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Lean Physical Inventory

12/9/2013 4:08:05 PM
Article by Alan Severance

It’s that special time of year again! Thanksgiving is over; the snow is starting to swirl. Santa shows up in every department store. And so does the Ghost of Decisions Past! All of those substitutions, part number conversions, and miscounts and the cheating “backcounts” come home to roost. Yes, indeed, all our thoughts turn to the dreaded Annual Physical Inventory!

No production, no invoicing, no receiving that last item you need to fill a customer order. Just the annual pain in the …

Wait! You’re not thinking about all of the effort you logged this year that will make it so much easier to accommodate the accountants. You have taken your shop Lean! Your entire warehouse and production floor are neat, clean, orderly, and organized. This is another payoff for your hard work, and a very big one.

Your inventory teams are on your production floor counting small parts and Work In Process. Even though you did not have to waste a day of production time to “clean the lines” or take the time to return parts to the warehouse this year, you can still quickly blow through this normally tough assignment! Everything is labeled. The tools and supplies are separated from the parts. The amount of raw material is not just reduced, but easier to count because you know your Kanban size. Actual Work In Process is sitting in much-reduced lot sizes. Your counting mistakes are reduced. Misidentification is eliminated. Bumps disappear.

And your warehouse is no longer the forbidding black hole of your private universe. It’s neat, clean, and organized. There are no surprises hiding on a rack because every rack is labelled; every part is identified. There are no extra layers of cardboard or foam packaging or empty boxes hindering the easy visibility and access to the product that will impede accurate counts. There is no danger in bringing skids down to floor level since each was clearly identified, counted, labelled, and securely packaged before it went into location.

Did you assign a team to the rework/repair area? Not this year! Product and parts no longer sit around.

Did you send your usual team to the dock to count Finished Goods Inventory? Not this year. You only built products that you had orders for, and shipped them upon completion.

You instituted your drive to Lean to become more productive, remove waste from your organization, and reduce your costs to remain competitive. You knew that you would see the results on your shop floor because that is where you focused your attention. You may even have realized that your efforts in the warehouse would payoff in production. You were not even thinking about your annual physical inventory, yet you impacted it dramatically.

You have reduced waste, improved your inventory accuracy, taken much less time, money, and effort to take your annual physical inventory, and resumed production, shipping and invoicing much quicker than if you had kept on your former “business as usual” this year. Congratulations! I hope these thoughts will add to your enjoyment of this Holiday Season, whether you conduct your inventory before, during, or after the traditional Christmas week. You have been preparing for this since you began your Lean journey. And while this journey will never end, you now see that there are some oases along the way, so enjoy them. You worked very hard to get here.

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