BP Blogs

LIKE WHAT YOU READ? Share this article :

What’s on your shelves?


Today, I’d like to present a simple idea that could dramatically change the way you think about inventory.   By changing your frame of reference for thinking about inventory, I believe you can implement some changes and improve inventory practices, which can ultimately benefit the organization.

Inventory (widgets, etc.) = Cash

Let’s take a step back and consider some common practices at a bank, a place that has lots of cash.

What type of security measures are in place at your bank?  Are you, the customer, allowed to wander through the vault at the bank?  Of course not.  Is the vault left unlocked?  Definitely not.  Are the tellers trained?  Hopefully yes.  Is the cash organized and counted daily for accuracy?  Most definitely.

Now, think about what changes you would make, if instead of widgets, there were dollar bills on the shelves.  Visualize replacing the widgets with money, equivalent to the cost of the item.  What changes would you make to the warehouse if there were $20 dollar bills lining the shelves, instead of widgets?

Here are a few ideas to consider –

Limit access to the warehouse. It’s unfair to hold warehouse employees responsible for the widgets in the warehouse if customers, delivery drivers, salespeople, and other individuals can walk through the aisles at any time. Only the people shipping, receiving, or moving inventory should be allowed in the area where inventory is stocked. Think about it – how many people are allowed to wander around the vault at your local bank?

Restrict physical access points.  The more places that people can come and go, the higher the risk of unauthorized people entering the warehouse, as well as inventory leaving undetected.  How many doors are there into the warehouse?  Are they locked?  If possible, separate shipping docks from parking lots – this increases the difficulty in removing items from the warehouse.

Educate warehouse employees about seeing inventory as cash.  Hopefully, your employees are good people who wouldn’t take money out of the cash register. But most people don’t readily appreciate or see the true value of inventory. They don’t see the direct relationship between the inventory on the shelves, turning that inventory into cash by selling it to customers, and using that cash to pay employees and other expenses.

Employ Organization and Continuous Counting.  By having a logically organized warehouse, with widgets put away neatly, items are easy to locate when needed, and mistakes can be quickly identified.  By counting continuously, through a mechanism such as cycle counting, errors – whether by mistake or intentional wrong-doing – can be identified and rectified, before they adversely affect the business.