Disciplined Daily Cycle Counts Enhance DC Culture


A few years ago, I walked into a distribution center in Baltimore that could only be characterized as a dump. I didn’t say that out loud, of course, because I didn’t want to offend the managers and executives there, nor did I want to tarnish their first impression of me. Executives do want to know the truth, but they also want actionable advice on how to fix it so it’s not something to mention at a first meeting.

The company planned to overhaul its supply chain infrastructure. They had just welcomed a new vice president of distribution and logistics, and that person had hired a director for the distribution center. They had set aside budget to support a much-needed revamp of systems and processes. Better still, they had garnered support from the IT folks.

We were there to kick off a long-overdue upgrade of the warehouse management system (WMS). We went through an end-to-end design, customizations, end-to-end testing and finally turned it on. The new leaders had a strongly shared vision and clearly emphasized the need to inculcate discipline with processes and systems. The vice president wanted to leverage all the checks, controls, and balances in the system to keep his operators doing everything within the system. He pictured a warehouse that operated like a well-oiled machine.

Before the upgrade, it was common practice in the warehouse to take inventory from any box and ship the order because the order had to shipped. They didn’t report that inventory that was taken from the different boxes, so that circumventing the system was a constant practice.

We recommended doing a physical count of all inventory. Unfortunately, the warehouse personnel skipped that part, ran the inventory conversion process and loaded the inventory from the old system. When they turned on the new system, it directed operators to pick from locations that, in reality, had insufficient stock (remember the willy billy picking system mentioned above?). They were literally running in circles chasing their tails, unable to fulfill orders completely. This went on for weeks and orders were routinely late.


The DC director called us for help fixing the inventory mismatch/discrepancy. We immediately understood the problem: Garbage In, Garbage Out. Again we recommended a physical count, and this time they complied. In the end, after the count, they found that there was a staggering 40% discrepancy between the systemic inventory and the actual physical goods sitting on the floor.

Multiple issues existed:

  1. SKUs without barcodes. Operators were not able to scan the SKU during picking or replenishment, resulting in mis-located products and wrong items being picked into cartons.
  2. Shortage of inventory. Previously, the system had routinely asked the picker to pick unavailable product, so it was an accepted practice to pick from a different location or a different box to fulfill the order.
  3. No faith in the system. Because the WMS did not accurately show quantity, the entire team had lost faith in the system and did not follow the outlined processes. Circumventing the system was a standard operating model, from picking to replenishment to pulling from reserve.

All this boomeranged into a daily exercise of fire fighting. To fix it, the DC Director overhauled his team, chose the best and the most knowledge-able players and then started with a physical count of the entire DC. They spend a week just counting and verifying the count.  They made sure that every SKU was located in the right bins and reserve locations. Once the inventory count was corrected, they trained the operators to follow the system diligently with military precision. They also installed pictures of the actual on the bin shelving, to ensure that the pickers picked the right product and double-checked it against the picture and that replenishers put the correct product in the right bin locations. Finally, if there was any confusion, there was a clear process to escalate the problem to a supervisor without delay.

It was a hard and long road to get the team to follow the discipline and systems diligently. Also, they instituted a daily cycle count process. A cycle counter would count locations on a daily basis in the third shift. Further, correct behavior was rewarded and mistakes pointed out. The focus was not just shipping orders, but ensuring the processes were executed diligently from end to end without shortcuts, to maintain accuracy of both inventory and orders.

Now a few years later, they have a great DC, in a new building with very good infrastructure and disciplined operators. It supports a growing business with multiple new partnerships. The success can be traced to implementing a good combination of technology and clearly-defined practices. It was exciting to see they deploy our devices and also hear great feedback from the pickers on our devices.

How do you exercise discipline in the inventory control groups within your supply chain? Let us know in the comments section below.

Originally published at Smartgladiator.com on Aug 8, 2016.

Puga Sankara is the co-founder of Smart Gladiator LLC. Smart Gladiator designs, builds, and delivers market-leading mobile technology for retailers, distributors, and 3PL service providers. SG LoadProof is a patent pending Centralized Enterprise Photo/Video Document System on Cloud for Supply Chain. SG LP is built on the fact that photos & videos are vital docs as important as POs/SOs/Legal Contracts/Fulfillment Orders that reside in ERP/WMS/TMS systems, that serve as compelling, conclusive, unequivocal proof of crucial, critical, vital operations executed in Supply Chain within/across orgs when fulfilling customer orders as well as meeting contractual obligations between orgs as merchandise is transferred between different parties that partake in Supply Chain functions & operations. And these photos/videos data should not be stored in someone’s Smartphone or Email Inbox or in their personal/work Computer, but should be stored in a Centralized Enterprise system, where such data can be pushed into super-fast, stored securely, accessible to all stake holders (CFO/Sales Reps/Customer Support/AR/AP) in an org, as well as facilitates super-fast retrieval/sharing. LP is an Enterprise System of record for Photo/Video docs & is as important as an ERP which is an enterprise system of record for POs, SOs, Legal Contracts between parties etc. that have huge legal ramifications, also as important as a WMS (Warehouse Management System) that hold indispensable shipment & fulfillment data on orders. Like how Instagram, Facebook, Snapchat etc. have evolved into social media platforms/systems that enable individuals to showcase their beauty/pretty clothes/lovely cosmetics/hep coolness etc., LoadProof is an Enterprise system that holds similar photos/videos, but for a different reason, not for show off, but to serve as compelling, conclusive, unequivocal & indisputable system of record and proof that can be presented even in the court of law, when there is a dispute between parties while they execute many facets of the Supply Chain functions & operations. Puga is a supply chain technology professional with more than 25 years of experience in deploying capabilities in the logistics and supply chain domain. His prior roles involved managing complicated mission-critical programs driving revenue numbers, rolling out a multitude of capabilities involving more than a dozen systems, and managing a team of 30 to 50 personnel across multiple disciplines and departments in large corporations such as Hewlett Packard. He has deployed WMS for more than 30 distribution centers in his role as a senior manager with Manhattan Associates. He has also performed process analysis walk-throughs for more than 50 distribution centers for WMS process design and performance analysis review, optimizing processes for better productivity and visibility through the supply chain. Size of these DCs varied from 150,000 to 1.2 million SQFT. Puga Sankara has an MBA from Georgia Tech. He can be reached at [email protected] or visit the company at www.smartgladiator.com. Also follow him at www.pugasankara.com.

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