Learn how drones in logistics is likely to be the possibility of full-cycle counts done daily - with deployments of dozens of drones for DCs in parallel.
2. Real estate and labor – these are, by far, the top sources of expenditure
incurred by distribution centers, warehouses and similar facilities. Both are
closely tied to inventory management – the bigger the business, the larger the
DC, and the more the number of people required to deal with inventory
operations. With the ever-increasing velocity of supply chain, and relentless
need for higher operational efficiency, technology plays a central role in
helping DC stakeholders optimize their real estate and labor investments.
Whether it is specialized equipment that can navigate very narrow aisles or
autonomous vehicles that allow human labor to be freed up for higher-value
activities, automation is playing a central role in the disruption of the supply
chain industry, including drones for logistics. Inventory counts are part of this
journey – and one of the keys to the successful digital transformation of DC
operations.
While it’s a fond hope that the most advanced warehouse automation
technologies will make cycle counts redundant one day, the reality is that 90%
of distribution centers today have to do random and/or full cycle counts ever
so often – or risk shrinkage, stockouts, customer dissatisfaction and loss of
market share. The danger of not counting distribution center inventory
frequently enough is the compounding of the error in inventory records stored
in the warehouse management system.
Imagine a DC housed over a million square feet. On average, 40% of the area
is likely to be racked. That’s 400,000 sq ft of racks, meant to store full pallets,
partials and individual cartons. As real estate becomes expensive, more and
more of the aisles in this area will change from traditional (i.e. 10 to 12 feet
wide) to VNA (i.e. 6 feet wide or less). Similarly, the rack heights will grow from
25 feet to nearly 40 feet. Assuming standard bays (~ 10 feet in length), aisle
How Cycle Counts Help Match Digital Twins to Reality
Full Counts Too Expensive? But Are Random Counts Enough?
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3. length averaging 200 ft and six-high racking, this works out to over 100 aisles
(over 200 racks) and over 10,000 locations.
Even if all 10,000 locations had full pallets with just one location identifier and
one barcode to be scanned, it would take over 100 man-hours to do a full
cycle count. In reality, many of these locations may have individual items with
front-facing barcodes and thus dozens of barcodes to be scanned for each
location. Thus, a full cycle count could take ten times as many man-hours.
That’s 4 people working in 1 shift for an entire month – an expensive,
time-consuming exercise! No wonder inventory stakeholders have made
peace with random cycle counts – with single-digit percentage of inventory
being counted and used to statistically arrive at an ‘equivalent’ full count.
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4. To improve the accuracy of random cycle counts, data collected over time is
analyzed by warehouse management systems to inform which locations
should be counted, how often and when, based on location inaccuracies
observed in the past. Each day, each cycle counter is automatically assigned
a set of tasks by the WMS – the data thus manually collected is fed back into
the WMS to match the ‘digital twin’ to its real-world counterpart. Of course,
climbing ladders, using forklifts to scan barcodes 30 feet in the air, and
stretching arms to ensure that each barcode is correctly scanned remains
the ugly reality of manual inventory counts.
While inventory audits may not be mandatory to private (i.e. unlisted)
companies, those in the 3rd party logistics (3PL) business do have service level
agreements (SLAs) with their customers that are subject to internal and/or
external audits. The business driver here is not financial regulation but the
importance of inventory accuracy to the 3PL customer – who is relying on
data from each 3PL facility to inform their supply chain and ensure the
Quarter-end and year-end inventory audits are a way of life for GMs of
distribution centers owned by listed companies. Financial regulations require
that the entire inventory be accurately accounted for so that the
corresponding line item on the company’s balance sheet is correctly reported
in the tax filings. These inventory audits tend to be resource-intensive; besides
the full-time resources involved in daily inventory counts, an army of part-time
and/or over-time staff is brought in, so that the entire distribution center
inventory can be counted in a relatively short period of time.
In fact, the less the frequency of regular cycle counts, the more challenging is
the audit count, since there are likely to be more and larger discrepancies
between what’s on the shelf and what’s in the warehouse management
system. These audits have a much bigger impact than just the time & money
involved in the labor and equipment, viz.
Inventory Audits Are A Must, No Matter How Long They Take!
Customer SLAs Are Sacrosanct for 3PL Providers
The entire facility might have to be shutdown, thus harming fulfillment
metrics and resulting in loss of revenue,
Theft, misplaced inventory, loss of perishable goods, etc. all will raise
auditor concerns that require immediate resolution – further delaying
the shut-down,
The inherent lack of accuracy & repeatability of such laborious tasks –
combined with the lack of traceability of manual counts – may hinder
the resolution of audit queries.
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5. satisfaction of the end customers. The direct revenue impact from timely
order fulfillment – or lack thereof – makes inventory-related SLAs an important
determinant of 3PL success.
The nature of 3PL business models dictates that 3PL customers have direct,
automated visibility into the inventory data at 3PL facilities – making manual
inventory counting increasingly ineffective. Ideally, customers want their own
IT systems to proactively trigger inventory searches, counts and SLA audits –
via the 3PL provider’s WMS or IT infrastructure.
It is but obvious that automated inventory counts – especially those that
leverage cost-effective, reliable, autonomous drones and intelligent
automation software – are bound to disrupt the way inventory is managed at
DCs. With the possibility of full-cycle counts much more frequently,
quarter-end and year-end audits will become far more manageable – that
too without the pain of hunting for over-time staff or shutting down the entire
facility. Drones and logistics are thus turning out to be an ideal match w.r.t the
promise of automation.
Drones used in logistics can do the inventory management tasks at-least 3X
(and possibly 10X for case reserve) faster than manual counts. Accessible
commercially via a SaaS model, such drone solutions tap into existing budget
allocations, with minimal capital investment – resulting in payback periods in
months, not years! In fact, the biggest advantage of drones in logistics is likely
to be the possibility of full-cycle counts done daily – with deployments of
dozens of drones for distribution centers in parallel.
—
The Time Is Ripe For Drones In Distribution Centers
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6. flytware.com
ware
Streamline your DC inventory audits, and honor your 3PL customer SLAs, by
deploying drone solutions that come with live video feeds, date-wise image
archives, and location-wise barcode data.
Write to us at info@flytbase.com or schedule a call with the FlytWare team.
