Emma: Welcome to the deep dive. Today we’re jumping into something that might sound a bit dry. Inventory accuracy.
Ryan: Yeah, but it’s so fundamental, isn’t it?
Emma: Absolutely foundational. I mean, picture this, a company, maybe Apex Parts, right. They keep getting complaints about back orders.
Ryan: Even though the system says in stock. Yeah, happens all the time.
Emma: Exactly. Or their whole production line just stops, grinds to a halt when a component is just gone.
Ryan: Uh huh. And it’s almost never just bad luck. It’s usually that inventory count being off.
Emma: Seriously, when your numbers don’t match reality, you get these huge real world headaches. Missed shipments, production nightmares, even problems closing the books.
Ryan: Finance teams hate that.
Emma: Oh, definitely.
Ryan: And you know, it’s funny. Often these errors come from pretty basic stuff, like bad timing on counts, maybe tracking mistakes, or just gaps in how.
Emma: Things are handled on the floor.
Ryan: Precisely. So businesses kind of face this core dilemma. Do we do these ongoing little counts, cycle counts, or do we shut down for, you know, the big one, the full physical inventory.
Emma: Right.
Ryan: And the thing is, it’s not really about one being like inherently better. It’s more about what fits.
Emma: What fits? Your goals, your warehouse, your resources, that kind of thing.
Ryan: So that’s what this deep dive is about, really unpacking both ways to help you figure.
Emma: Okay, great. So accuracy is the target. Let’s talk cycle counting first. What is it really? And you know, when does it make sense?
Ryan: Well, cycle counting is more of a steady, continuous thing. Instead of doing everything at once, you focus on certain items.
Emma: Like specific bins or product lines.
Ryan: Yeah. Or categories. You do it on a regular schedule, a rolling basis.
Emma: Yeah.
Ryan: The real kicker isn’t just knowing what you have now.
Emma: Okay.
Ryan: It’s about spotting where the errors are getting into your system in the first place. Proactively.
Emma: Ah. Finding the leaks in the process.
Ryan: Exactly. Like lots of places, use ABC analysis. You count your really valuable stuff. The A items maybe more often because.
Emma: They move fast or cost a lot. Makes sense.
Ryan: Right. And the slower C items, maybe you check those less frequently. It’s about putting your effort where it counts most. And it’s great. If you really can’t afford to shut down the warehouse for counting, it turns counting into, well, almost like a continuous improvement exercise.
Emma: That steady approach does sound efficient, but. Hmm. If you’re running lean, doesn’t that feel like a constant low level drain? Always counting something.
Ryan: That’s a fair Point. It does require consistent effort. No doubt.
Emma: So is the payoff always clear? The roi?
Ryan: I think it becomes clearer when you look at the costs you avoid. Fewer rush orders, less downtime on the.
Emma: Line, fewer angry customer calls.
Ryan: Definitely. And think beyond just filling orders. Really accurate inventory that can help you negotiate better with suppliers.
Emma: Oh, interesting, because you’re not just guessing and over ordering.
Ryan: Precisely. You might even uncover costs hiding in dead stock. You didn’t even realize you had stuff just sitting there.
Emma: Okay, got it. But then what about when you just need a total reset? That’s the full physical inventory, isn’t it? Sounds like a much bigger deal.
Ryan: Oh, absolutely. Is a full physical means counting, well, every single thing, everywhere. A lot of companies do it maybe once a year, end of the fiscal year or perhaps before a big audit.
Emma: Makes sense for reporting.
Ryan: Oh, yeah. Or if your cycle counts are showing really weird, big discrepancies you can’t explain. Or maybe you just overhauled your warehouse system or layout.
Emma: So, like a system shock requires a system reset?
Ryan: Kind of think of it like a massive spring clean for the warehouse. It’s definitely disruptive while it’s happening.
Emma: I bet.
Ryan: But afterwards, yeah, you’ve got this perfectly clean, accurate baseline. A fresh start.
Emma: I’ve heard stories, you know, people finding stock that’s literally years old during one of these forgotten pallets in a corner.
Ryan: Oh, absolutely. That happens. The full physical is like the ultimate detective work for inventory.
Emma: So you find treasures or maybe liabilities. Like finding out just how much shrinkage you actually have.
Ryan: Exactly. That’s when you often uncover the big gaps. The dead stock or. Or, yeah, significant shrinkage from theft or damage that maybe the smaller cycle counts didn’t catch.
Emma: He’s more focused.
Ryan: Right. The full count gives you that undeniable comprehensive snapshot, which, going back to finance, is crucial for the balance sheet, profit and loss. Auditors really care about that number.
Emma: Okay, so pulling this together, how does a business decide Cycle count? Full physical? No, mix them up.
Ryan: Well, most find that tailoring the method to their own operations is really key. You want efficiency, but you need accuracy, too.
Emma: A balancing act.
Ryan: Totally. Cycle counts are generally superb for that ongoing accuracy. Finding those process flaws quickly. Full counts that give you that clean slate, that big reset when you need it for baseline accuracy or those major reporting moments.
Emma: So maybe not strictly one or the other.
Ryan: Often, yeah. Many businesses actually use both cycle counts day to day, week to week, to stay on top of things. And then maybe a full count once a year or when needed.
Emma: Depends on your warehouse. Your staff compliance needs all those factors.
Ryan: Played a huge role in finding the right mix for you.
Emma: Right? So to wrap up, then cycle counting, full physical inventory, they both have their place, right? Solving different problems, meeting different needs at different times.
Ryan: Exactly. It’s not about picking a winner. It’s about understanding the tools and using.
Emma: The right tool for the job.
Ryan: Precisely. And I think more than the specific method, what really, really matters is having a consistent, structured process behind it.
Emma: Meaning?
Ryan: Meaning you diligently track what’s been counted. You clearly flag what hasn’t. You spot those discrepancies early, before they snowball into bigger, much costlier headaches.
Emma: Catching problems small. Yes, yes.
Ryan: Which leads to a final thought, maybe for you. Listening. How could bringing that kind of structured, proactive approach into your operations make inventory management more efficient, more accurate, and, honestly, just less stressful.
