Cycle Counting: Seeking Discussion

[Marc]

I have been in a lot of companies. One of the problems I have had is I have a hard time understanding why so many companies wait so long to put in place decent material control systems. Maybe it's because of my background, but it seems to me it would be one of the FIRST things a company would be looking at.

From small companies to large companies, modern facilities to old plants. it doesn't seem to matter.

A good example is Harley-Davidson. They built that beautiful Kansas City assembly plant in the late 1990's, touted as a model of manufacturing and quality, and KC STILL does not have a working inventory control system. Nor is there any evidence as of this date that this is changing. I know they know there is a problem there, but nothing is done.

Seeking discussion - What's the deal with cycle counting? What can be done to eliminate it? Are there any reasons you can think of why a company could NOT devise an affordable working system in a short time?

 

[Douglas E. Purdy]

I have been in a lot of companies. One of the problems I have had is I have a hard time understanding why so many companies wait so long to put in place decent material control systems. Maybe it's because of my background, but it seems to me it would be one of the FIRST things a company would be looking at.

Seeking discussion - What's the deal with cycle counting? What can be done to eliminate it? Are there any reasons you can think of why a company could NOT devise an affordable working system in a short time?

Marc,

So you are suggesting that a good material control system would not need cycle counting? Please share the resource information you have that would support this idea. With what little contact I have had with APICS, I thought that cycle counting was an acceptable method of checking and making corrections and improvements to your inventory control system.

Thanks,
Doug

 

[mshell]

Our organization has a very effective control system. We know exactly how many of everything including nuts and bolts. Our Shipping/Receiving Clerk counts everything we receive and the exact amount is entered into our Manufacturing software. When items are needed for use in production, she issues the exact amount needed, the item is recorded on the job traveler and inventory is adjusted at the end of the job. If replacements are needed because of a defect, both the replacement and the defective part are recorded and removed from inventory. We still do a random cycle count on a weekly basis to verify the accuracy of inventory. Discrepancies are minimal. It appears to work well.

I have also worked for a company that had very little inventory control and constantly ran out of the supplies needed to complete a job. They performed monthly cycle counts and still had inventory issues. When I left, they had hired an inventory control person to figure out where all of the materials were going.

 

[CINDY]

We have an effective system as well. It is updated from receipt to shipment, including internal removal. Everything is logged into our system. We perform an annual audit to verify counts, location, deterioration etc. More audits may be preformed if there is time, personnel, or need. We also have monthly monitors (random) to ensure location, quantity, deterioration etc. Proper training and department coordination are essential.

Cindy

 

[energy]

We have an effective system as well. It is updated from receipt to shipment, including internal removal. Everything is logged into our system. We perform an annual audit to verify counts, location, deterioration etc. More audits may be preformed if there is time, personnel, or need. We also have monthly monitors (random) to ensure location, quantity, deterioration etc. Proper training and department coordination are essential.

Cindy

In a previous life, our system was set up the same way. At the end of the year, the entire facility was involved in Inventory. Out came the printouts and sections were assigned. Dollar amounts for unaccounted differences between what was on hand and what should be on hand varied from 30K to 120K. The 30 K was considered "outstanding". Maybe some cycle counting would have eliminated some of the difference. The problem? Not enough resources to assign people to do it. Management would simply look at the numbers at Inventory time, sharpen their pencils and put their best face on for the CEO! Like, "Yeah we used XX for project YY. That's where it went"

 

[CINDY]

Talk about lack of control. 30k would be looked at as unacceptable here. I personally have searched for 5 or 6 missing pieces that may have a dollar value of 5 or 6 dollars each. During my slow time, I volunteer to do such things as inventory audits.


Cindy

 

[mshell]

That type of discrepancy would not be tolerated her either. We have tight control and make sure that each piece is accounted for. When you have a small business, every penny counts.

 

[energy]

That type of discrepancy would not be tolerated her either. We have tight control and make sure that each piece is accounted for. When you have a small business, every penny counts.

Let me rephrase that. The 30K amount was an acceptable number to start whittling away at. The material was used, just not documented accordingly. Service technicians may come in at night and grab a 4K pump because the Customer is down. He bills the customer and doesn't make it's way back to Inventory. He says, "I was in too much in a hurry to fill out the paperwork, at that time and I forgot about it. What's more important? You or the Customer?" Stuff like that.

 

[CINDY]

Inventory and Accounting nightmare.

What is more important, receiving a paycheck or not?

 

[David Hartman]

Marc,

I could not agree more.

At a former employer's where inventory control was strictly push oriented, we had no clue how much was really being spent to produce product (not only due to "uncontrolled" rework activities, but a process that included "uncontrolled" repair and part replacement as well). We really did not fully understand if we were being profitable or not.

When we implemented a proper MRP system and pull-oriented floor inventory we almost brought production to a standstill, until the previously unseen quality issues were addressed.

This change had a far greater impact on product quality than the hundreds of thousands of dollars we spent on ISO 9001 compliance, and improved effeciency/productivity as well.