Introduction written by CPA.com:
To be a true advisor to clients it takes understanding their industry and being aware of technologies that could impact their record keeping. For those practitioner serving a manufacturing niche, this article by Chris Fraser, has helpful information on mobile inventory management and how to choose the right system.
The use of mobile devices, solutions and barcoding is on the rise. According to Motorola Solutions (From Cost Center to Growth Center: Warehousing 2018), by 2018, 66% of their survey respondents plan to use handheld mobile computers for inventory management with real-time access to an inventory & warehouse management system. Plus, it is estimated that the number of barcoded items received at a warehouse or distribution center will increase to 84%.
With this upward trend, businesses should fully understand mobile inventory management, what is involved and if it can meet their needs for greater operational success.
QuickBooks expert and consultant Keith Fileccia of Mendelson Consulting works with wholesale distribution clients to understand mobile inventory management and barcoding; to develop a strategic plan to effectively integrate it with their operations; and he implements mobile inventory management solutions within their business.
Keith recently gave us his first-hand account of transitioning to mobile inventory management and barcoding within an organization.
What should a business address first when they want to add mobile inventory management to their operations?
The business needs to understand exactly what they want to accomplish.
At Mendelson Consulting we get a lot of calls about mobile inventory management. It’s usually framed as “I want to do barcoding” and some people do not really understand what barcoding is, so you have to start at the very basic level. There is a barcode and there is a UPC and they are often used interchangeably.
UPC stands for Universal Product Code and that means a manufacturer has taken an item and had a universal barcode assigned to it. For example, if I go to Target® it is the same UPC as if I go to Walmart®.
A barcode is simply turning a number or a sequence of numbers and letters into what we traditionally know as a barcode. Those tend to be unique to a company. I could have a barcode in my organization that a business three doors down also uses, but for a completely different product.
So, first and foremost the business needs to know if they will be dealing with UPCs that only one product will have or if it needs to be a company specific thing.
The next question is: Does the inventory coming in the backdoor have a barcode or a UPC already on it? If it doesn’t, the business has to have the ability to generate the barcode, which has to be done prior to receiving the goods because it needs to be put on each of the items.
There is also the question of how the business plans to use barcoding because barcoding with QuickBooks is different than with a QuickBooks add-on, like Acctivate Inventory Software that offers mobile inventory management.
QuickBooks Advanced Inventory has a feature they call barcoding and it will generate a barcode and then you can put that on your products and scan that in, but you have to actually be connected to QuickBooks. This means you might be lugging a barcode scanner and a notebook around the warehouse or bringing the products to a central place to scan.
Secondly, you can’t use QuickBooks to do what I call sales order or purchase order verification and that is what true pick, pack, ship type of environments are about. Most companies are looking at barcoding in terms of pick, pack and ship to drive efficiency to receive goods in the door and send them out, so a third-party inventory management software will accomplish this rather than QuickBooks alone.
What benefits does mobile inventory management bring to a business?
Increased speed and accuracy.
Mobile inventory management used directly at receiving actually helps speed up overall operations. In the warehouse, most companies struggle with manual entry.
In a typical operation: items come in the backdoor, somebody removes a packing list from it, checks it, writes on it the items that have been delivered, and sends it over to accounting to be key entered and received against the purchase order.
During this process there could be errors, such as the wrong quantities could be entered or whoever is entering it could be picking the wrong product. One of the biggest warehouse errors, which results in costs is either receiving the wrong items or shipping out the wrong items. If something is picked and it’s the wrong item and that item is shipped out, now charges are going to be incurred to have the product returned and generally you wouldn’t charge the customer to ship out the right thing. I’ve seen clients that ship out the wrong product so they tell the customer, “Oh just keep that one,” then there’s the cost of those goods.
When mobile inventory management with barcoding is brought into the picture warehouse operations become much more accurate and therefore efficient because the UPC or barcode can be scanned upon receipt.
The great thing about mobile inventory management with Acctivate is that if the wrong item or the wrong quantity is scanned, the actual mobile computers will make the most obnoxious buzzing sound to tell you that you’ve done something wrong or picked the wrong item.
What size business does mobile inventory management suit?
Any organization that has grown to a warehouse operation should consider a mobile solution. Small, medium, or large — it doesn’t matter the size of the organization. If the company is incurring significant warehouse operation costs due to shipping out the wrong items and/or shipping to the wrong customer, mobile inventory management makes sense.
The question that a business has to ask itself is how often does this happen. If it happens regularly there is an ROI almost immediately in going to mobile inventory management.
If a business has two shelves, sells five products, and it takes three minutes to pick an order, there’s no need to go to mobile inventory management, because usually there wouldn’t be a large number of errors. There’s no ROI there and without ROI there’s no point in going mobile.
Moving to mobile makes sense when you’re dealing with a warehouse that has hundreds or thousands of items located in multiple places — that’s where mobile inventory management will drive efficiency.
What strategies & logistics should a business consider to have effective mobile inventory management?
Most people who think in terms of “I want to go mobile and I want to do barcoding,” think it is a five-minute process and it is actually not. Anytime you implement a mobile solution it does take time and planning. There are so many factors that go into mobile inventory management. The warehouse needs to be setup with bin locations, the barcodes need to be on the product and in the system, etc.
Remember, there are those ground rules that have to be established — do you have UPCs or barcodes; does the product coming in have UPCs or barcodes; do you have to add UPCs or barcodes to it; what is your current workflow; what is your volume of orders; and/or do you need a pick list then a packing station or can you pick one order at a time?
For large organizations that are dealing with multiple orders at once, we’ll set up a packing station with barcoding because we don’t want the employees “ping-ponging” around the warehouse – going out to pick ten items for one order, then going back and picking five items for another order. In this instance, we build reports for customers that list what is needed and it all comes to a packing station where the scanning is done.
The other important thing about mobile is that we can actually setup bin locations — that’s another cost incurred by businesses if not setup effectively with an alphanumeric layout that lends to a nice mobile transition.
I have learned through the years, rarely do I walk into an organization that actually has a warehouse layout that is set up logically to be able to sort a pick list by bin location. When I walk into a warehouse I ask them to tell me about their bin locations and how they have assigned them. About 75% of the time we end up redoing the layout. For instance, if there is an $8 per hour warehouse worker and they get a pick ticket and head out into the warehouse and ping-pong around the warehouse for 20 minutes picking a $5 order, that is not efficient.
Mobile inventory management allows a business to sort the pick ticket by bin location. For example, the worker starts in row 1 and it guides them efficiently through the warehouse to pick the order. So again, saving costs on what I call the “ping-pong effect.” The efficiency is actually in how the worker moves through the warehouse.
Also, there has to be Wi-Fi hotspots connected throughout the warehouse because you’re connected with a device that uses Wi-Fi technology.
What should a business look for in a mobile inventory management solution?
One that allows flexibility, the ability to generate your own barcodes, and is portable (you don’t have to drag the computer with you).
Functionality-wise the mobile inventory management solution should allow mobile receipt of products into the warehouse, picking of products on sales orders, sales order entry, and product transfers between warehouses and locations.
What tools have you talked to manufacturing clients about to add in their inventory and accurate records?