in the correct locations and all delivery dockets booked in by the end of the day. This process ensures the stock is 100% accurate at the beginning and end of each day.

3. Booking Out of Parts
Our customer in this warehouse is the Production side of the company. Before giving the parts out to Production we “kit” them. This involves putting the parts required for a certain product into a box that Production will call for when needed. We have lists that inform us which parts and quantities are required to go into each kit. Once the kit is complete, the list of products is then booked out of stock, and the sooner this is done the sooner the stock is accurate. There are also instances where an employee could come to the warehouse and requests a part/parts. If this occurs, it is vital that this part/parts are booked out correctly as every part leaving the warehouse must be recorded in order to ensure the stock is accurate. To help with the tracking of parts leaving the warehouse, I introduced a sign out sheet. This sheet is attached to the door in the warehouse and requires the following to be recorded before the part can be given out: date, time, person requesting the part, the reason they require the part, the details of the part and the quantity given out. This gives us the relevant information to allow us to book out and to track a part if necessary. A similar sheet is located on the door in the warehouse for parts being returned to the warehouse with the same details required. The process that is in place requires that all parts placed in a kit, given out/returned are to be booked out/in by the end of each day to ensure the stock is 100% accurate at the beginning of each day.

4. Cycle Counting
This is a key step in correcting and maintaining stock accuracy. It involves picking parts at random to be counted at the beginning or end of each day and checking if they match the stock that is recorded on the system. The number of parts to be counted is dependent on how detailed you want your cycle counts to be. I usually get all warehouse personnel to count five parts each every morning. For this to be accurate, it must be carried out when everything has been booked in/out, put away and when there is no movement of stock. If there are any parts counted that do not match the figures on the system, then you will need to investigate to see what caused the irregularity in the stock and put measures in place to prevent it from happening again. An issue that occurred with one part has a high likelihood to occur with other parts. Having warehouse personnel involved in cycle counting allows them to understand the importance of stock accuracy and can make them aware of the different problems that can affect it. I found this vital as all the preventative measures that you put in place will realistically be carried out and maintained by them. It is a good form of training as it will demonstrate to them the benefits of having accurate stock and will give them a sense of ownership. Monthly stocktakes are also carried out. These are treated and carried out similarly to the cycle counts only with a larger number of parts counted. These stocktakes usually take a full day to carry out and all suppliers are notified in advance that no deliveries will be accepted on these days, which eliminates the movement of stock.

5. Organisation
This is one of the most undervalued steps in warehouse management and for most warehouse personnel, cleaning and housekeeping is probably bottom of a long list of things they want to do. Aisles with unused pallets, lists and sheets of paper left on desks, parts left on the floor and cardboard boxes left everywhere can all affect stock accuracy. It can lead to parts not being put away correctly or parts not being put away at the end of each day. This can lead to incorrect counts during cycle counting and can cause issues with the quantity of stock being ordered. Blocked aisles, obstructions and clutter not only affect stock accuracy and efficiency but also create a health and safety problem. To tackle this issue, I implemented a housekeeping process where all warehouse personnel finished work a half an hour early to tidy up and organise the warehouse. The warehouse was divided up into areas and each employee was given an area to keep tidy. Weekly spot checks are done at random on all areas and any issues are brought back to the relevant employee. This helps ensure that the warehouse is kept organised and tidy and thus eliminates one factor that can contribute to discrepancies in stock accuracy.

6. Training
With the introduction of all the new processes, it is important to document everything and to ensure that the correct training is provided to all personnel. Working in a warehouse is a high-risk environment as any mistake can directly impact the customer. Therefore, it is important that the correct processes are followed and that all personnel are on the same page. This can not be achieved without adequate training. When new processes are put in place, I find it is good practice to discuss all the changes with each employee separately to ensure they understand what is expected. This is also a good time to get feedback or suggestions as it is these employees that spend the majority of their time in the warehouse and know the stock best. Any feedback or suggestions could be invaluable and will lead to them feeling more involved and more willing to accept all the changes and new processes.

With the implementation of the six steps listed above there has been a great improvement to the accuracy of the stock in our warehouse. The improvements were slow at first but once the processes and procedures were in place and all warehouse personnel bought into them, stock accuracy began to gradually increase. The stock accuracy is now at a level that we are happy with and it is due in no small part to the steps listed above. Other factors such as warehouse size, quantity of stock and the industry you are involved in may mean that the six steps listed above will need to be adapted to suit your needs but I feel the concepts behind these six steps can be applied in any warehouse.

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