By Glenn Saunders
I.B.W.A. is an acronym for Inventory by Walking Around. This is to describe the process where an inventory manager or warehouse employee walks around the warehouse to determine quantity and location of inventory items. Another term used to describe this inventory management methodology is “Visual Inventory”. As far as I know, the term IBWA was coined by my colleague, Britt Lowry. If someone has heard it elsewhere I believe it to be a colloquial saying among APICS (American of Production and Inventory Control Society) professionals.
An example of a visual inventory system (and its drawbacks), that I witnessed, occurred while attending a production planning session. The production planning group was discussing an unforeseen delay in production. The staff on the manufacturing floor had to halt production because not all of the parts needed were in inventory. After the production meeting concluded, a group was walking around the warehouse whereupon the parts in need were discovered. The inventory in question had been quarantined due to minor defect. While it was correct to be in quarantine, most of the product was still usable for production purposes. The production order only required about 75% of the product in quarantine. The good parts of the “quarantined” inventory could more than meet the production needs. The inventory had been properly quarantined, however there was no systematic way to know that the item was physically at the warehouse. In this instance, having a system of record would have prevented the delay in completing the production order.
Many customers start with an inventory system where just a few people are aware of all of the inventory items and where they go in the warehouse. Simply walking around a warehouse can tell you how much inventory you have of a given item. Over time, of course, additional items are brought in, items are phased out and new requirements are incorporated to the warehouse. When I was in high school, I was working in inventory control. During that time, I knew how many boxes of a certain item a full pallet could hold as well as how many items were in a given level on the pallet. Visual inventory makes it nice and easy when doing a cycle count or full inventory, but that should be for validation of system processes, not used as your system of record for inventory. Listed below are a few of the issues IBWA can cause:
- Reliance on tribal or individual knowledge for inventory quantities and location. All information on inventory is held within an individual or small group of individuals.
- Lack of a true system of record for inventory (Jim the inventory manager does not count as a system).
- No collaboration with shifts and other people. If one person moves a piece of inventory without recording the movement, the entire IBWA system can quickly become disrupted and inventory can become lost resulting in unnecessary re-orders.
- Severe risk associated with the inventory workforce. What would happen if your inventory manager left the company?
Deployment of a business and inventory management system can alleviate the risks and business issues created by IBWA. A simple, easy to use, mobile enabled inventory management system makes it easy for inventory personnel to update inventory as it is received, sold, transferred or moved. Real time insight into inventory transfers helps improve production planning, understand inventory carrying cost and provides insight into what products are selling and how quickly. Armed with this information, business and department owners can make better business decisions and utilize existing inventory more effectively.