TABLE OF CONTENTS Day 5 through 45
Step 1. Establish the control group.
Step 2. Reconcile balances daily understand the reason for inaccuracy.
Step 3. Implement root cause analysis.
Step 4. Eliminate barriers to data accuracy and report performance weekly.
Step 5. Achieve control group accuracy of 100 percent for ten working days.
Step 6. Start new control group.
Step 7. Implement standard cycle counting.
Companies frequently reconcile inventory through physical inventory counts or periodic cycle counts. Unfortunately, too many of these organizations really are engaged in just fixing bad balances. Like perpetual cleansing, the counts are designed simply to clean up ongoing errors that happen unacknowledged. This is not the case in high-performance operations.
A distribution warehouse in Michigan reported an accuracy of 95 percent and does a full warehouse count every month through its cycle count process. That means that its cycle count program randomly selects location balances every day to count. Enough counts are made to ensure that the entire warehouse is counted by the time four weeks have passed.
If you assume that the cycle counts are relatively accurate and that the inaccuracies are fixed as found within the four-week cycle, then with a posted accuracy of 95 percent, one can assume that at least a 5 percent variation factor is added each and every month. If cycle counts were stopped, the accuracy would fall logically to 90 percent in two months and 85 percent in three. When you look at it this...
