July 3, 2020

Counting Best Practices

Episode: 1 with Matt Thomas & Jeremy Thomas

"What Starts Right, Stays Right." In the first episode of Taking Inventory, Matt and Jeremy Thomas discuss the importance of counting right the first time, as well as steps you can take today to make sure your counts are correct.

What You’ll Learn

  • The importance of counting.
  • The difference between wall to wall and cycle counting…and which one you should do first.
  • Issues you can run into while counting and how to solve them.

Want to add cycle counting to your warehouse functionality?

Let's Talk!

Additional Resources

Who You’ll Hear on this Episode:

Matt Thomas, Strategic Account Executive, RF-SMART

Matt has been with RF-SMART for 3 years, and he has helped over 200 customers as both a Business Analyst and a Strategic Account Executive.

Jeremy Thomas, Associate VP of Sales, RF-SMART

Jeremy has worked at RF-SMART for 5 years as NetNew Sales leader. He has 15+ years of supply chain and logistics experience.

Sarah Archer, Digital Marketing Coordinator, RF-SMART

Sarah has been with RF-SMART since 2018. She is the host of this podcast and the YouTube series Q&A.

Transcript

Sarah Archer:

Hi, everyone. Thank you for tuning in. My name is Sarah Archer. I'm the host of Taking Inventory, which is a podcast about warehouses, ERP, WMS and so much more. And this is our very first episode. Today, I have two guests from RF-SMART in the studio with me. I've got Matt and Jeremy Thomas here. Matt and Jeremy actually have over 40 years of combined inventory experience, and experience in supply chain. So they're twins, which is awesome. And I'm going to let them introduce themselves. So Jeremy, do you want to tell us a little bit about yourself?

Jeremy Thomas:

Sure, I'd be happy to do that. So been in the industry now over 20 years and started in third party logistics, and then moved into inventory management software. So I've been doing that for five years here now at RF-SMART and represent the net new sales team.

Sarah Archer:

And Matt, you've been at RF-SMART for about three years. Did you hear about RF-SMART from Jeremy?

Matt Thomas:

I did. I did. Yeah. I've been in the industry for 20 years. Come from warehousing and logistics background. Started as a business analyst with RF-SMART and worked into the strategic account executive role. But yeah, Jeremy spoke very highly of RF-SMART, so.

Sarah Archer:

And that's important to know, for those of you listening, is that both of them together have all this experience, but Matt is able to speak from both the business analyst side of it, but also from sales, and Jeremy as well. So that's cool. I do want to ask you guys, we talked a little bit before. There's a fun fact about both of you being twins. Can you tell me what that fun fact is?

Matt Thomas:

Yeah, we're definitely not identical, those that have seen us and know us. But in the wonderful year of 1976, we were the biggest twins in the state of Florida.

Sarah Archer:

And who's the oldest?

Matt Thomas:

That would be me by the amount of six minutes.

Jeremy Thomas:

He was six minutes older and two pounds lighter.

Matt Thomas:

Exactly. So he basically kicked me out.

Sarah Archer:

And I'm sure your whole life, he probably reminded you that he was six minutes older.

Jeremy Thomas:

Absolutely.

Matt Thomas:

Yeah, my hashtag is six minutes.

Sarah Archer:

Hashtag, six minutes. Well, let's just go ahead. We'll jump into our topic today. We're going to talk about counting, which is super applicable, because you guys are twins and we can count you. There's two. But we're going to talk about stock counting today. Jeremy, I want to talk about why counting is so important for our customers.

Jeremy Thomas:

Yeah, let's talk about why inventory is so important for our customers, because I think accounting of that inventory is only important when you recognize the importance of inventory and accuracy for those customers. So most customers, one of the largest assets they carry, if not the largest asset they carry on their balance sheet, is their inventory. So they buy all this inventory and they have to store it in their distribution center, warehouse, and it's worth a lot of money. So that's cash that they could spend in other places. So it's important, if they don't know what they have, they can't tell the bank what they have. And so, they're making up numbers.

Jeremy Thomas:

And so, to account for that or to count it accurately is super important, not only for that purpose, but also if you're going to make or sell something, you don't want to have too much of product. Think about making a recipe at home, right? If you make, you're going to make a recipe and you buy too much of an ingredient, you end up throwing it away. You can't sell it if it's inventory. And even if you're making things from a manufacturing perspective, you really have to have a good plan, and having a system that tells you exactly what you have, it allows you to basically do that accurately and at the most cost efficient price point possible. And so, that's why knowing exactly what you have at any given point in time is so important.

Sarah Archer:

And I think we're going to talk about this a little bit later, I want to come back to it, but we talk about our recommendations as doing a wall-to-wall count and then a cycle count. Matt, we've done over 2,000 of these implementations at this point. You've been a part of many of them. Do you have a story that you could share?

Matt Thomas:

Yeah, and I think it's important to know the difference in wall-to-wall versus a cycle count. I think the industry knows that the wall-to-wall is where you count everything in your warehouse. That's a good starting point. And then your cycle count is where you, throughout the year, whether it's quarterly or weekly, go randomly count your product.

Matt Thomas:

So we had a large medical company that, on the beginning of the implementation, we tell them, "Hey, it's important to do a wall-to-wall. Count everything you have." And so, they had two locations. One location started with the wall-to-wall, which is a best practice. The other one did not. So they learned both good and bad. And doing the wall-to-wall, it helps them get their product where the inventory level's where it needs to be. And the other location, when they did not do that, they see a lot of negative bins. They see situations that when they go to pick, the product isn't there.

Matt Thomas:

So in that example, what you learn from is that starting with a wall-to-wall is the best practice. The cycle count, although is a good practice, should be done throughout the year. So the medical customer came back and gave us feedback that, Hey, the best practice that you guys teach is the right way. It's the right way it should be done. We learned that one location did it the right way, the other one didn't. And I believe that from experiences in our industry and during the business analyst roles, when we go through those process, we see that our company really is proven and can show these customers what exactly is the best route.

Matt Thomas:

So, we talk about what starts right, stays right. Jeremy and I have talked about that, and that's a good basis by why we preach, do a wall-to-wall first.

Jeremy Thomas:

Yeah, because if you start operating, the alternative is, if your baseline, so that wall-to-wall, which is costly, it's an investment. You need to do it. But it takes time and it's to establish an accurate baseline, because again, what starts right, stays right. If you don't do that and you start buying more stuff and inventory starts coming in and you start shipping stuff out, you're just exasperating the problem. And that's the issue is, you're not, if you don't stop and really get a good starting point, you'll never get back to an accurate inventory. So you really, really have to focus on that and make that investment. That's a definitely a best practice.

Sarah Archer:

And I think, I was doing a webinar about counting maybe last week, two weeks ago. And I had somebody, a customer, type in the chat box and they were like, we are overwhelmed or something similar to that. There are so many things that, if you don't start it the right way, can end up coming back to hurt you later on. And so, I want to talk, dive a little bit deeper into that. The example that you just gave, we've got some trouble with counting processes, wall-to-wall versus cycling, but there are other issues that you can run into if you're not counting correctly. Can you guys think of some of those?

Jeremy Thomas:

Yeah, so, I mean, one of the biggest ones is, especially if you're selling to end consumers, you might be selling inventory you don't actually have. So imagine, you're as a consumer, go online, you get excited, you see a product, it's advertised. You order it and then you find out two days later, Oh, we didn't actually have it. The guy goes to pick it and it's not really there.

Sarah Archer:

That's happened to me.

Jeremy Thomas:

Right. It's a very common, but that's inventory accuracy. The system thinks you have it and you don't really have it. So that's a big problem. The other issue is, say you're going to make something, you're going to manufacturer something and you have a plan today to make a hundred of those things. And the system says, okay, you need to do that. You need a hundred of these, you need 200 of these, 300 of these. Well, if you don't actually have that amount on hand and the system thinks you do, you can't actually complete the production of those goods.

Jeremy Thomas:

And so, now what you have to do is expedite that product from the supplier, which costs a lot of money, and get it in. So in book those cases, it's a customer service issue that you end up dealing with. And if that customer is not going to come back and buy from you again, you're losing revenue, you're losing profits. And that's a big issue with inventory accuracy is, end up committing something that you can do because the system says you have it and you don't actually have those goods.

Jeremy Thomas:

The other side is the way to protect yourself against that is you just order a bunch of extra stuff. Well, that's not a good financial decision either. So if I only need a hundred, but I don't know if the system's actually right, so I order 120, that's 20% more inventory that I'm carrying. Well, that's cash for your business that could be spent in other places. So from a financial perspective, both sides are very, very negative with regard to inventory accuracy. And that's probably the bigger issue than the balance sheet side, is the actual operational side of it.

Sarah Archer:

And this can be different, right, if you're in a warehouse or in a retail environment? Matt, do you want to comment a little bit about what that looks like?

Matt Thomas:

Yeah. Traditionally, our warehouses are in bin environments and your retail industry isn't. So it's still important to differentiate the two, but at the same time, stock counting is very important in both industries. So in the retail, regardless if you have bins or you don't, it's still important that you count your inventory, and in the example that Jeremy shared as well. What we've seen on the best practice model is that you have to start with the stock counting no matter what industry you're in. Definitely in the bin environment, it's easier, but in the location level, RF-SMART supports that as well.

Sarah Archer:

And so, ultimately, the cost of not counting correctly the first time is obviously, there's money on the line, there's production on the line, time on the line. But you've made this investment, right, into an ERP, you're using NetSuite. Can you guys talk just a little bit about what it looks like if you don't do it right the first time?

Jeremy Thomas:

Sure, yeah. So, I mean, again, I think going back to that motto of what starts right, stays right. I think I said it earlier, exasperating the problem is if you don't take the time to establish an accurate baseline and know what you have before you get started, you're only adding to the problem. You might be accurately adding to the problem, right? So, but there's still a problem there. You never corrected the issue.

Jeremy Thomas:

And certainly, getting away from my full wall-to-wall is a desired state. You don't want to have to do that because it's very time consuming. It's very slow. It's very expensive. You have to shut down, come in for a weekend, spend overtime. But doing it the first time to make sure that as you receive, as you pick, as you ship, you're adding and subtracting to an accurate baseline. I mean, that's really important. If you're adding and subtracting accurately to an inaccurate baseline, you're just exasperating the problem. You're never going to get back to a truly accurate inventory.

Sarah Archer:

And Matt, you've had customers that have had this happen, right?

Matt Thomas:

Yeah, we have, and ultimately, we teach best practice and it's the customer's decision. And I've seen it work, but for the most part, the stock count on the front end is the best practice. We had a large distribution customer that, we gave them the direction, we explain our process starting with the wall-to-wall. They chose to not do that. So throughout the implementation and throughout the process, communicated the pros and cons of this, but ultimately it's the customer's decision. So as they go throughout the process, they get to a point where they realize they've made the wrong decision and they're going to have to do a wall-to-wall now. And this could be a year into it or three months into the implementation.

Matt Thomas:

So think about having to stop production and bring in all your members of your team in. Typically, that's on a non-production day, which is a Saturday. So you're paying overtime. Those are hours that weren't probably planned. People were probably frustrated having to come in on a Saturday. So something that could have been circumvented on using the best practice that RF-SMART teaches caused a lot of headache.

Matt Thomas:

Now, obviously after that, it cleaned a lot of their inventory up. Their pick bins, the negative bins, everything was cleaned up a lot better. But it was a good story to learn on what not to do, but also that RF-SMART was there to support them and say, Hey, look, this is understanding that you chose that route, but this is a solution. It's going to be an expensive solution to clean this up, but it's a good example of, Hey, do do it right the first time.

Jeremy Thomas:

Well, and I'm sure if you asked them now, they wish they would have done it earlier. It's that kind of looking, hindsight's 2020 type thing. So if you went and asked that same customer and said, "If you had to do it all over again, would you have done it when we first transitioned?" And they would have, I'd guarantee you, they'll say, "Yes, we wish we would have just went ahead and got it over with and then we would have had more time to be fully productive and getting the full ROI of the solution." Because that's one of the biggest of any of these solutions of mobility, is getting the ROI out of it. And certainly, doing the wall-to-wall the first time, and then switching to regular cycle counts, that's going to save you a ton of money because you can avoid all the overtime. You can avoid the extra staff, having to bring in over a period of shutdown. You don't have to do that anymore.

Sarah Archer:

I'm going to go out on a limb here and say that if our customers take one thing away from listening to this episode of this podcast is, you need to stock count and do a wall-to-wall count in the beginning, and go ahead and get that out of the way and do it right the first time.

Matt Thomas:

Yeah, think about it proactively is a lot better than reactively.

Sarah Archer:

Absolutely. And so, if you aren't doing a wall-to-wall count today, you haven't done one, maybe you're implementing NetSuite and RF-SMART, maybe you're just like, we've got to do something, how do you employ that in your warehouse?

Matt Thomas:

Yeah, so, we have our business analyst team and service team that could help them through that. Probably the best thing is to find a time to do it. Think about your warehouse, no matter if it's small or large, you got to organize that and look at a time to do that. I would say, what I've seen that works better than coming in on a Saturday is doing it after hours when production's down and there's no picking. You can count throughout the day with RF-SMART. It is a little challenging, but you can do that. But I would say, start with organizing when you want to do it and doing it, having enough staff to do it, first of all, and organizing it through NetSuite's stock count form.

Jeremy Thomas:

One of the things too is there's an old, what's called ABC analysis, which is, your A is your fastest movers, your bestsellers. It's where you're going to have your most inventory. Your B is your middle range and your C is your slow movers. And you're usually going to have a lot more C items and a lot less A items. Well, go count your A items, because that's going to have the most impact with least effort. So it's like, you don't have to go count that many items, but you're really going to get an accurate financial inventory on those eight items. So that's industry standard, kind of ABC. So my recommendation is always, count your A items first, then go to your Bs and then go to your Cs, because you can get more bang for your buck that way.

Jeremy Thomas:

So as Matt said, you don't have to shut down with RF-SMART to actually start counting. You can count while you're being productive or a couple hours after, that type of thing. And so, integrating that into a plan to work through all that, but starting with your A items, working through your Cs, I think is a way to, again, get your biggest bang for your buck.

Sarah Archer:

I didn't even think about that, but if you are listening to this podcast and you feel inspired and you're like, I've got to start counting right now, there is something tangible that you can do today to go ahead and start working on this and getting your inventory accurate. That's awesome. And I think that it's safe to say, our most successful RF-SMART customers have implemented this best practice and are doing the wall-to-wall count and then following up with cycle counting.

Sarah Archer:

We do a ton of content around this. There's content on our website. I know that we've got a blog about ABC counting, so if you are interested in that, I'll make sure that we've got that linked for you. But then, I know that we've also, we do webinars. We do monthly webinars for our customers and we talk about counting a lot because it is so important.

Sarah Archer:

So we're going to wrap up, but guys, is there anything else that you want to share before we end it for today?

Jeremy Thomas:

Yeah, I would just encourage anyone who's out there who has questions or needs advice, or is kind of struggling with, I really want to get this started, counting is one of the simplest workflows to implement. It is not hard to actually do. It's hard physically to go ahead and take it on, but systemically, it is very easy to train, very easy to do. Any of our business analysts can help you with it. So please reach out for help. We're glad to do some training or some simple stuff, or even come onsite and help with the count. So those are things that we want to help our customers with, because we know this is such an important part of the core of the business, is if you get this right, everything else seems to flow really well and you get a much larger ROI on the system.

Matt Thomas:

Yeah. Yeah, and I agree with Jeremy. And if there was one thing the listeners can hear is, being proactive rather than reactive is always a cheaper route. And then, kind of the same way, what starts right, stays right. That's industry standard and it's been a proven with RF-SMART customers.

Sarah Archer:

Yeah. If you've got questions, if you're listening, you've got questions, definitely make sure that you reach out to your account executive. If you don't know who that is or you need help getting in touch with them, you can email info@rfsmart.com. All that information is available on the website. But we're happy to put you in touch with somebody who can help you start this process.

Sarah Archer:

So Matt and Jeremy, thank you so much for being on the podcast. For those of you listening, remember that you need to subscribe. We're on major platforms. There's the ability to subscribe on our website, so make sure you're subscribing so, you know when new episodes are released. And for all of that information, contact, podcasts, all of that's on our website. Thanks again, guys. Matt and Jeremy, thank you so much. And we'll talk to you guys all again soon. Thank you.

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