Automated inventory count processes in FM Logistic warehouses, cutting costs threefold and improving the accuracy and relevance of inventory reports
Client
FM Logistic is an international logistics corporation headquartered in France. Nestlé, Wrigley, Auchan, Michelin, Volvo and over a thousand other major companies trust it with their logistics. FM Logistic has 22 warehouses in Russia, with a total area of more than 816,000 sq.m.
FM Logistic provides a full range of logistics services: from transportation and storage to picking and delivery of B2B and B2C orders to the recipient. In addition, the company provides additional services to its clients: customs clearance of goods, goods marking, etc.
Business objective of FM Logistic
To provide clients with a full range of logistics services in a comfortable, transparent and reliable manner at all stages of interaction.
Clients Problem:
Each warehouse has 3,000 people working on inventory count every day, and still the data is out of date before reports appear in the system.
FM Logistic has thousands of partners: Leroy Merlin, Michelin, Auchan... Tens of millions of SKUs are in stock every day. Hundreds of trucks are loaded and unloaded. Goods are moved within the warehouse. FM Logistic packs B2B and B2C customer orders, forms joint deliveries, sets of goods, and receives returns. Goods reach their expiration dates.
As a result, the actual availability and quantity of goods often does not match the plan. Since FM Logistic is financially (and in some cases even criminally) responsible for the goods in stock, the company must timely and accurately inform customers about the status and quantity of their goods in stock.
But even when FM Logistic warehouse's 3,000 employees were engaged in inventory counts in the "traditional" way (as all procedures were manual), warehouse reports became outdated faster than they reached FM Logistic’s customers.
FM Logistic has set us an aim: to ensure that the inventory is timely, complete and of good quality, while at the same time reducing inventory count costs.
Peculiarities of Inventory Count Process in a Warehouse with Dozens of Merchants
The inventory count process has many nuances:
- Where the inventory is being taken: in a specific warehouse area? In the whole area occupied by the merchant? In the whole warehouse?
- What is the purpose of the inventory: to check the availability of goods? the amount of residuals? the write-off of out-of-date goods? etc.
- What is the reason for the inventory count – is it routine, or is there a specific reason for it?
- Where do the results need to appear?
- What should be done with surplus stock?
- What if a code on an item is duplicated?
- What about misplaced stock?
There are hundreds of such questions, and they affect 35 business processes of the company. Without an applied understanding of inventory, it's easy to forget about them. As a result, an IT solution built on theoretical knowledge will be useless.
Prior to development, the kt.team made hundreds of phone calls with employees involved in the inventory processes and visited FM Logistic's warehouses twice to learn the process in detail.
Solution: Stickers for All Stockpiles + Automated Inventory System in Warehouses
Stickers allow FM Logistic employees to get information about shipments without searches and reconciliations
All shipments stored in FM Logistic warehouses are marked with stickers. The stickers link to the cargo records in the company's systems: information about the owner of the cargo, the contents of the tare, the storage location, the number of items, etc.
Previously, the procedure for stocktaking used to be as follows.
- Where the inventory is being taken: in a specific warehouse area? In the whole area occupied by the merchant? In the whole warehouse?
- An employee would receive a task to inventory a storage space or a list of goods.
- Using a scanner, they would read the codes, and the data from the codes would be entered into a text file.
- Employee would manually recalculate the quantities of the goods and complete the information in the text file.
- They would then compare the results of the inventory with the assignment data. If there was a discrepancy, they had to go back to the workplace, find in the corporate systems where the misplaced goods should actually be, then return to the storage area and send the goods to the correct address.
Inventory applications make the procedure faster, easier and more accurate
We have developed three inventory applications for warehouse and warehouse scanners.
Now, when an employee receives an inventory task, he works with single source of information: the scanner. On the screen, they see the storage location to be checked and, if necessary, the exact quantity of goods, lot number, shelf life and other data for the inventory.
At the storage location, the warehouse employee scans the code and works with the stock record in the inventory software.
They enter the actual values into the fields and the application compares them with the reference information stored in FM Logistic's systems. In case of discrepancies, the application notifies them by highlighting the data.
If an employee discovers an unplanned item at a storage location, the scanner will signal this. The employee immediately deposits the goods in the "anomaly zone" so that they can be moved to the correct storage location at a later date. This not only detects the misplaced items, but also restores order in the warehouse at a lower cost.
The scanner will also inform the employee if the labelling code is duplicated on several items or is mechanically damaged and needs to be re-labelled.
If the actual values do not match the plan, the system will inform the line manager and they can schedule a recount of the goods. At the end of the inventory count, the line manager receives an automatically generated report of the inspected location’s state.
The report to the client is generated automatically in the administrative application.
Results
- Inventory labour and costs are reduced threefold.
- Cyclical inventory counts and full inventory counts can be taken in a regular rhythm.
- Misplaced items are detected more quickly and put back in the right place.
- Storage service reporting for the merchant is automated and becomes more accurate.
- A report can be sent to the merchant in one click immediately after the inventory is complete.
- Corporate reporting becomes more reliable.
- The company receives an additional source of information for management decisions.