„Half a day is more than enough.“
Just a few years ago, René Seidt would have been labelled a fantasist for this assessment of the expenditure required for the company‘s inventory. And no wonder – after all, the warehouse manager of Würth Industrie Service GmbH & Co. KG in the spa town of Bad Mergentheim is responsible for no fewer than 280,000 storage positions. The former barracks site, covering around 122 hectares, now accommodates two high-bay warehouses, a shuttle warehouse and six manual warehouses, which are primarily used for the storage and retrieval of socalled C parts.
Since 2014, it really does take just three employees to perform the company‘s annual inventory in a mere four hours – and all achieved on a normal working day without disrupting operations. „We simply can‘t afford to stop everything for the purpose of stocktaking“ explained Seidt, who has seen his fair share of different inventory methods during his many years with Würth. Between 1999 and 2003, the inventory process of full counts in Bad Mergentheim still required up to 200 employees over the course of two to four weekends.
Due to its excessive demands on manpower and time, this method was replaced in 2004 by a permanent inventory system, made possible by the company‘s migration to SAP. As per § 241 (2) of the German Commercial Code (HGB), this method requires a physical inventory to be carried out at least once a year on any given day and involves a comparison of target and actual stocks. By 2009, however, the number of storage positions had increased so exponentially that compliance with this provision could no longer be guaranteed.
„The last thing we wanted to do was return to a full-count system, so the sample inventory method seemed the ideal solution“,, recalled Eva Borkenhagen, Deputy Head of Finance. Since the 1970s, sampling as per § 241 (1) of the German Commercial Code (HGB) has been recognised as an approved inventory method. This means that no physical inventory is required if mathematical/statistical methods allow the determination of stock according to type, quantity and value on the basis of samples.
The IT team of Würth Industrie Service initially developed its own software for this purpose. This programme determined a daily sample of around 25 storage positions from the overall quantity of stock using an extrapolation method, which was then physically checked by staff during the course of their shift using paper lists.
„This type of inventory required some three to four hours a day, which represented a significant time saving compared to the previous full count“,
said Eva Borkenhagen.
However, at the urging of its auditors, Ernst & Young, the proprietary-developed sample inventory software was dispensed with in 2014. „Unfortunately, our solution was not certified by an auditing company, and obtaining the required certification would have involved a lot of time and money“, explained Christian Heckmann.
The business IT specialist at Würth Industrie Service is involved with the development of a proprietary warehouse management system KMS (Kanban Management System). Heckmann also helps his colleagues in the Finance and Warehousing department with the selection and implementation of new inventory software.
„In our search for a certified sample inventory system, we compared four providers and Stat Control GmbH quickly emerged as the overall favourite“, said Eva Borkenhagen.
Several aspects of the Hamburg software and consultancy firm were compelling: „From the very outset, we had a dedicated service partner who was available around the clock via mobile phone in the event of any queries“, said Heckmann. Another benefit was the high level of professional competence, acquired through years of focussing exclusively on statistic methods for inventories and inventory controls since the company‘s establishment in 1991. Against this backdrop, Stat Control was able to offer solutions for all methods of sample inventory, which includes extrapolation methods and the sequential test. The sequential test is suitable for storage areas with a high level of inventory reliability and is considered the crème de la crème of approved inventory methods: using this method, as few as 30 random samples are necessary to perform an inventory of an entire warehouse.
„We were very keen to find out if the sequential test would meet our requirements“, said warehouse manager Seidt, who arranged for installation of the Staseq software. The first test instantly showed that the quality of the inventory was sufficiently high and that using this method would enable us to perform the annual inventory in just a few hours.
The process is divided into four steps: firstly, the current stock level is transferred from KMS to Staseq. This is followed by selecting the quantity of positions to be counted. To date, Würth Industrie Service has always opted for the legally prescribed minimum value of 30 although it may be advisable to opt for a larger quantity, depending on stock accuracy. Based on this quantity, Staseq determines the count list. In the final step, the positions to be counted are then blocked in KMS to prevent any further entries. This is yet another advantage of Stat Control, the fact that it can be implemented without disrupting daily operations.
Once these four steps have been performed, the actual counting process can begin. If there are any discrepancies between target and actual quantity for the 30 selected random samples, Staseq generates a second count list with additional samples. If the numbers match on the second count, the result is deemed within the tolerance range and the inventory can be concluded. „We‘re normally done by lunchtime“, enthused Eva Borkenhagen, who carries out the counting process once a year together with René Seidt and Christian Heckmann under the watchful eye of an auditor from Ernst & Young.
Summary: thanks to the sequential test from Stat Control, Würth Industrie Service has reduced the time required to perform its sample inventory from 700 to a mere 4 hours. This is a reduction of more than 99 percent. But it doesn‘t stop there: next time round, Eva Borkenhagen is aiming to reduce this time still further by increasing the number of random samples to 32. By doing so, any discrepancy in figures in a single count would be within the legally prescribed tolerance range and there would be no need for a second count. Who knows, maybe next time the inventory will already be done and dusted by breakfast!
With a specialist product range of more than 1,000,000 items, Würth Industrie Service GmbH & Co. KG is the C-parts partner for the manufacturing industry. Operating under the brand „CPS® – C-Parts Solutions“, the company offers industrial manufacturing customers customised, logistical procurement and supply concepts, such as scanner-supported rack systems, automated electronic ordering systems and just-in-time supply using Kanban bin systems. Customers benefit from direct delivery to their production lines.
Würth Industrie Service was founded on 13 January 1999 as a result of the spin-off of the Industry Division from Adolf Würth GmbH & Co. KG in Künzelsau, Germany. It operates as an independent subsidiary within the Würth Group and now boasts more than 1,420 employees at its premises in Bad Mergentheim on the former site of the „Deutschordenskaserne” barracks, which offers ample room for further expansion.