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16–14 Streamline the Physical Count Process
The main problem with using this methodology is that the purchasing and
warehousing departments must get used to issuing purchase orders for all items
received, while also rejecting all items shipped to the company without attached
purchase orders. Only by closely following these procedures can one be sure of
identifying all customer-owned inventory at the point of acceptance.
Cost: Installation time:

16–14 STREAMLINE THE PHYSICAL COUNT PROCESS

Some companies find that they are unable to produce anything for several days
while count teams perform a physical count of all on-hand inventory. When this
happens, a corporation loses sales, since it cannot produce anything. In addition,
the resulting inventory is not entirely accurate, since the counting process is fre-
quently conducted by people who do not have a thorough knowledge of what they
are counting, which results in incorrect counts and misidentified parts. Also, key
people are taken away from their other work to conduct the count, resulting in little
or no attention to customers for the duration of the count. Finally, the accounting
staff usually stops all other work in order to devote themselves to the processing of
count tags. Thus, the physical count is a highly disruptive and inaccurate process.
For those organizations that cannot entirely dispense with the physical count, it
is still possible to streamline the process so that fewer resources are assigned to it,
while keeping the accuracy level relatively high. The improvements are as follows:

• Eliminate some inventory from the count with cycle-counting. For situations
where a company has just started cycle-counting (see the ‘‘Eliminate the Physi-
cal Count Process” section earlier in this chapter) but has not yet brought accu-
racy levels up to a sufficiently high level, it may still be possible to concentrate
the cycle-counting effort on a few key areas. By doing so, the accuracy of the
inventory in these locations will be so high that there is no need to conduct a
physical count.
• Enter location code on tags. When counters are entering information on
count tags, they should also enter a location code. With this information, it is
much easier for the accounting staff to later locate where a tag was used to
record information, rather than wandering through the warehouse in a frus-
trated search for the information. This approach is even better than the com-
mon practice of tracking blocks of tags that are assigned to teams counting
specific locations; though this brings a review person to the general vicinity
of an inventory item, it does not precisely identify the location, which leads
to lost time while someone searches for the part.
• Enter tags directly into the computer. It is much more efficient to directly
enter tag information into the computer system, rather than entering it into