In the field of sports, overly-eager reporters and assorted talking heads tend to quickly label the latest flash-in-the-pan as "The Greatest Ever". "This guy is a phenom." "He is the Second Coming", and other superlatives are frequently used to describe an individual whose accomplishments are too often short-lived. Rare indeed are the Bobby Orrs, the Wayne Gretzkys, the Jim Browns, the Johnny Unitases, and the Mickey Mantles of this world, who truly deserve the moniker "Superstar".

I was fortunate, early in my career, to have worked with a modest superstar of operations and supply chain management. His name was David Chapman. Mr. Chapman (I could never call him David - he deserved too much respect) was a truly unsung visionary. Working with North America's largest retailer, Mr. Chapman envisioned, created, and implemented some of the most progressive SCM and Inventory Management systems known to retailing. He was ahead of Wal-Mart. The only constraint that he faced was that of available information technology. Mr. Chapman, without knowing it, shaped many of my attitudes to SCM and Inventory Management: virtually anything is possible if you expand your mind and embrace creative energy.

A more famous Superstar in OM circles was William Edwards Deming. Like Mr. Chapman, he dared to buck the trends and the conventional wisdoms which infected North American business leadership in the post-WWII era, and which still torment Western economies today. If all you have ever heard of Deming is a stray comment or two at a cocktail party (something like "wasn't he that weird statistician with the red beads?"), you owe it to yourself to get to know him.

I very much recommend a book written by Mary Walton in 1986 called "The Deming Management Method". It is an easy read, but very insightful. She covers many of the important points in his teachings, without getting bogged down in the minutae (a very easy thing to do when it comes to Deming).

Mr. Deming lived from October 14, 1900 to December 20, 1993. He was an American statistician, professor, author, lecturer, and consultant. He worked in the post-War years with Japanese businesses to improve product quality through various methods including statistical process control and the concept of continuous improvement. Considered a hero in Japan, his genius was considerably overlooked in the USA until late is his life.

One of his enduring contributions to Quality Management were his Fourteen Points. These were a set of principles which outlined the foundation of his philosophy. (There were not always 14 points - in the 1970's, there were only 10!)
In my forthcoming posts, I will discuss some of the 14 points, and how they might relate to our businesses and lives today.

"Export anything to a friendly country, except American management."
W. Edwards Deming
 

Many operations management practitioners are familiar with the concept of cycle counting. It is an important procedure in the OM practitioner's tool box to help improve inventory record accuracy.

To avoid any ambiguity, the APICS Dictionary defines Cycle Counting as follows:
"An inventory accuracy audit technique where inventory is counted on a cyclic schedule rather than once per year. A cycle inventory count is usually taken on a regular, defined basis (often more frequently for high-value or fast=moving items, and less frquently for low-value or slow-moving items). Most effective cycle counting systems require the counting of a certian number of items every workday with each item counted on a prescribed frequency. The key purpose of cycle counting is to identify items in error, thus triggering research, identification, and elimination of the cause of error."

It is the last sentence where many firms fail to properly execute the spirit of cycle counting. More on this later.

The importance of inventory record accuracy ought to be self-evident. Without accurate inventory records, customer service and sales lose visibility of what is available for sale. Inventory Managers will order either insufficient stock, or will unknowingly order surplus. Confidence interally and exterally becomes shaken. Customers become disappointed. Finance gets angry. Warehouse personnel get frustrated. The list goes on. 

A mentor of mine years ago, for whom I have great respect, used to express her fear that the more one counted an item, the worse inventory record accuracy became. There is more than a grain of truth to that assertion. 

Cycle counting must respect similar cut-off rules as are observed in an annual physical inventory that has been well done. Pending inbound shipments need to be identified and accounted for in the counts, Pending outgoing customer orders need to be identified and accounted for in the count. Stock needs to be located properly in the warehouse. And samples need to have been listed and included in any counts, if they are saleable inventory. Broken and otherwise unusable inventory needs to be written off and excluded from the count.

Adjustment of the inventory record to the physical count needs to be done. But too many firms stop there. It is critical, as per the last sentence in the definition above, that the cycle count team investigate and identify the root cause of the error, and ensure that it does not happen again,. This might mean adjusting internal business processes or make demands of external partners that would require the assistance of Senior Management. But until the root cause is addressed, the problem will continue to pose problems. 

What other issues might cause a cycle count program to fail? A few land mines to avoid:

- inexperienced staff, who are not familiar with the product(s) have difficulty counting properly
- failure to devote sufficient resource to the program
- kicking off the program during a period of peak activity (sales, outbound or inbound shipments).
- poor stock locator systems
- a messy warehouse
- failure to promptly write off and dispose of unsaleable inventory- staff who have been insulated from business processes outside of the warehouse's four walls. Staff need to appreciate the impact of poor inventory record accuracy and need to have some basic understanding of business processes outside of the warehouse.
- lack of support and follow-up by senior management.

It can be done!

Cheers