How To Cycle Count Your Inventory

What is an Inventory Cycle Count?

An inventory cycle count is basically an inventory control and auditing process in your warehouse. Instead of blocking all the warehouse, a small set of selected inventory is counted daily. Cycle counting is a must-have functionality for an advanced warehouse management system.

As we have been emphasizing in many of our previous posts, accurate inventory is the key to success in various forms of retail business. Counting the inventory and evaluating what we have in hand periodically will enhance our inventory accuracy.

 

cycle-count-your-inventory-logiwa-WMS

FREE CYCLE COUNTING TEMPLATE

FREE CYCLE COUNTING TEMPLATE

Download your free cycle counting template in Excel!

Why is Cycle Counting Crucial?

Cycle counting is a repetitive process which guarantees the accuracy of the inventory. We have seen drastic accuracy increases in the warehouses which implement cycle counting. The main benefits of cycle counting are:

  • Increase accuracy in the warehouse
  • Prevent human errors
  • Do not block whole warehouse, so the rest of your warehouse keeps going.
  • Prevents over selling and missing sales opportunities

How to Select Locations and SKUs

One of the crucial processes before starting a cycle count is selecting the warehouse locations and SKUs to be counted. I usually use pareto analysis or ABC classification to select my locations and SKUs. A better way to classify your SKUs as A, B and C type is to check the sales reports. The fast movers are the ones you sell more. I suggest selecting 80% of your locations and SKUs from the A type of fast movers and 20% from the slow moving B and C types.

In some industries, the value of the products is also important. Some of the products are more expensive than the others. You should also consider to include expensive products into your selected cycle count list.

Do you need an inventory management system for cycle counting?

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A Product SKU Master Data Template for Better Inventory Management

There are 2 important master data in order to start an inventory management system implementation: Product SKU master data and warehouse location master data. A product SKU master data is an excel sheet that shows all the required information to manage your inventory in your warehouse and also in your sales channels. In this article, I will try to explain a sample product SKU template that we use in our implementations. There are some crucial fields which you should include in your product SKU master data.

Product SKU Master Data

Our product SKU master data template starts with SKU number. You can check out this article to learn how to create SKU if you do not have yet. The article allows you to download a free excel based SKU Generator.  

Sales Channel

With the rise of online sales, multi-channel inventory management became a crucial issue for online retailers. Not only multi-channel but also multi-store inventory management is trending nowadays. Your product SKU master data template should have a sales channel field which shows all the selling channels of the product.  

Channel SKU

Often times, Online merchants use different seller SKU in different channels. Some of the marketplaces and shopping carts have different rules than others. Our product SKU master data template allows you to define different SKUs for different sales channels such as Amazon, eBay, Shopify, Magento, Walmart.

Product Barcode

Barcodes are used to achieve more productive fulfillment operations. By scanning barcodes, guarantee the accuracy and traceability of our inventory. SKU and/or UPC can be used as product barcode.

UPC

We usually use a separate field to track UPC of the product.

Product Description

Product description or explanation is used for the listings.

Dropshipping

Dropshipping is becoming a crucial facilitator for online retailers. If your product has the dropshipping option, you should define this in your product SKU master data.

Product Dimensions

Product dimensions such as weight, height, length and width are very useful to calculate storage usage, carrier rate and the packing box for the order. The dimensions are also used by the directed putaway algorithm to suggest a suitable warehouse location for our receipts.

Inventory Attributes

Inventory attributes such as lot batch number, serial number and expiration date are also useful for some industries. For instance, if you are selling food products, you need to track loot number and expiration date. If you are selling electronics product, you may activate serial number tracking.

Kitting and Bundling

If the product is a kit, product SKU master data should include this information as well. You should enter the components of the kit and the required quantities. Your inventory management system uses this information to track kit product inventory and component product inventory.

 
Product SKU Template

Product SKU Template

Download your free product SKU master data sheet!

 

How To Manage Inventory With SKU – An Excel SKU Generator

What Is SKU?

SKU means stock keeping unit. SKU is used to define distinct product codes for sales items. SKU should include all the attributes that distinguish one product from other products. For a specific inventory item, these attributes could be color, size, manufacturer, packaging, warranty etc. SKU should be a unique identifier for a specific sales item.

What is UPC?

UPC (Universal Product Code) is the barcode that we use for scanning items in the warehouse or retail point of sale. UPC is an international global code which is based on international standards.

Barcode Scanner UPC

What Is The Difference Between SKU and UPC?

UPC is based on international standards and usually created by the manufacturer of the product. Whereas SKU is not regulated or standardized. The company can use the same codes that the supplier is using or companies can create its own SKU code.

Both SKU barcodes and UPC/EAN barcodes can be used to scan inventory in the warehouse and point of sale. Your inventory management system should give you the option to assign multiple barcodes to the same product. By having this functionality, it is possible to use SKU or UPC barcodes for your inventory.

How To Generate SKU

To manage inventory with SKU, you have to create identical SKU. When creating your own SKU for your inventory, the challenge is creating unique identifiers. Each SKU must be different than the other. To implement a basic SKU code strategy, you can use our an excel based SKU generator.

If you decide to use your supplier’s or a wholesaler’s SKU code, it is possible to have same the same SKU code for different inventory items.(SKU codes are created by vendors). In order to manage this challenge, you need an advanced inventory management system.

Manage Inventory with SKU For More Productive Fulfillment

Receiving Inventory

When receiving inventory, SKU codes are used by the receivers to scan and recognize the product. Especially, when the products have attributes such as size and material, it is very difficult and time-consuming to identify the products.

 

FREE SKU CODE GENERATOR

FREE SKU CODE GENERATOR

Download your free SKU code generator excel!

Multi-Channel Inventory

SKU is used to upload our products to the selling channels. We feed our inventory based on SKU Codes. With new generation inventory systems, it is possible to define multi-channel based multiple SKUs which are related to your original SKU code in the inventory.

Order Picking

By scanning an SKU barcode, the picking process will become more accurate and productive.

Order Packing and Shipment

SKU barcodes are used to scan products during the order packing process. You can also print packing slip and shipment barcodes by using the SKU codes.

Cycle Counting

SKU barcodes are crucial for cycle counting. They directly affect the performance and accuracy of the counting process in your warehouse.

 

Would you like to learn more about Logiwa Inventory Management System?

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Warehouse Labor Planning – A Spreadsheet Template

In this article, I will explain a simple spreadsheet template for warehouse labor planning. I will use a sample warehouse of a small retailer. Usually, the bottleneck in a retail warehouse is picking or packing process. So, it will be better to focus on picking and packing processes in our warehouse. I will also provide a link to download the template at the end of the article.

Let’s assume, we have 2 different types of orders: Single item orders and multi-item orders. Basically, single item orders are the orders which have just one SKU whereas multi-item orders have multiple quantities of the same SKU  or multiple SKUs. In our sample warehouse, we will have the picking process followed by the packing process. And the shipment labels are printed during the packing process.

 

Single Item Order Picking

 

Single item orders are picked in a batch of 50 orders at a time into a picking cart. The batch size may differ from one warehouse to another. The main idea behind batch picking is to reduce the number of locations for a picking trip. The warehouse management system should consolidate the same SKUs in a batch to reduce the number of visits to the locations.

 

Multi Item Order Picking

 

There are several options for multi-item picking. You can check various picking methods in this article. I will use cluster based batch picking for multi-item orders. The trolleys for cluster picking include 12 bins or totes and the batch size is considered as 12. The picking batch size may differ from one warehouse to another. I will try to explain how to calculate optimum picking batch size for cluster picking and batch picking in the next articles.

 

 

 

3 Points to Consider When Deciding the Picking Batch Size

 

  • Consider the size of the picking car (or container) and the products in the batch. It is better to have one picking car (container) for a batch.
  • Consider the total duration to execute all the batch. The total duration for a batch should not be more than an hour.
  • It is always better to create a separate batch for large and small products.

 

Defining the Input Parameters for Warehouse Labor Planning Spreadsheet

 

Parameter Value Explanation
Daily Shift Hours 7 The effective working hours for your warehouse excluding breaks.
%Single-Item Orders 15% Percentage of orders which has 1 product.
#Avg. Items per Multi-Item Order 3 Average number of products in an order
#Single-Item Orders for a Single Batch Picking Batch 50 Number of single-item orders to be picked together in a single-item picking batch.
#Multi-Item Orders for a Cluster Picking Batch 12 Number of multi-item orders to be picked together in a multi-item cluster picking batch.
#Orders to be shipped daily 500 Daily number of all shipment orders(Single-Item and multi-item orders)
#Single-Item Order Lines 75 Daily number of single-item orders. Formula: #Orders to be shipped daily * %Single-Item Orders
#Multi-Item Order Lines 1275 Daily number of multi-item order lines. If an order includes 3 products, the number of order lines is 3. Formula: #Orders to be shipped daily * #Avg. Items per Multi-Item Order

 

How to Use the Warehouse Labor Planning Spreadsheet?

Order Picking Process

 

ogiwa-WMS-warehouse-labor-planning-Order-picking-process

 

Step 1: Start with estimating an average “Setup Time” to start the next batch ( Picking the next job, picking the trolley etc.) and to finalize the batch ( Moving the trolley to the packing station etc. ).

Setup Time to Start and Complete a Batch(Seconds): 120

Step 2: Estimate input parameters for picking process.

Total Time To Pick an Order Line From a Location(Seconds): 15

#Avg. Distinct Items in a Single-Item Order Batch: 30

#Avg. Distinct Items in a Multi-Item Order Batch: 20

#Avg. Unique Items in a Single Item Order Batch: To explain the parameter, let’s use a sample. Assume that we have 10 single item orders. The order and SKU combination is shown below.

 

Order SKU
Order1 A
Order2 A
Order3 B
Order4 B
Order5 C
Order6 A
Order7 C
Order8 B
Order9 D
Order10 A

 

Avg. number of consolidated item quantity for a single item picking job is calculated as below:

#Avg. Unique Items in a Single Item Order Batch= number of Orders/number of distinct SKUs = 10 / 4 = 2.5

This parameter is an estimation based on the number of active SKUs in the warehouse. If you have 100 active SKUs in the warehouse, the parameter may be 10 (It is not “1”, because the distribution of the SKUs will follow a normal distribution and warehouse management system will try to consolidate similar SKUs into the same batch). If you have more SKUs for instance 1000 than the parameter may be 5.

#Avg. Unique Items in a Multi Item Order Batch: We can use the same formula which we explained in the “#Avg. Unique Items in a Single Item Order Batch”. Usually, this parameter depends on the size of the picking batch and the number of active SKUs. You can test different values to estimate your average value.

Total Time To Pick From a Location(Seconds): This parameter may differ from one warehouse to another. It indicates the total time to walk between warehouse locations and to pick the products from the location. When a picker arrives a location which is suggested by the warehouse management software,  the user stops by and picks the products from the location. In this template, the walking duration from one location to another is included in the parameter.

 

Calculated Values for Order Picking

 

These values are calculated automatically to estimate the duration of the order picking process.

Total Time to Execute a Single-Item Batch(Setup + Execution): 570 seconds

Total Time to Execute a Multi-Item Batch(Setup + Execution): 420 seconds

Total Time to complete a Single Item Batch: This value shows the total time required to execute a single item batch. And can be formulated as below:

Total Time = Setup time + (#Avg. Unique Items * Total Seconds To Pick From a Location)

 

Order Packing Process

 

Logiwa-WMS-warehouse-labor-planning-Order-packing-process

 

Setup Time to Start Packing of a New Order (Seconds): 30

Total Time to Select and Prepare a Shipment Box for an Order (Seconds): 10

Time Required to Pick the Total Quantity of a Product From a Location (Seconds): 5

Total Time to Wrap, Print and Stick Shipment Label for an Order (Seconds): 30

Setup time to start packing of a new order: The parameter indicates the time that is required to start next packing task.  

Total time to select and prepare a shipment box type for an order(Seconds): The parameter indicates the time that is required to check the products and select a suitable box type for shipment.

Time to scan an item and put into the box: The parameter indicates the time that is required to pick an item from the tote, scan the barcode and locate it in to the shipment box.

Total time to wrap, print and stick shipment label for an order:  The parameter indicates the time required to wrap the box, print a shipment label and mount label on the shipment box.

 

Calculated Values for Order Packing

 

These values are formulated to estimate the packing process.

Total Packing Time for Single-Item Orders (Execution + setup) (Seconds): 5,625

Total Packing Time for Multi-Item Orders (Execution + setup) (Seconds): 36,125

Total packing time for single item orders: This value shows the total time required to pack all the orders in a single item batch. The result is a function of setup time to start, box selection, product scanning, shipment labeling and wrapping.

Total packing time for multi item orders: This value shows the total time required to pack all the orders in a multi item batch. The result is a function of setup time to start, box selection, product scanning, shipment labeling and wrapping.

Results

 

Results for Order Picking Process

 

This part of the sheet gives you a summary of the estimated results.

 

Logiwa-WMS-warehouse-labor-planning-Order-picking-process-estimation

 

The number of single item batch picking jobs: The value shows the number of single item order batches according to your daily shipment orders. This parameter uses the single item order percentage and the single item batch size to calculate the number of batches.

The number of multi item batch picking jobs: The value shows the number of multi-item order batches according to your daily shipment orders. This parameter uses the multi-item order percentage( 1- Single Item Order percentage)  and the multi-item batch size to calculate the number of batches.

Total time to execute single item batch picking jobs: This value shows the total hours to complete all the single-item batch orders.

Total time to execute multi item batch picking jobs: This value shows the total hours to complete all the multi-item batch orders.

The Number of Pickers: This value shows the estimated number of pickers to pick the given shipment orders. The formula uses daily shift hours to estimate the total number of pickers. I did not round the numbers to give enough room for productivity in the warehouse. Usually, we round up the numbers.

 

Results for Order Packing Process

 

Logiwa-WMS-warehouse-labor-planning-Order-packing-process-estimation

 

This part of the sheet gives you a summary of the estimated results.

Total time to pack all single item orders: This value shows the total hours to complete all the single-item packing tasks.

Total time to pack all multi-item orders: This value shows the total hours to complete all the multi-item packing tasks.

Number of Packers: This value shows the estimated number of packers to pack the given shipment orders. The formula uses daily shift hours to estimate the total number of packers. I did not round the numbers to give enough room for productivity in the warehouse. Usually, we round up the numbers.

 

Number Of Estimated Labors

 

The last part of the sheet shows the estimated number of employees for picking and packing.

 

Logiwa-WMS-warehouse-labor-planning-Results

Conclusion

 

In this article, I explained a useful spreadsheet to estimate the number of labors for picking and packing in an online retailer’s warehouse. We can design more templates and your processes may differ from the one I explained. But I guess, you had an idea of how to do it for your own operation.

 

Download The Spread Sheet