How Inventory by Exception Can Accelerate Your Inventory Process
Organizational transparency and strong data collection is becoming increasingly necessary for businesses and organizations. Entities must manage their physical assets throughout their life-cycle in order to remain competitive and adhere to increasingly strict regulations.
An important part of asset management is performing inventory. Inventory allows the organization to assess potential needs, gaps in business processes, and account for asset loss.
There are several ways to conduct inventory, each with their own benefits and draw-backs.
In this blog post, we will primarily be focusing on inventory by exception.
This article will cover:
- What Inventory by Exception is
- Important considerations for performing Inventory by Exception
- The benefits of Inventory by Exception
- How inventory solutions help implementation
What is Inventory by Exception?
When talking about conducting an inventory, many property professionals may only consider a wall-to-wall inventory, where every asset requires a physical verification during a set time frame.
Unlike a wall-to-wall inventory, an inventory by exception counts items that have been “touched” recently as already inventoried. A touch means the asset has been interacted with, which verifies that it is actually there. After a certain time period, manual inventory is performed for all assets that have not already been “touched.”
A touch point for inventory by exception can be based on many different activities. Below is a snapshot of activities which may qualify as a “touch.”
- Asset was first added as Active asset
- Asset moved to a different Site/Location/Sublocation
- Asset move to a different Department
- Maintenance activity is performed
- Calibration activity is performed
- Asset Checked Out to a custodian
- Asset Checked Back In
- A Property Pass is generated on the asset
- A shipment document (packing slip or DD1149) is generated on the asset
- Barcode label or number of the asset is updated
- For items with a quantity greater than one, the quantity of the asset is updated
Considerations when implementing
Before considering a physical inventory method, it’s extremely important to take into account the current policies and procedures of your organization. Questions such as what items must be inventoried, how often do inventories need to occur, and why are we conducting an inventory are important to support these policies.
When implementing inventory by exception, it’s vital to define what constitutes a touch. Is it maintenance or calibration? Does an asset transfer count? Defining this will prevent future confusion and possible missing assets.
An inventory by exception could exclude assets that have been “touched” and simply allow you to go out in the field to identify the assets that are still “missing” at that point.
The benefits of Inventory by Exception
Wall-to-wall inventories can be an excruciatingly painful process to coordinate and run. If the inventory is the full responsibility of the property management group, a full wall-to-wall inventory becomes a long, drawn-out process which can take months to finish.
For situations where the inventory process is decentralized and there are property custodians responsible to inventory the assets assigned to them, it can be difficult to have these folks focus on this task. After all, this is not their day-to-day job.
An inventory by exception can alleviate some of these stressors.
Performing inventory by exception cuts down on the number of assets requiring an inventory audit during a specific cycle. This can greatly increase the productivity of staff who are tasked with performing the inventory. It will also decrease the time required for inventory.
How inventory solutions can help
Many organizations use outdated methods for conducting inventories. Technology is always at our fingertips, so why not use it to automate the inventory process?
There are a number of areas where software will make performing inventory more accurate and efficient.
Accurate asset records
The starting point for every inventory lives within an asset management database.
An asset management solution should contain workflows with the “touch” points listed above. When a worker performs any of these tasks, the software will update the asset history. This, in turn, will update the last recorded “touch” point for these assets and mark the asset as inventoried.
By filtering these assets out when preparing for an inventory audit, the list of assets requiring audit will be significantly cut, and this new list of assets will be the starting point for your inventory.
Now that you have your list of assets, what’s next?
Many solutions have an app which runs locally on a mobile device. A mobile inventory app is extremely helpful; often there is no internet connectivity in areas where inventory is conducted, such as a large warehouse or government-secured location.
Locally installed applications will batch store the inventory activity so that data is not lost if the device is disconnected from a network. When connectivity is restored, the data is synchronized to the asset management system.
When utilizing a software solution to aid in the inventory process, you may want to supplement your solution with hardware. Some hardware options to consider are ruggedized scanners, tablets, and smartphones.
Many organizations have used dedicated scanning devices built to withstand heavy usage and drops to conduct inventory; however, often times the price of these devices becomes cost prohibitive.
There may be a solution to cost-prohibitive hardware. Nowadays, everyone carries a smartphone around. A smartphone and a software app, available to download from the Google Play or Apple Apps Store, provides the ability to conduct inventory from a device in your pocket.
A mobile inventory app either uses the camera as a barcode reader or a Bluetooth-enabled scanner. This solution provides all of the power of your phone with little to no overhead costs for hardware.
For property professionals, conducting an inventory audit can be a daunting task. By combining an inventory by exception strategy with a software solution, the road to completing inventory becomes much clearer, more accurate, and less time-consuming.
We all wear many hats and juggle many tasks in our day-to-day work. The less time spent conducting and reconciling an inventory can be time spent on other important tasks.
If you’re interested in seeing how a software solution could help you spend less time performing inventory, go here to request a free demo of eQuip! asset management software. Our asset management experts would be happy to see if eQuip! might be the right fit for you.