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The company, which is based in Pinneberg near Hamburg, has continuously built upon its share of the market in recent years. According to Mr Metzger, the company’s Managing Director, the main reason behind COG’s expansion is its high level of readiness for delivery across the entire range. The items are stored on a surface area of 2,600 square metres. The storage space is divided “into an automatic small parts warehouse with three lanes, around 4,200 shelf spaces and 20,000 sectors, as well as a manual warehouse with around 9,000 shelves in 55,400 sectors,” explained Steffen Buchholtz, the Logistics Manager.
Rubber products’ relatively low goods value and minimal space requirements make for acceptable storage costs. But up until now, the legally prescribed inventory required COG to invest an enormous amount of time and money. Given the huge quantities of inventory items, COG used the continuous inventory method. “Using that method, we still had staff counting just like they would have done 50 years ago. So it was clear to us for a long time that we needed to streamline the inventory procedure,” recalled Andreas Dunst, who is responsible for accounting.
The backdrop to this situation is a German law that significantly simplifies the inventory process: Paragraph 241 of the German Commercial Code (HGB) allows companies to carry out sample inventories. The phenomenon that roughly 20% of all stock items represent 60 to 95% of the stock value forms the basis of this. When preparing the inventory, the stock must therefore be determined based on random samples. One prerequisite is that the methods used must comply with the generally accepted accounting principles (GAAP). The quality of an inventory prepared in this way is tantamount to the informational value of a conventional inventory. This allows companies to cut their inventory expenditure by up to 95%.
A further prerequisite is that an IT-based, reliable inventory management system is used within the company. COG uses the “Ci-log” warehouse management software in combination with the “Pro Alpha” ERP system. The warehouse should also have at least 1,000 items in stock. The differences between book values and count values must be within the permissible limits. In an automatic warehouse, the error rate is often so low that even a so-called “sequential test” can be used. In this regard,a totally precise result can be achieved by counting just 30 items in extreme cases. At COG, the stocks proved to be so exact that the sequential test could be used both in the automatic warehouse and in the manual one too. The impact is huge: COG was initially expecting the counting work to reduce from 44,000 to 2,500 items. The sequential test slashed this value again to less than 100 items.
But it’s not just the warehouse that has to meet certain conditions; the inventory software has to as well. Above all, the program used must be certified by an accounting firm. Only a few suppliers on the limited inventory software market satisfy this condition – and Stat Control GmbH from Hamburg is one of them. The first inventory took place in October after the “Staseq” software was installed in September. The inventory itself was carried out without incident: “We load the product inventory – which would have to be provided according to Pro Alpha’s specifications – in Staseq. The inventory software then calculates a list of samples with items that have to be counted manually. When finishing up, we only had to count 79 units,” explained Mr Dunst. The first inventory performed using the new method was completed within just six hours.