The Keys to Inventory Accuracy
The Keys to Inventory Accuracy
Inventory accuracy is the basis for a solid supply chain. Our guest today knows this and is helping companies improve warehousing daily.
In this week’s The Faces of Business Episode, our guest speaker was Jeff Lem. Jeff is the President of Portable Intelligence. Before this, he was also the President and Founder of qdata inc. Jeff is a warehousing expert that helps warehouses run more efficiently and with much high inventory accuracy. The software they have developed at Portable Intelligence is changing the way warehouses operate.
The conversation of the episode started with Jeff sharing how he started his supply chain journey. He said that once he was sitting at his boardroom table and saw a card from a barcode company. Jeff said that this is when they decided to sell barcode equipment which became a huge success and generated much revenue as well.
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Moving on, Damon asked Jeff about what he thinks has changed over the years in warehouse and inventories? To this, Jeff said that a lot of people here are now understanding the supply chain as well. Moreover, Jeff says that the warehouse is the crown jewel of the supply chain and therefore holds a domino effect.
According to Jeff, if you mess with the warehouse, it starts affecting other things as well and therefore affects the supply chain. After this, Gabe from the audience asked a question from Jeff. He asked that how to create a process that has helped better forecast lead time for your merchandise?
Responding to this, Jeff said that when it comes to inventory accuracy, you can’t always create a full forecast because you don’t have a crystal ball or anything. Moreover, he said that for the right accuracy forecast, you have to record your transfers and you put them away.
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Aside from this, you also have to record your issues returns and then those returns back to stock and cycle count. To be more specific Jeff said that you have to record the cycle counts not your annual physical inventory.
Talking more about cycle counts, Damon asked Jeff about how much that really matters? To this, Jeff said that if you do it once a day, it will really sharpen your views on what you have in hand. Jeff also mentioned that if you do a proper account you can also find the stuff that is obsolete or is expiring.
In addition to this, he said that things like these help your inventory stay up to date and help you make a better decision as well. By the end of the conversation, Jeff said that doing your accounts regularly for accuracy inventory is very important.
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The conversation ended with Damon thanking Jeff for his time.
warehouse, inventory, wms, people, system, product, warehousing, material, business, customers, track, location, supply chain, accuracy, counts, transfers, manufacturers, vendor, process, put
Damon Pistulka, Jeff Lem
Damon Pistulka 00:05
All right, everyone, welcome once again, the faces of business. I’m your host, Damon Pistulka. And with me today, I’ve got none other than Jeff lamb. Jeff, thanks for being here today.
Jeff Lem 00:16
Yeah, really excited to be here, David, and thank you for having me.
Damon Pistulka 00:20
Oh, man, I am excited because, well, I get excited about inventory and warehousing. And we’re going to be talking about the keys to inventory accuracy today. And this is something you’ve studied a bit, isn’t it?
Jeff Lem 00:33
Yeah. And I want to say you and I are probably the only people that really truly get excited with every course. Well,
Damon Pistulka 00:41
I tell you what, it’s been a longtime passion of mine, because I really honest to goodness, I was, I was tasked with designing a warehouse in my second year of college, and I had no idea what I was doing. And it turned out okay. But in the process of it, you do learn a lot when you start to research and do it. So it’s it is something I’ve been around a bit. But let’s talk about you, Jeff. So tell us a little bit about your background, and kind of what got you interested in supply chain and inventory and really warehousing.
Jeff Lem 01:17
Yeah, well, I started off in the world of time and attendance, you know, tracking people. And there was a had a pretty hard day, I remember sitting around my boardroom table, and there was this business card on the boardroom table. It was from one of the bar coding companies, a sales rep that left this card on the table. And it was from a company called Intermec, which later got purchased by Honeywell. So I looked at the card and said, You know what, this guy specializes in tracking boxes, I bet you’re they’re easier. They’re tracking people for these sorts of intended purposes.
So we reached out, and we launched, you know, a barcoding business, that resold their hardware. And in the process of selling that all that barcode equipment, which we later grew to be a national company, doing millions of dollars of sales a year, we had a little software business that helped us sell more hardware. So we built all the software that really facilitated the collection of data and uploaded it to the host system, be it an ERP or an accounting package. And, and that’s basically how I got started in the business. Basically learning, you know, the process of collecting data to support inventory moves.
Damon Pistulka 02:34
Okay. So what what do you think if you if you look back on it, and and look at it, as we’re thinking about it today, what really has changed? The way inventories move, I’ve got some people I know that are in with the handheld scanners and all this other stuff that’s happening. So over the years, what do you think some of the most fundamental things that are really changed that have been exciting?
Jeff Lem 03:00
Well, I think a lot of people certainly now are understanding the importance of the supply chain. And the warehouse is basically what I consider to be the crown jewel of that supply chain, because you start messing up the warehouse, there’s basically a domino effect around how it affects your supply chain. Because if you don’t get your act, right, where all those starts, all the inventory starts, and you start pushing that data and materials out the door, guess what, you’re gonna create a lot of havoc in your supply chain. So I’m seeing far greater awareness around understanding the fundamentals of running a warehouse, and a lot of interest in it.
So so when we deal with, say, manufacturers, who are not natively fairly sophisticated, sophisticated around supply chains, and inventory management, they’re all ears. And a lot of them want to understand, you know, how do they better improve their warehouses, how they better improve their processes, and you know, that all trifecta, people, processes and technology, it’s all about how do we affect those three areas to basically produce a better and more enlightened warehouse that’s going to eventually create a competitive advantage for folks?
Damon Pistulka 04:10
Yeah, yeah. And that’s it is it is it is true. And I just want to say Gabes on saying hello, great to see you again. Thanks for stopping by. It is really when you look at it, it doesn’t matter if it’s a raw materials warehouse, or it’s a finished goods warehouse. I mean, if your warehouse is not organized and accurate, you’re gonna have trouble.
Jeff Lem 04:32
Yeah, yeah. And exactly. And so, you know, I wrote a book to that effect, called it’s your warehouse is not your fridge. And I came up with that title one day, and it was around, you know, I was having my breakfast I did my little workout and sitting around the breakfast table.
And in the mornings, my kids which were still living at home at the time, come rushing down in the morning, and it’s basically every man for this because they’re all trying to get to work or to school, and it’s an all out assault on the fridge, because not only do you have to get their breakfast ready, they also have to prepare their lunches, right, because they have lunch. And just watching them tear stuff out of the fridge, make their little luncheon things or their breakfast thing. And then they throw it back into the fridge in any order, which they find it at Summit, they actually leave on the counter table for mom and dad to clean up. And,
Damon Pistulka 05:26
of course, that that part’s left behind. That’s right, I can just slowly something’s left behind.
Jeff Lem 05:31
Yeah. So I looked at that. I said, Oh, my gosh, this is exactly how people treat their warehouses, you know, we they, they come in there, they grab stuff out, they take it to the floor. And sometimes it makes it back. And sometimes it doesn’t make it backwards left on the floor. But the bottom line is, there is no mom and dad looking after the thing. And eventually the warehouse becomes quite messy. And it began certainly gets quite confused. So I did some further research and you know that the average refrigerator in the United States wastes about 22% of the product that goes in there. Right?
I guess Yeah. No, I mean, ever it is but got that crisper, which is where all vegetables go to die, basically. Right? Yeah. Right, you know, and like, I’m like, at like a email aware refrigerator. The more you stuff in your fridge, the more likely you’re not gonna find it. Right. Yeah. And so that’s exactly what’s happening with warehouses today. Especially as people are really buying more product, or they’re forced to buy more product due to shortages and longer lead times.
And so we’re seeing a lot of customers come to us and say, Hey, we reached the tipping point, not only do we have more raw materials to track, we also got more work in process. And we also have more finished goods to track. And by the way, we got to meet a delivery schedule, we got landed this new large retailer customer, they brought out say 100 stores across the states, and now all sudden they say don’t deliver it all at once delivered on this timeline to these DCS or to these stores. And by the way, also tell us how much inventory we have in stock in any time. Yeah.
Damon Pistulka 07:11
Oh, yeah. And that’s it is it is. Wow, you just described. I mean, there’s probably people that have chills just because you described them. So it was so closely there, because they’re they’re sitting here, we couldn’t get it. Now we got our hands on some raw materials. So we bought, you know, twice what we normally would buy or four times or as, as you said before, maybe before we got on maybe even a year’s worth of raw materials or materials, and then you you have to try to get that out the door with more work in process or more inventory, whatever you’re dealing with in your warehouse. On a still on that stringent schedule only ship so much to each location and, and keep track of all of it.
Jeff Lem 07:57
And that’s so a few extra wrinkles in that. Now you talk there are three PR a third party logistics company, and they’re going to manage your finished goods or manage your raw materials, right. So now you’ve got to track them. Or you’ll have another warehouse across the street. And just the fundamental act of being able to control moods between warehouses. Yeah, really tough for a lot of people. Yes, yes.
Damon Pistulka 08:21
I can’t tell you how many times we’ve been I’ve gone into companies and it’s like, Oh, we got busy. So we just bought this warehouse, down the street or across town. And you go just just makes you shudder to think how much money that that weighs. If you don’t do it intelligently and think about what you’re doing. But Gabe had a question for us. He said how do you create a process that’s helped better forecast lead times for your merchandise? As this is a problem, problematic issue I’ve encountered and poorly managed supply chains.
Jeff Lem 08:58
Yeah, great question game.
Damon Pistulka 09:00
Yeah, I think I think in there, that’s a long answer to that one, because there’s a lot of different pieces in the process. But as you’re talking now, one of the fundamentals is inventory accuracy.
Jeff Lem 09:11
You got it, I was gonna You took the words right out of my mouth, and you can’t create a proper forecasts or without knowing what you really have on hand at any time, right? And short of having a really good crystal ball, you got to have good accurate inventory.
And the fundamentals around accurate inventory Are you know, recording your your put aways, recording your transfers, as I alluded to earlier, recording your issue returns if they’re a manufacturing issue and those returns back to stock and cycle counts. And I’m being very specific. It’s a cycle counts, not your annual physical inventory account that that I’m referring to it really SEC accounts is what pushes the needle across towards the more accurate inventories.
Damon Pistulka 10:00
So how much just on on a cycle counts? Because I, I’m a big proponent of cycle counts, and and people have never used them before think I’m crazy because I say, Listen, you got to do cycle counting, you got to do it, it’s not even an option for me you need to do it. How much does that really improve your inventory? When you do inventory accuracy when you do it? If you just across the board, you mentioned, you know on about it and seeing it applied, how much does that really change?
Jeff Lem 10:29
Well, if you’re doing it once a week, my preference, if you do it daily, is that you’re gonna sharpen your your appreciation for what you truly have on hand, as not just the inventory accuracy, Damon is you’re gonna be ensuring that there’s better turns of that inventory, because when you do a proper account, you’re going to find stuff that’s going to be possibly expiring, or it’s obsolete, and you should get it out of your your warehouse. Because if you get it into your production, you could end up having a costly recall, not to mention a bit of a loss of reputation and costs associated with that. So, you know, doing your accounts regularly is critical.
And we’re not talking about having to do a staged inventory count like you wouldn’t when folks do their annual physical kill, they’ve got the rope off areas, they put numbers on stuff that you shouldn’t be counting, they have strict cut off rules. And it’s all it’s all like a large game of mannequin, you know, when people go still, yeah, picked up that selfie picture of it. Right? That’s what it looks like, everybody goes still and then you do the count based on on that stillness. And of course, you’re gonna arrive at a pretty high accuracy level, because you basically set it up to succeed in every breezes, big sigh of relief going good, we got inventory accuracy in the 90.
So we don’t need to do cycle counts, it’s totally wrong. cycle counts serves the needs of the business. And how you do your account is just as important as how frequently you do it. So there’s a number of different ways you can do your cycle count, you could do it by location, you could do it by your skews, you could do it by activity level. So that, for example, if you just had a large restocking, or you’ve got locations that are run down to zero, or even got negative locations where the system is over issued from a location and as drove into a negative, those are there’s the account.
And the last thing that everybody hears about is using ABCs, you know, use your eight, your inventories, and categorize into a level B levels and C levels based on either the value or the velocity of that inventory. Yeah, so it’s a bit like a Pareto analysis, like the old 8020 rule, that kind of thing. So if you set up your accounts, and there’s lots of good, you know, WMS packages that will do your accounts and scheduling for you. If you set up accounts and follow it regularly, it’s like, you know, flossing to date every day, right?
You know, and it’s, again, it’s gonna save you a ton of time. So back to Gabes, earlier question, just having that accurate inventory is gonna allow you to get a better handle as to what you really have on hand. And then you can use that inventory, to, to set up with your manufacturer, to schedule it against your production schedule. And then looking at your lead times for the various products that you’re going to be short. You can get ideas when you really start that that particular job, or tell the customer you got to short ship it, but at least you’re doing it with confidence.
Damon Pistulka 13:33
Yeah, yeah. And that’s great. And, man, it just the cycle counting is is such a savior because especially in where if you’re an ecommerce retailer, this is is critical. And the days in the day of your latest review is your you know, your best indicator, if you’re going to sell more not you know, if you run into something and you’ve got no inventory, but it says you’ve got a you know, got 100 of them on your website and you got 10 People that order them and then you have to tell them, they’re gonna put bad reviews on your site, and that’s gonna hammer you and not only then it causes a supply chain problems, because you gotta hurry up and try to get them or whatever the deal is.
But man in the in the E commerce world, the accurate inventory is so critical. Just because the the high level customer satisfaction you want to do a game has another great question, because you mentioned a WMS system. What do you have some recommendations on systems that you particularly like?
Jeff Lem 14:38
Oh, being particularly biased towards my package? Yeah, I love our system. It’s geared more for manufacturers. So it all depends on game as to what business you’re in. So if you’re a food distributor or if you’re a food manufacturer, the WMS obviously should support the needs of the business and do properly understand the context in which you’re going to use your product is you need to come up with a call the wish lists, call it your top five showstopper needs.
And then from there, you would go shopping, and there’s a ton of WMS products out there, that will suit your needs, I do encourage you to get together a group of people within your company each represent the different departments that will be using that WMS and come up with a wish list. And, and I do have, you know, 10 steps that I’ve, that I that I discussed in my book, and we have it available on our website as well, where you can, you know, the step by step forces by which you would select a WMS. And, and part of it, as well as creating what we call a vision board is where you get everybody together.
And it’s sort of like, you know, a social thing. But everybody takes images or pictures from the internet or even from magazines. And it describes the state that they want their particular department areas to look like when you have your WMS. And then from there, you can quickly distill and come up with a common vision of what problem you’re solving for your for your particular problem. So for me to say, yes, go with ABC package, without knowing your needs. This is like me saying, you know, go go, you know, what kind of car should I get? Right? Yes, it’s never that easy.
But it all comes down to understanding your requirements, understanding not only just to grasp, but what IT infrastructure, you have to support this package. Right. And eventually, you know, what problems you’re trying to solve? You know, and, and you know, that the typical things that we’re hearing from folks, that problems that they want solved are things like inventory management, labor efficiency, you know, what kind of labels so we’ve seen a ton of manufacturers coming to us today and say, you know, help, help help, we need to produce these type of AIAG labels, and they need it on every package, right?
Or every container or bin that goes to them, right, so we’ve seen a lot of these requirements coming out of the woodworks and it’s really impacting the type of WMS. And bear in mind, whatever you buy today, chances are three, four years from now, you’re going to be changing how using it. So you got to, you got to make sure you work with a vendor who’s constantly investing in growing their product, keeping it current, not only tactically, but also feature sets wise, and then ask them, you know, how do I get my needs into your product?
When you guys create enhancements or upgrades? Is there a forum for customers? Do you have a process for our voices to be heard? You know, we, you know, for example, we have customer panels where we get customers engaged on particular areas, like for example, we just had one on vendor consignments, you know, although that’s not happening so often these days where, you know, it was where a vendor send you product in advance, you know, you stored on site at your place. And when you consume that product, or ship it out, then you tell your vendor, send me an invoice for it.
Well, that takes a lot of trust for a vendor to do that. And a lot of systems are not robust enough or transparent enough to offer that view to the vendor saying, Here’s what we have on hand, here’s what we consume. And here’s what you can invoice for. Right? So that was really critical. And then of course, the customer being our customers said, but we also are on the other side of the fence and we ship our stuff to our customers. What are you gonna do for us? There I go. Okay, that’s gonna be chapter two, or customer panel.
Damon Pistulka 18:42
Yeah, yeah. Well, that’s a that’s a great point, though. You showed a really cool example of something that’s actually pretty tough. I mean, it’s, it’s something that’s common, but it’s, it’s hard. How do you how do you let your suppliers look into your inventory? And then how do you let your customers look in the inventory, if you’re keeping product for them, and they can get it when they want or whatever it is.
So there’s so many different ways that it works. Because I’ve been in manufacturing before where we manage this, the inventory at the suppliers location even, which is different again, and you talked about food service. I know they do that. And there’s a lot of industries where that is common. So yeah, it’s it’s really something well, it’s just it’s as simple as as going going to the grocery store and going in and get and getting milk out of the grocery store. A lot of times the the manufacturers are managing the inventory in the stores.
Jeff Lem 19:36
Yeah, there’s, they’re restocking the shelves, they’re doing inventory counts, you know, and, and, you know, that’s assuming you’re big enough to do that. Right. Yeah. You know, if you’re a mid size small size manufacturer, you know, for you to get that consignment arrangement a you got to have a very good relationship and obviously credit score with your supplier. Yeah, but they may not they may not send anybody on site to your place. So now you You’ve got to have the processes and the system by which you can accurately and, and and timely basis record what’s what’s going on with that person’s inventory.
Damon Pistulka 20:11
Yeah, yeah, that’s for that’s for sure. And it’s a tall order sometimes, especially if you’re not big enough to really support it. Well, that’s a great point. Well, Ingar, thanks so much for being here today. Great to see you. And then Ingrid says hello to gave and gave said Great answer.
Thanks for giving me some awesome information. So that’s, that’s really what what? I mean, you brought so much there in that little bit, because, because it’s like, it’s like, yeah, it all comes down to simple fundamentals in in inventory accuracy. It really does. And you said there’s four keys to it. So we talked about cycle counting a little bit? What what are some of the other areas where you see that people are making mistakes with their inventory? Accuracy? Yeah, yeah,
Jeff Lem 21:04
it’s on the inbound side of things. I mean, most people do a great job of receiving their materials, because obviously, they want to receive it accurately, and timely, because they’re going to be paying you money against the materials receipt, right? But after it’s received, the way they put it away, sort of like, Ah, geez, guys, you know, you gotta, they’re not recording that put away.
They’re kind of, you know, a lot of ERP systems will do what we call an automatic put away to its primary location. So yeah, automatically goes into, say, a location a one a one, right? But what happens is a guy gets to a one on one with the product, ABC goes AWOL, when he looks at a woman goes, Oh, damn, it’s full. Yeah. So he puts it in p 101.
Damon Pistulka 21:54
Right, next. It’s real close. They
Jeff Lem 21:55
can see it. Yeah, no big deal, right. But guess what? The inventory system or the ERP system thinks is in a one on one. And we go to do what we call a back flush in your manufacturing side of it. A male consume materials from a one to one, and there’s your negative. Yeah, I mean, while sitting and be what Oh, what did they only find out but till after do account? Yeah, those who knows what, right. So now this product, ABC is Mia. Yeah, another academic, right? So, so Adi goes, and this is repeated hundreds of times, right?
So. So as I said earlier, they do a great job receiving, and even labeling it. But when it comes to the put away, it’s kind of like laissez faire, everybody’s up does it load their friend. And some guys scan it, some guys record it, some guys don’t do it at all, at all, we had a customer, his biggest job every day. And this is the manager would go back there and just do an audit to check that everything is in the place it is. So he’s walking around with a handheld terminal. Yeah, using our software, and he’ll go in and check to make sure right, then they, they forced the process to be scanning that location it goes into, I don’t care of the system.
If it’s you’re putting it away into its prime location, I want to verify that your scanning slows them down a bit. But guess what, it saved the manager two hours a day having to do the audit, and all sudden he went from like, fearing the inventory they seize on this system gone. That doesn’t look accurate to knowing that that inventory, the season shelf is exactly what’s there. And then we’re telling a customer you’re planning production, it just gets that much more easier.
Damon Pistulka 23:46
Yeah, yeah. Because if you’re the one that has to tell the production department that the the components that you thought were there are not there, you’re not very popular that day. Yeah. Especially if it’s a minor component, and it’s expensive product that they need to ship because it’s the last piece or one of the critical pieces.
Jeff Lem 24:05
Especially today, I mean, oh yeah, everything yesterday and you know, there’s not a lot of room for air and to really print around e commerce because you know, typically on an E commerce order, there’s it’s only one to three lines max. So you do a pic air 123 lines, you know, your pick air is going to be 33%. That’s just one line. Right? So so you’ve got to be super accurate. And yeah,
Damon Pistulka 24:33
yeah, that’s a great point. That’s a great point. Because you’re not picking 100 items on ecommerce if you want to get really high. Pick accuracy. You got to be good. Yeah, well, yeah,
Jeff Lem 24:42
the the average order is one one item on each line. So you might have three lines and three items and you missed one of them. Yeah. 66% or 67% accurate. Yeah.
Damon Pistulka 24:54
Yeah, that’s for sure. That’s right. Wow. And when you Look at this. If you if you’re doing things better, just just marginally better, you’re doing half the stuff that you’re supposed to do. How much of a labor difference does this make? Because you’re not looking for things you’re not blah, blah, blah, all the myriad of things that happens when you don’t put stuff away, or you’re not in the right spot. How much of our labor savings do you see in a warehouse when you’re doing that?
Jeff Lem 25:25
Well, one of our customers is fond of saying that, you know, when he put in the system, there was a lot of skepticism, you know, big brother was watching us. Yeah. But within a few months, the warehouse guys would come to him and go, you know, we love the system. He loved the system, they go and they go, why? Because these guys would walk on average, in a warehouse anywhere between two to four miles a day, right?
Looking for stuff. Yeah, now we don’t have to walk down this big, long, 100 foot aisle, because I just go, I just look up on the device. And I know if it’s in that aisle or not, yeah, I can’t tell you how much time it saved me, right. And basically, so basically says, says, this lookup feature, pay for the entire system itself, get the guys are happy. And when they will, say some time, they’re more likely to scan the product into location.
So it’s that simple thing. And then, of course, there’s a domino effect. And pretty soon, the accuracy starts coming up, raises all boats, they could produce more accurately, they could ship more accurately. And you know, pretty soon you’ve got a competitive advantage. And you’ve got this notion of inventory turns, which you’ve likely heard about their turn start going up, and where to turn start going up. Was what I call magic happens. You start down to ship more product store more product, the same amount of space and people. Yeah,
Damon Pistulka 26:55
yeah, it is. And when when you lose sight of that turns, it can be an ugly thing. Yeah, it can be an ugly thing. And we’ve had it before where we’re growth and and then just growth has, has really, the focus comes away from being efficient operation into getting stuff out the door. When that happens, you can really, you can lose sight of the turns, you can lose sight of the accuracy, there’s just so much stuff that that’ll happen.
And those costs just creep in. And pretty soon you got to where you know, you’ve got 100,000 square feet, and I’ve got, you know, whatever it is 4050 people out there now. And now I’ve got 50 or 60, when I know I really should have 40. And because we’re doing things inefficiently removing things twice, especially as that warehouse gets full. And when it when it gets when a warehouse is that just about maximum capacity, it is ugly, if stuff is not accurate, and not put in the right spot?
Jeff Lem 27:53
Well, you get the situation where you have product on the floor and the aisles and the yard and just becomes a almost like a best guess or stuff. Yes. And you’re and people are relying on their memories and not gonna happen. So so it’s really crit, it’s really critical to, you know, be efficient in your labor and to have this information that people can trust, then all of a sudden, you know, it’s that little act of just recording, you know, where stuff is. Yeah, is a big step in the right direction in terms of just improving inventory accuracies. Yeah,
Damon Pistulka 28:31
so you got a couple more couple more of your, your keys, the inventory accuracy. Let’s talk about the next one, because we hit cycle counts and and put aways
Jeff Lem 28:40
Yeah, the next one is, you know, transfers, right? And transfers is a big thing. Because, you know, people do basic transfers between Location One to location two, so you might be bringing down moving stuff from the box storage down to the pic face, that’s a transfer, or you could be doing a bigger transfer, like moving product from Warehouse a warehouse B, right, or moving it off site to a three PL right or doing what we have, we called this thing called outside service where a manufacturer will take product that is in a semi finished state and send it to a third party vendor for say, galvanizing. Yeah, coding, right. And so that product is now being transferred to that other facility.
And then these come back. So the question is, how well do you track those transfers, right, even moving the simple act of transferring material from the warehouse to say production or to what we call the marketplace. Within the manufacturing area where you take kitted products that are ready for production, you put them in what we call a marketplace, and then when they’re ready to run their jobs, they move from the marketplace to production, or you move it directly to the production floor. They have big enough staging area.
So those transfers are really critical. I need to track it. We I talked to a prospect once, and they build up to, I think it was up to 200 of these kits, you know, out there in the Florida at any time, right. And what they did was that they not only just transferred it from the warehouse, they actually issued it pre issued it to the jobs, even they weren’t started yet. Meanwhile, the actual inventory, waiting to be actually started in production was actually sitting there in in a combiner box, near the near the production area or near the first machine that was going to start processing.
So their inventory was constantly had to be updated. And they actually had a person who went around checking the end and scanning it and recording these kits that were pre built, and say, No, we haven’t started this one, we haven’t started this one. And then they would do a little adjustment in the inventory. To show that, you know, really, we have this on hand. This is waiting to be in production, and these goods are actually being consumed or have been consumed. Yeah, yeah, pretty scary. Wow.
Damon Pistulka 31:09
Wow, that is pretty crazy. And, and even when you talk about transfers, I think back to when I was in the aerospace industry, and we had making components and you think about, you know, a titanium component for for an airplane, it might go out to three, four or five different processors before it comes back to you again, how the heck do you track it all out there and keep? You know, and and? Yeah,
Jeff Lem 31:36
it’s it’s not easy. And, you know, we we have a we actually have a little workaround to do that, you know, a nice, yes. But but it’s, it’s, it’s just a question of tracking that it’s at this particular vendor. Right. And, and what we do is we set up a location in our system called that fender, yeah, they’re sending it to Mr. painter or Mr. Galvin, iser or Mr. Cody, and you have a location called coding, and then maybe the NAC brief acronym of that of that particular vendor. And you transfer those work in process goods, which we put on what we call a license plate, or we enact UI, we call it a sign to a container code.
So you would in the system, transfer that container code to that location called vendor ABC or whatever, right? And it’s, then when you look up your inventory, you see all the products and containers are at vendor ABC, right? Then when it comes back, right, you receive that against a purchase order, which you’ve issued vendor ABC, and you make sure you transfer the goods from that location in your facility back to the production line. And so now we got some visibility and understanding as to what’s happened to that particular working process goods.
Damon Pistulka 32:57
So Well, yeah. Because if you’re not tracking it, you’re really guessing on what your working process inventory value is, where it’s at. I mean, yeah, you got purchase orders, but you really don’t know from a system standpoint where it says you don’t
Jeff Lem 33:12
know actually, when it went to them. Yeah, so Oh, great. So now you, you know, you got this report that will tell you, it was transferred in at this time and date into this location. And that’s when we shipped to the vendor. Right. So. So it’s all it’s all pretty, it’s pretty straightforward. And we had a number of customers who approached us with that problem, was it me? Who, who thought of it? It was it was them saying we have, we need a way to track it. And I say, okay, just create a virtual location, one for each of your vendors, and you transfer it in there while you’re really physically shipping it out the door to them.
Damon Pistulka 33:47
Yeah, well, that’s great, that’s great, because it shows that how the customer driven focus of your company, you’re able to move on the fly and help them solve those problems.
Jeff Lem 33:58
Yeah, I mean, that’s, that’s, that’s my passion is, you know, our mission at our company is to literally make lives of our customers better. I mean, I get a big kick here and there stories where one fellow, we solve their their ability to print a pack lists. For whatever reason, the ERP was producing the pack list, it took up to 10 minutes to produce a single pack list. And when it came time for UPS or their carrier to pick up the products, they’d be waiting around for the pack list to print and they gave this poor Shepherd know, a lot of grief. So it’s a very stressful situation. And you always end up you know, working late and missing.
They’re fast forward, they put in our system, and we’re not putting pathless in under 10 seconds, and they’re all out there on the parcels. So when they drive arise, it’s all there they load. And he goes, I’m able to have dinner with my family everyday by six o’clock. It’s been it’s been a game changer for and, and that’s the big I can’t ROI that I can’t even even put in a testimonial for why our system is wonderful, whatever. But it’s that kind of stuff, which allows people to have a better life. Yeah, that makes me feel great. I can’t get off. Yeah, chills even talking about it today. Oh, yeah,
Damon Pistulka 35:16
no doubt, no doubt. So you’re, you’re out doing this work and, and, and what really made you decide, hey, we need to we need to develop us a software system to help warehouse Oh, you make a WMS? Right? What? What just kind of triggers your mind one day and you go, we need to do this? Yeah, great
Jeff Lem 35:36
question. David. It was pain. Yeah. That the fact that people would show me their, their current systems I go, you gotta be kidding me. We do that you’re having to do this or you are the system? Are you having new spreadsheets to augment what your system, the computer should be doing that kind of thinking. So what what we try to do is engineer a product that, you know, that is as least intrusive as possible. And it’s done almost as a byproduct or as a committer tasks. So, so when we create a product, our product in particular, I mean, we try to set it up so that it actually helps them do their job better.
So it’s not like a time and attendance system. Back to my early days, were attracting people, where people had to clock in, clock out. And they did that because they want to get paid. Right. And also, you know, clocking in on jobs clocking out of jobs, and those kind of situations, there’s no value add to the manufacturing process, right? I mean, clocking in and clocking out for payroll. Yeah, people get it, right. But we clock in clock out on each job. Most machine operators look at that as a burden, because it’s gonna slow them down.
The warehouse, on the other hand, that actually, we actually make them better at their jobs. So, you know, there’s, we have one customer testimonial, when he jokingly asked his warehouse workers, you know, we took our plus our product away from you today, what would you do? And this workers all said, We quit? Oh, that’s a nice testimonial. Right? Yeah. You know, so. But nonetheless, you know, it’s a whole idea of how do we engineer the product, so that it works and supports the process. So we’re not, we’re not just merely capturing data.
And that’s the big difference, Damon is that we’re not here to help you record the data, we’re actually supporting you and help you make better decisions around which product to pick from where and where to take it to. So and we also will organize the pic in such a way that it’s going to help you become most efficient in terms of building that pallet. So it doesn’t tip over. So you’re picking typically the heaviest stuff first, and then you’re building from there. Right? So that’s cool. A little things like that.
Damon Pistulka 37:53
Yeah. Well, I mean, and that shows that that warehouse knowledge too, right, because a simple system will just spit out everything, hey, this all needs to go in the shipment. But when you think about the physical task of building a pallet out, if you put the heavy stuff on the top, we all know what happens is you end up re shipping more, because it’s lost somewhere in the middle between here and there. And but that’s, that’s awesome. So when you when you got into this did, were you really? Did you really think that you summarize the challenges you’re going to see in doing this with your business? Or was it was it a bit more than you thought after you got into it?
Jeff Lem 38:41
Yeah, our our first project way back when was with you know, Liquor Control Board of Ontario, which is at that time, it’s the largest liquor warehouse or distribution center in the world. What we won that project, I have three employees. And we were supposed to automate 28 sortation conveyor lanes, and then put a pallet on it, put a label on each pallet and then also support what they call the non convertibles which is the pick area for products you can put on conveyor, and also the more expensive liquors and wines right that were hand picked and put on the pallets, right.
That was a million dollar RFP that we won. Wow. Right. And it was quite the wake up call, you know, yeah, we were the first to actually come up with a system that ran on, on then PCs. And PC technologies were only invented, they did it. Kudos to them. They had faith in us. We pulled it off. They use the system for over 12 years now. But a few years ago, they replaced it with a robotic arm for Germany.
But that was our claim to fame. Our system process daily 150,000 cases a day. And it was quite. We want we want a number of awards for it. But that’s how I learned the business the artists way. And to your earlier question, I later went on to get some formal education around warehousing. I have a professional designation in materials management. I’m also the director of education for the material handling Society of Ontario. We help design courses and help you learn about all sorts of minutiae about warehouses so you can actually win at at try to pursue gate. Yeah, if you’re at get invited to what,
Damon Pistulka 40:27
talk about these courses a little bit, because because before we got on, you were explaining you’re you’re taking these material handling courses, from material handling Society of Ontario and putting them online. But these are not your typical five minute video type courses. Explain this. And then because it’s significant, what you what you’ve done there,
Jeff Lem 40:50
yeah, the program is broken out into four modules, you know, modules one through four, and, and each module has about, I’d say about anywhere between 10 to 12 chapters, each chapter is anywhere from 20 to 50 pages in length. Reading of each module requires a major project at the end of an each module, there’s a series of assignments, and then when you’ve done all four modules, which is typically about 48 chapters, you know, 18 to about 40 assignments, and for major projects, you get to write a final exam three hours and if you pass you get a P am a professional materials management.
So it’s very detailed. David, I knew a lot in the warehousing business before I started these courses about six years ago. And when I came through it, I went wow, I know, I know some pretty crazy stuff that would when you qoodles In the true pursuit game, but by and large, you you develop a certain level of confidence.
Yeah, about anything pertaining warehousing because we cover everything from you know, obviously, how to design a warehouse, what kind of material handling equipment, you use it to health and safety, you know, how to do how to deploy projects, how to do time motion studies, you know, how to use statistical processing to now analyze how long a certain process should take and what’s the, you know, your confidence level, etc.
So it’s an amazing course it’s really a one of a kind of, in the world that I’ve I’ve never heard most supply chain courses, focus a lot on procurement, and rightly so. But this one really focuses on warehousing. And if you want to know the warehouse business, totally recommend it. I’m a little biased. Well, no,
Damon Pistulka 42:41
I I’m serious. When you’re talking about it. I’m like, if somebody really wants to understand warehousing, you just don’t find training like that. And it is is cool. And that’s from the material handling Society of Ontario. Correct. That’s okay, material handling Society of Ontario. So if anyone’s listening, check that out. Because if you’re in a warehousing and you want to learn a lot more, that might be a good place to go
Jeff Lem 43:05
or reach out to me and I could certainly say some, you know, yes, outline information, etc. And we’re also partnering with lift trucks. And they’re actually working to put all our course material online. And we should have the first module set up and running by the end of December. Wow. Very just putting the last finishing touches and it’s, it’s been quite an endeavor because everything was, you know, binders and paper. Yeah, we now it’s all digitized with videos, voiceovers quizzes. So it’s, it’s a proper, you no more monitoring content as
Damon Pistulka 43:38
well. That’s incredible. That’s incredible, man. Because it it is I mean, when you look at it, it’s it’s like yeah, you can learn warehouse by working in warehouse management, warehouse and other things. But if you really want to take it to the next level and be a warehouse professional, these are the kinds of resources you can use to really make that difference.
And like you said, you may not need to know it all but but having a good rounded knowledge of of the the warehouse and how to operate and all the other things you talked about there is definitely beneficial. Oh, that’s cool. A sec. So what do you think is the next exciting thing I know everybody’s talking about supply chain, we could beat that to death forever. We don’t have enough of everything. But what do you think’s really exciting and warehousing now that you go, man, when that comes out, this is really going to be cool?
Jeff Lem 44:24
Well, that’s a great question. I mean, I have I have a passion project, you know, okay, this is a bit of my legacy. I want to leave to the industry. It’s called our smart warehouse, right. And I’m the smart warehouse that we’re working on is founded on a couple of additional technologies that I think will take the whole WMS field to the or to the next level. bought most of the messes are founded on two principles, technologies, barcoding and wireless. Those are great technologies for tracking boxes, right?
But a lot depends, but they’re terrible technologies for tracking people. Now back to the people think, right? I mean, the and as we all know, people move the boxes. And yes, we’re replacing people with more automation, say, but for most companies, certainly most small mid size manufacturers and distributors said, people are going to be your most flexible resource and able resource to help you get through the boxes.
So the question is, how do we make those people more efficient. And this is where this new set of technologies that we’re working on currently, one was AI, is we’re gonna start by modeling your best workers in your facility. Right, so now we’re going to build a persona, which is your best pickers your best put away guys.
And from that, I’m going to do something pretty crazy, which may factors have have used all their lives, the standards, benchmarks, right? I mean, I’m holding up the pen here, whoever made this pen could tell you, you know, to this to the penny, how much material went in there, how much time went into producing, but they couldn’t tell you how much time it took to move this pen around. Right? And material handling processes, you know, account for up to 30% of the products costs, you take into account carrying costs and storage, etc.
So why aren’t you tracking that costs? Because you know, what? They don’t know. Right? Yeah. So the next generation of WMS systems will have the ability to actually create standards around what material movements should, how long should it take. And to help with that, we’re not only going to use AI to help learn, or do machine learning around what your standards should be. But we’re also going to actually be able to start tracking people as they move through the facility. So think about internal GPS.
So we’re gonna be able to do things like wayfinding in a facility, you know, I mean, that in a large, 250,000 square foot facility, it’s very easy to get lost, and plan your routes, right? We’re also going to use that indoor position technology to track who’s where, and then be able to create, do what be called tasks, assignments, and they’ll assign tasks to the appropriate person based on their location and availability. How’s that for a crazy idea?
Damon Pistulka 47:14
Right? That’s good. That’s incredible, man. Yeah, so
Jeff Lem 47:17
So we’re coming up with a number of different technologies to support that. And then And then basically allow us to not only model after your best workers, do Wayfinding, but then assign tasks to people who are available to do those tasks. So a lot of companies now, especially in the main factory, have their material handlers who are siloed. Yeah, so they have, say, a group of 15 material handlers. And they’re typically assigned to a few machine areas. And they and their job is to basically keep those machines running or keep those operators busy with by supplying the materials. So do what we call drive bys. Do you need it how you doing etc, right?
Well, what will happen is that you end up having other guys who end up running late or getting busy, somebody has a mechanical or somebody doesn’t has an upset stomach, and all sudden you now shorter guy. But guess what the other guys can’t help them because they don’t know what’s going on. Yeah, so what our tech will do is that instead of having the solid workers, we’re going to be able to go back to the future, which is how it used to be before they they want sell, and have teams of workers, right now be all dynamically flex and create these teams assign tasks to the appropriate people who are available. I mean, yeah, makes total sense, right?
So we’re gonna be rolling out that as a pilot very soon, at a tier one parts, auto parts manufacturer, where exactly having that problem they’re trying to, they’re adding additional lines, because they finally got some chips. And now their production, they’re going to be producing, you know, another, I think their goal is to do support the production of 900 cars a day. And they’ve added more lines, but they don’t want to add more material handlers. Right, yeah, but they know their silos. So what they want to do is break that mold, and have them work as a team. And so now they’ll be able to, you know, work together to basically support an entire group of machines and equipment.
So that’s the future. It’s a more highly called aware warehouse or facility, raw material handling. And it’s based on standards so that you can scale your warehouse as well schedule your work based on all the potential movements that are going to happen in a day and then track them, they see how they’re doing. And that’s one thing automotive parts manufacturers love to do. Is they love to track stuff. I mean, like I said, they can tell you down to the penny, what a cost makes up but they have no idea what it costs to move stuff.
Damon Pistulka 49:49
Wow. That’s super cool. That’s super cool. And when you think about it from the business perspective, you know, and and it is you’re there is a lot of wasted labor. in that in that part of your because they’ve, you know, you’ve lean manufactured all out of your work centers, you’ve lead manufacture, even in your shipping and receiving and these other areas, but that movement is still largely based on the person just going to go from here to there, they’re gonna take it whatever they want. And if you think about, like you said, in a large warehouse, 250,000 square foot warehouse or something, even some of these even bigger you go, I can get lost, I can take not an efficient route.
And then when you talk about the team aspect of this, if I’m in manufacturing setting where we’ve got 1015 50 people, whatever it is, that are supplying all these ever areas, so he said, If somebody, somebody gets sick, a forklift breaks down, something happens and someone else, it just gets notified on their on their device, that it’s a you need to go take this from there to there. That’s awesome. Because you’re going to be the efficiency in that’s going to go up dramatically. Yeah, I
Jeff Lem 51:00
mean, right now somebody gets sick or have mechanical, it’s, it becomes 911, the supervisor gets called the operator machine operator goes, Hey, Joe is in there. I haven’t seen him around, he hasn’t done is done is run, and the supervisor starts looking for Joe. And before I know, he’s he’s driving on lift truck himself.
Yeah, material to light. So it’s a very stressful environment. And so what we’re trying to do is, is take these little bumps and just just roll with them, which is, which is all everybody wants, he wants a system that can you know, basically self heal, and basically flex as required. And so that’s a bit of my passion project. We, we’ve got a lot of, you know, we’re having a lot of fun doing it. And oh, I bet he’s we
Damon Pistulka 51:48
go that’s for sure. Yeah. Well, we’ll keep us updated on that. Jeff. It’s, it’s, it’s so awesome. Like, we could talk a lot longer because like you said, some people would think warehouses and inventory is boring, but man, it is critical to business and and you’ve shown us that today with your with just a bit you shared about inventory accuracy. And it’s so exciting about your your warehouse management software and your system that you have and the new developments that you’re having. So thanks so much for being here today, Jeff. Yeah, I
Jeff Lem 52:19
really enjoyed it today. And you know, I love this topic at the fight. Somebody shared some saved views. It’s, it’s great. Yeah. I call the talk to my wife or kids about it.
Damon Pistulka 52:31
Well, they, they look at us kind of funny if we talk about some of this stuff, don’t they? It, but it’s good. It’s good. So thanks so much for being here. Today. We’ve been talking with Jim Jeff lamb about inventory accuracy. Now, Jeff, your company is called portable intelligence. And your software system is called RF plus Rf plus.
Alright, so if anyone’s looking for that, they can do that. And if you can, you can connect with Jeff on LinkedIn as well. But thanks so much for being here. Thanks, everyone, for listening tonight. I hope you enjoyed this as much as I did. And we’ll be back again after Thanksgiving with with some more guests on the faces of business. Thanks again, Jeff.
Jeff Lem 53:13
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