Solving the Pain Points of a Physical Inventory
Physical inventory counting is an essential aspect of warehouse management, ensuring accuracy in stock levels and providing valuable data for decision-making. However, this process is not without its challenges. From operational disruptions to human error, traditional inventory counting methods can create significant inefficiencies. The focus around physical inventories are also highlighted as we near the end of the year and certain count requirements need to be met sometimes even including a full inventory count of your facility. This webinar with featuring Gather AI and GEODIS discusses how to alleviate these pain points and increase your inventory accuracy at the same time.
Breaking Down a Physical Inventory
What actually goes into a full inventory count? For starters, to do it right you need to make sure that you are not counting at the same time operations are happening as your counts will not be accurate if transactions are occurring in between. This requires a coordinated effort by all departments and typically requires resources outside of regular work hours. When I have done these we are typically pulling employees from everywhere we can to ensure we get the count done in the allotted time.
Organizing a count needs to be detailed and planned out so that counts can be recorded in a timely manner and then processed into the system. Typically you will do a first level count and then a second level count for any discrepancies that are outside a predefined threshold. The lower your inventory accuracy the more second level counts you will most likely be doing.
Problems with Physical Inventories
- Operational Downtime and Disruption –One of the most immediate and visible drawbacks of physical inventory counting is the disruption it causes to daily operations. For accuracy, warehouses often need to pause normal activities, such as receiving, picking, and shipping orders, to facilitate inventory counts. This halt can lead to delayed customer orders, reduced productivity, and increased operational costs. Depending on how you are capturing count data, typically inventory counting can be done simultaneously to other activities but for a full inventory count operations must stop. For businesses with high order volumes, downtime is particularly detrimental. The larger the warehouse and the more complex the inventory system, the longer the downtime required. Furthermore, many companies rely on overtime or additional labor during physical counts, which further strains resources and increases expenses.
- Susceptibility to Human Error – Physical inventory counting relies heavily on human involvement, which introduces a natural susceptibility to error. Workers tasked with manually counting items may miscount, overlook discrepancies, or incorrectly record data due to fatigue, time pressure, or lack of familiarity with the products. This issue is compounded in warehouses with large inventories or diverse product lines, where maintaining focus and accuracy becomes increasingly challenging. Errors in physical inventory counts can lead to inaccurate stock levels, which affect decision-making in areas like procurement, production planning, and order fulfillment. Even with rigorous checks and balances in place, the reliance on human effort makes traditional inventory counting inherently error-prone, often necessitating recounts that consume additional time and resources.
- Resource-Intensive Processes – Physical inventory counting is labor-intensive and demands significant resource allocation, from planning and preparation to execution and reconciliation. Large warehouses may need dozens of employees to count thousands of SKUs (Stock Keeping Units), especially when dealing with high inventory turnover. The process also requires coordination across multiple teams, including warehouse staff, supervisors, and inventory managers. This level of involvement diverts attention from other critical tasks and can create bottlenecks in workflow. Additionally, discrepancies discovered during physical counts require reconciliation efforts, which can further stretch resources and prolong the process. For warehouses handling perishable goods or seasonal items, the stakes are even higher. Delays or inefficiencies in the counting process can result in spoilage or stockouts, exacerbating financial losses.
A Solution for Inventory Counting
What has traditionally been very human centric and manual can now be automated. Gather AI is bringing their inventory management system to industry leaders like GEODIS to help them increase not only the speed at which they are able to count locations but also increase their inventory accuracy overall which pays dividends throughout the operation.
In this webinar, I had the chance to talk to both Gather AI and GEODIS together to discuss how they implemented Gather AI’s solution, what it looks like and how it has helped to improve their operation and take away the pain points they had been dealing with in the past.