While many accountants and auditors may ask you for a physical inventory count to be done at the end of your fiscal year, this may not actually be needed based on Amplifier's inventory control practices!
Cycle Counting
Inventory variance can result from both external and internal factors. Vendors can mislabel inbound inventory, report incorrect quantities on the Receipt Labels, or make mistakes in manufacturing that result in unshippable units. Amplifier can mispick a unit in the fulfillment process, or misplace a container in a different location.
Because Amplifier has the ability to report inventory numbers to client online stores nightly, we work to maintain accurate inventory counts on a daily basis. To that end, both Scheduled and As-Needed Cycle Counts are created and executed daily. All Inventory Locations are Cycle Counted at least once a year during the course of the year, and many Locations are counted more often.
Scheduled
By Remaining Quantity: When a Picking Location reaches 3 units, a Cycle Count is created to verify 3 units remain.
By Velocity: SKUs are categorized into fast, medium, and slow moving SKUs. Faster SKUs (the top 20%) are counted more often, usually once a quarter; medium SKUs are usually counted once every 6 months; and slow SKUs (the bottom 20%) are counted at least once a year.
As-Needed
At Vendor Error Identification: If, in the process of daily activities, a user discovers a mis-labeled container or manufacturing error, a Cycle Count is created for all remaining units to determine the scope of the error and adjust inventory accordingly.
At Amplifier Mis-Pick Identification: If a customer reports a mis-picked order, the Picking Locations for both the mis-picked item and the item that should have been picked is created.
At Amplifier Movement Exception: If a user is directed by the Amplifier system to move X units from Location A to Location B, and the user reports moving fewer than X units, a Cycle Count is created to determine the number of units in Location A.
At Large Adjustment Identification: If any Cycle Count, created for any reason, results in an adjustment larger than 4 units, or resulting in a change in value over $50, a new Cycle Count is created for that SKU in all Locations.
Variance Root Cause Analysis
When a variance is found, Warehouse Managers and Personnel are trained to look for common Inventory Movement errors and can usually resolve and retrain as needed. User errors and accuracy are tracked, enabling Managers to identify re-training needs for particular personnel.
Where the cause is not obvious, the Amplifier system can provide not only all locations where the units are currently supposed to be, but all locations where the SKU has been during its life at Amplifier. This Item Location History enables Warehouse Personnel to retrace the SKUs movement through Amplifier and the various users who moved the units. Item history can often be retraced back to the original receiving events from specific Vendors.
Inventory Testing
From time-to-time, Clients request Inventory Testing, where personnel physically count designated SKUs in all Amplifier Locations to test accuracy of Amplifier’s Inventory Reporting. This process can be as simple as someone from the Client walking through Amplifier’s Inventory Locations and spot checking a few locations to a stop-all-activity so Amplifier Warehouse Associates can touch-every-unit during a week (or more) long process. The latter is a costly process to Clients both because of the labor cost of the Warehouse Associates and potentially lost sales during an extended stop-ship. Performing Inventory Testing requires scoping in advance and preparation of a detailed Statement of Work.
Best Practice for modern warehouses is to continually run Cycle Counts on inventory, rather than to periodically stop activity for a physical count. Amplifier follows this best practice and recommends Clients work with concerned parties to determine what reports, if any, are needed to satisfy inventory testing requirements for a continually counted Warehouse.
If a hands-on-inventory count is required, a lower-cost approach is for Clients to pre-select items for testing, provide their own labor, and count what is needed in a day. The following day, Amplifier Warehouse Associates re-count identified material variances for a second check. Adjustments to Physical follows this second check. This allows Clients to save time and money on labor and store down-time, while still providing an accurate test of their inventory.
Monthly Inventory Snapshot Reports
Did you know that a snapshot of each month's inventory levels is housed in My.Amplifier in the Reports section? Click Reports on the left menu, Inventory on the right and then expand the Archive folder. The inventory snapshot runs after hours on the last day of each month. For this reason, it will likely have the date of the first day of the following month.
Despite the above information, if a physical count is indeed needed, please reach out to Client Services help@amplifier.com as early as possible to discuss the requirements and request a statement of work (SOW) outlining the work to be done and its costs.