Sunday, November 29, 2009

A Better Backspace Button

When I was listing some of the various factors that affect one's APH in "The Stats You Keep", one factor that I probably should've mentioned but didn't was the quality of the equipment being used when performing a count. In regards to the equipment, one factor has to be the machine itself, the device actually used to count with. When I read the entire "History of Inventory" article by Jack Henry, one of the most interesting parts of the article for me was the description of how companies counted inventories back in the early days of external services. According to the article back in the late 50's and early 60's RGIS were counting inventories by entering counts into "fifty pound rotary calculators" mounted on shopping carts. Naturally these calculators required an electrical source, so they were constantly plugged in using 100-ft extension cords.


Well needless to say, inventory counting technology has come a long way since then, and has grow along side the technology advancements in other walks of life. I've had the opportunity to use several different machines over the years, below is a list of the ones that I've used, in order of which ones that I have liked the most.

DC-5




There are actually a number of different machines in the "DC" series, I've only had the chance to use the DC-5 machine. The numeric keys always felt good when I used this machine, the keyboard desgin basically followed older machines like the ICAL where you had your basic 10-key design, with a multiplication key to the left and the equals key to the right, that allowed the input of various quantities under the same price. One could also utilitize chain multiplication, where you can enter in quantities multiplied together. (For instance once could type in 1.59 X 12 X 30, instead of doing 1.59 and then hitting "12 =" 30 times in a row.) Above the numeric keys where function keys that performed various tasks. One was the search function that allowed one to review their keystrokes on their machines. One could also delete erroneous entries. There were also function keys to separate totals by sections and categories. The most interesting and useful feature of this machine was that it allowed you to print off reports straight from the machine itself. By simply attaching the DC-5 to a printer, one could print off totals at a given point in time, or print off keystoke detail for any section or category that one wanted to review. For the keystroke details a report could be done for any section or category, so one could zero in on a certain sections of the inventory that might call for counts to be reviewed. Also the DC-5 could print from any computer that had the proper ports, so if your printer went down, there was the possiblity that you could plug the DC-5 into the store's printer and still print off reports. The machine's ability to essentially generate reports without a laptop and to print from multitude of printers, that made it one of the more interesting machines I've ever used. Other features include a LCD screen that could light up, when counting in the dark, and an off switch that was tucked away between the numeric keys, making it hard to turn off by accident. And even if you did all the data would still be retained. The only way to delete the data would be to choose this option on the menu options, and the chances of doing this by accident were pretty slim. The machine did malfunction on me once in a store, and unforuntely I lost my inventory data. However, I did close to 250 stores with this machine counting stores by myself, and this only happened once. So the machine was still pretty durable. The power mangement for this machine was very good as well, it ran on 4 "C" batteries that would last for weeks, and consider that I was counting 5 stores a week by myself, in some stores I would be using that machine for 6 to 7 hours a day. There really wasn't anything about this machine that I could truly hate. The machine also had a port for scanning capabilities (which I never needed to use) and there currently is a wireless version of the DC-5, which based on the pictures seem to look exactly like the non-wireless version. This is a good machine.


RGIS' "A" Series




These were the machines, RGIS were using when I first starting counting inventories, and they kept using them for another 8 or 9 years after that. These were fairly well designed machines. The numberic keys felt great for handkeying, and the machine also included ports for scanners and for transporting data to the computer. These machines seemed more designed for collecting data, then for multiplying things out like a calculator. Chain multiplication was not possible when in a store program. Store programs would require entries for several different menu fields, the ones most often used were F5 (usually for price) and F6 (quantities). Other functions would normally be F1 for areas, and F3 or F4 for barcodes when doing scanning inventories, F2 in most cases were used for subcategories like sections or departments. The use of the F2, F3, and F4 though was generally not very constant. The search functionality of this machine was for the most part equal to that of the DC-5, but of course you could only search through counts that were still in your machine. The one odd thing about this machine was the presense of the "6=" and "6K" keys. Other machines essesntially had a "6K" key which kept the price constant allowing you to keep inputing quantities. The "6=" key did not keep the prices constant, it looped back to the previous menu and required you to input the next price. Also this key was located where the 6K key would've been on other machines like the DC-5 or the ICAL, so using this machines after time spent with other machines was a little bit disconcerning because of those keys. Some machines also included a section for the entry of alpha characters, and with these machines you could almost do any type of inventory. The fact that these machines could be used for a variety of different inventories. weather to capture dollars, barcodes, or alpha-numeric codes was what I liked most about these machines. The only real downside to these was that they required the use of 6 AA bateries, and batteries did have to be replaced often. Also data could only be transferred by the use of cables, this included times when store downloads had to be sent to the machines. Downloading a whole bunch of machines only with cables was time consuming for certain clients. Another weird thing about these machines was that when you transmit data to a computer, you literally "send" it, it was not retained in the original machine after it was sent. All in all these were good machines, the few weaknesses it had could still be worked around effectively enough, to were they weren't really an issue at all.


Quantum's QIC




Like most other machines, this machine has the general 10-key design, with your mulitiplication key to the left and the equals key to the right. But one of the things I noticed when I first started using this machine was that the function keys on the side of the numberic keys were literally right on the side of the numeric keys with no space in between. With the "A" Series machines and DC-5, there was some space between the multiplication key and the "1" key, so I found the lack of space between these keys a little disconcerning, but I was able to adjust to that quickly, so it really wasn't much of an issue. Like the DC-5, one could do chain multiplication. The machine also had function keys at the top, but for financial counts they never got used, what was weird though was that the equals key was used for both entering quantities and for entering section numbers, to breakout counts. One was required to hit the clear key (or I think it was actually the "No" key) to back up to the previous menu and enter in a different section. Hitting the "No" key accidently may mean instead of inputing $1.29 X 3 in your machine, you may end up counting merchandise in section 1293, and hitting the multiplication key wouldn't stop you from doing this. If you're lucky enough to catch this early enough you could correct it fairly easily, if not you may get to the end of the inventory, and wind up trying to find where you counted something at $1.29. I prefer the design of the DC-5 and the "A" series where you have one key to input the section and another key to input the quantities, plus those machines will alarm at you if you hit the wrong function key as well. The search utility on the QIC though is one of the machine's best features, instead of hitting a button to bring up the search utility, your keystrokes are automatically generated as you count on the LCD screen, so you can look at them at any time. Not only that but the LCD screen for the QIC is far bigger than the other machines, in fact the LCD screen on the "A" series or DC-5 are so small that usually you can only see one entry at a time, even when you do search through your keystokes, although one downside to the search function is that one can only look at keystrokes in batches. Meaning that one can see the keystokes for section 1000 and then for section 1005, and then for section 1010 separately, one does not get a sense of the order in which these areas where done in. The keystoke detail for the DC-5 works the same way, but for the RGIS machines one can see keystokes as one long continuous string, so you not only see all the prices and quantities, but also when you inputted your section numbers, department numbers and so forth, you can also see the order in which you did your sections. When dealing with the mysterious section 1293, the RGIS model would be far easier to use, with section 1293 the issue isn't going to be the individual keystokes, the issue is finding out which area it should go into.

However, what I hated about these machines the most was the power management feature. Instead of running on batteries, the QIC ran on an internal power source. The problem with this was that the machines had to recharged daily, and sometimes you may even have to charge the machine up between your first and second stores, just so you would have enough juice to last through the second store. And if you did run out of power, your choices were either to insert batteries into the machine (which for some reason never really worked all that well for me), or to stop counting and spend time charging your machine up to where you can count some more. There were times during an inventory, where I would have to stop counting, go out to my car and charge my machine up using my car charger, because it was the only charger I had. I also remember several inventories were I would be counting in the back office at the end of the day, and I would literally have to count with the machine plugged into the wall in order to have enough power to finish. Having to charge these machines up all the time was to say the least very annoying. I would much rather use a DC-5 where I could toss in a few batteries and not worry about my power for weeks. The QIC also wouldn't rank high on the durability scale either, I knew a guy in another market, who went through 3 different QIC's in a span of 2 months because they would keep malfunctioning on him. When the machines worked and where fully charged they were good machines, but the power management and their durability are enough to keep them from being my favorite.


RGIS' RM-1




These are the machines that RGIS have used since they stopped using the "A" series. If you look at the pictures of all the other machines, you'll see one main similarity among them all, and that is they all have the same basic 10-key design for the numberic keys with the same function keys to the left and right of the main 10-key pad. The RM-1 is first machine I've seen that has messed with this design. They have essentially taken all the function keys that used to be off to the side and shoved them under the numberic keys. On the RM-1, the "multiplication" key is actually under the numberic keys instead of to the left of the "1" key, furthermore the quantities or "6K" key is under the numberic keys as well. This allows the machine to have a thinner design, which I suppose makes it easier for holding in your hand. But this benefit is slight when compared to the keyboard design which is far more troublesome for handkeying. A few co-workers of mine at RGIS have flat out said that you can't handkey with these machines, I have to agree with them on this. The keys just don't feel right on this machine. The machine has the button for entering quantities at the top of the keyboard, essentially the "6=" key, but using this just feels too unnatural, and reaching for keys below the "1" or the "3" still doesn't quite feel right either. The button at the top is also used for entering sections, departments and other breakout numbers, but unlike the QIC, hitting the multiplication key when you're supposed to hit the quantity key will cause the machine to alarm, so there's little risk of a section 1293. As for the other features, the search utility is slighty better than it was on the "A" series, and you still can't do chain multiplication. The best improvements over the "A" series are that these machines have built in lasers for scanning which can be triggered using buttons on the side, but of course RGIS encourages it's counters to use finger lasers that need to be plugged into the machines, just like they were in the past. The other big improvement is the wireless capability. These machines can transmit the data to the main computer wirelessly, which allows reports to be generated far quicker then in the days when data had to be "physically" transported to the laptop. The wireless feature is pretty valuable for RGIS when you consider that they do a lot of big stores, that require a large number of counters, but did this wireless capability also have to include unnecessarily toying with the main keyboard design? Seeing how there's a wireless DC-5 machine with the exact same keyboard design as the orginial, I'm thinking "No". The power mangement is also better than the "A" series, they now use built in batteries that can get recharged, in fact this may be the best power management system I've seen yet, as for the durability however these machines do have the tendency to freeze up ever once in awhile, but for the most part work fairly well. One annoyance though is that sometimes the machine has trouble sending data wirelessly. If you're standing too far away from the antenna, it's almost impossible to transmit, and this either requiers transmitting to a flash drive, or walking a little closer. There have been numerous stores where I literally have to walk towards the antenna in order to transmit. There are still some kinks to work out with the wireless functionality. But still the handkeying aspect is what bothers me the most. Thankfully most of the stores that RGIS does these days requires scanning. In an auto-scan environment the RM-1's aren't really that annoying, but in a financial count that requires nothing but handkeying, this is the last machine I would ever want to use.


ICAL





Oh, yes the good old ICAL, the perverbial dinosaur of inventory counting machines. In the brocheure that I have for the ICAL it shows a picture of the ICAL 150, attached to a computer, that looks exactly like the one from the second season of the TV show "Lost" when they had to press the button every 108 minutes. I also love the "floppy" disk in the photo which gives you an indication of how old this machine is. But what can I say about the 100R, well it has the same 10-key design that has been used for other machines (Except the RM-1, of course), it allows you to store your running totals into sections for breaking out totals. It also allows you to use chain multiplication. The machine runs on 2 9-Volt batteries that actually will last a long time. The machine utlilizes a delibrate keying sequence to turn on and off, (I've forgotten what that sequence is). Of course if by chance you turn it off then you've lost all your data. It won't retain the totals like other machines will. Also the search utility only allows you to see the last 4 extensions that you've keyed in, but nothing beyond that. Another thing of note is that the ICAL-100R is a self-contained unit. There are no ports on this machine to communicate to a computer or even a printer. If you want the totals transferred from the ICAL to a computer, you have to do it by hand. Essetinally this is just a large high grade calculator. Granted it's not a bad machine to handkey with once you get used to it, personally I'd rather handkey with this then with the RM-1. But the real weaknesses here is in the search utility, only being able to look at the last 4 extensions, is not very useful at all. If you make a mistake on an ICAL, generally your only option is to do a recount. With no way to transmit data to a computer, and no real way to view one's keystokes, there simply isn't any real alternative. There's less of a safety net if you screw up with an ICAL, so for this reason, I'll rank it last.


It seems that each machines has it's own little quirks that requires certain behaviors when one uses them. With the "A" series it was trying not to use the "6=" key. With the QIC, I would have to review all my sections periodically to make sure I wasn't inputing any wrong sections. With the RM-1 I find myself actually holding the machine in my hand more often, with it's more narrow design and a built in laser, it felt more natural to hold than other machines, where I would just let them hang from my belt. With the ICAL I find myself working a little more meticulously, and being more vigilent of possible keying mistakes. This leads me to think, does using certain machines help mold a certain counting style? What effect do all these various features have on how a counter goes about performing their job?

It's amazing to consider that there are still inventory companies today that still use ICALS to count stores. I spent time working for one called AIS. When I think back about my expereince working for them, I must admit the way they did things was far more unique than any other company I ever worked. For one working for them required a lot more paperwork. Every total you compiled on your ICAL had to be recorded on a worksheet, and that total had to be recorded to another piece of paper where it would be compared to the totals from the previous inventory. Everything was hand recorded, there were no computers, or printers involved at all. This was a sharp contrast to Quantum who never really did anything on paper. With Quantum all the counts got inputted into the QIC, which got transmitted to a laptop, which did the comparisions electronically. The QIC even stored an electronic version of the store map. Also there was a well defined process of how things were run. Counters for this company never "roamed free", they were given assignments by their supervisor, and when they were done, they reported back to their supervisor to report totals. Current to previous comparisions were very important here, because there were few other options in determining the quality of the count. If a manager thought a count might have been off, then recounts were done. Another aspect of this process is the notion of an "audit trail". When doing financial counts one would write the running total for that section on a tag and place it at the end of the shelf to mark how much we had counted up to that point. This would allow someone to see not only the cadence of how one counted a grocery aisle side, but it allowed one to break totals down into smaller numbers, so you could see how much money was on one particular shelf or natural break. Of course, for this to work one has to tag well, and of all the inventory services I've seen, this company is the best at tagging, there's no question about it. There was one client where we scan their inventory using their own scanners, even in a scanning inventory tagging was important to AIS. At one scanning store I remember my supervisor, pulling me aside and letting me know that I wasn't tagging correctly, he then proceeded to tell me how I was supposed to do it. Let me make this clear, 'he was telling me how to tag properly', this is something that would never happen at RGIS, absolutely positively never. Granted like all other inventory services, AIS did care about our overall APH, and they did want people to be productive, but productivity wasn't the only thing that they cared about. And they seemed less inclined to toss other aspects of inventory counting aside for the 'high APH at any cost' approach. People with this company weren't afraid to pull someone aside and show them the proper way to do their job, because of this I have a healthy dose of respect for AIS, these types of moments probably don't occur enough in the world of inventory counting. That being said the methodology, despite some strong points, still felt antiquated and frankly old-fashioned. Counters who are more used to 'modern' methodologies would have a difficult time working for AIS. But one of the more difficult aspects has to be the ICAL. This is not a machine you want to make a lot of mistakes with (as if there is one you do). A mistake here means a recount, nothing else. In some ways using the ICAL forces you to handkey better and more accurately than another machine would. Despite being somewhat outdated the ICAL can still force habits that actually might benefit one's ability to count. It seems that technology (or in some cases the lack of it) can play a role in developing one's style and ability. When we did those scanning audits for AIS, we used handheld devices where one simply entered in a quantity for each barcode that they scanned. The trick with these machines however was that there was no '6K' button, so you couldn't just go 3 "6K", repeatedly over and over again until you counted everything for that barcode. Without the "6K" key, I found myself actually physically counting the merchandise more, I also spent more time counting to far bigger numbers in my head then I ever would have done with RGIS. To this day I'll still find myself doing this, and I have these machines to blame for that.


To further consider the effect of technology on human behavior consider the notion of typing. The art of typing as seen a lot of changes in technology from the days of manual typewrites utilizing typebars to personal computers. One of the biggest changes has been in the correction methods used. Older methods involved using rubber erasers and correction fluid. In more recent times other methods have included correction paper, or correction ribbons used on electronic typewriters. Correcting mistakes on a manual typewriter could at times be problematic and difficult. Erasers would leave debris from both the eraser and the paper that needed to be carefully swept away, one also had to be careful not to create smudge marks. Correction fluid however could leave a visible patch of fluid when held up to the light, and also required time to dry to the paper before it could be retyped. Also both methods would probably require removing the paper from the typewriter and reloading it, so as to not get debris inside the typewriter. With these methods it seems as if the best way to deal with mistakes was to not make any. Accuracy in typing is very important when using manual typewriters, and in the mid-1900s accuracy was valued as much as speed was. Methods for correction became easier and less troublesome with electronic typewriters, until the advent of the personal computer. With the PC paper and ink have essentially been replaced by pixels of light emitting from a computer screen, and this has probably to some extent made the use of liquid paper and typewriter erasers almost obsolete. The PC has changed typing so much that today we have a different name for it 'keyboarding'. In the world of keyboarding to correct mistakes we have the Backspace Button. This allows one to just wipe a letter off the screen as if it never existed and to key in something else, making it look like we typed in it correctly all along. The Backspace Button has made correcting mistakes so ridiculously easy and effortless, one has to ask what effect this has had on the notion of accuracy. You could argue that in the era of 'keyboarding' the importance of accuracy has decreased sharply. Mainly because the cost of making a typing mistake has been reduced to almost nothing. One could make all types of mistakes, and be able to fix them with a few additional keystrokes. Mistakes are so easy to fix that prevention is no longer the best cure. Speed on the other is still desired as much as ever. It fact people may feel more willing to aim for speed knowing that they have a backspace button to save them in regards to accuracy.


I've seen this concept played out as an inventory counter. When I was still relatively new to counting I remember doing a store for RGIS that required detailed printouts on every area. The store staff would then follow behind us and review the printouts for accuracy and then inform the crew leader of corrections that needed to be made. At this store there were a couple of instances where I would fat finger a quantity, for example I would hit '56' instead of '5'. The store manager became aware that I had done this about 2 or 3 times, and instructed the crew leader to talk to me about this. When the crew leader came up to me however, she told me to keep counting the way that I was counting. She didn't want me to slow down in order to count more accurately, her attitude was that if I made a mistake like that she could fix it, and it really wasn't a problem for her. Granted the crew leader was probably a little more vigilant about spotting mistakes prior to posting the detail printouts, but other than that no adjustment needed to be made. It didn't matter that I, or anyone else for that matter, were making mistakes, because RGIS had a system that could effectively deal with these mistakes, and to correct them to make it look as if we counted it correctly all along.


Every technological advance in inventory counting from 50-pound rotary calculators to machines that can transmit data wirelessly, has had one objective in mind to increase productivity, while maintaining accuracy. But the concept of accuracy seems to take on two different forms, on one hand there's "process accuracy", how accurate one is in actual counting the merchandise initially, and there's "product accuracy", how accurate a count is at the conclusion of the count. I remember an auditor once saying to me that "It's not a mistake until you leave the store", in this case they were referring to "product accuracy". Audit companies seem to focus more on the final product than on the process one takes to get there. Along with this are technological advances that seem to have enabled a sloppier counting process, much like 'keyboarding' has allowed us to type in a very error prone manner, something we could never get away with using more rudimentary equipment. It's possible to achieve a high level of "product accuracy" even when there's some suspect "process accuracy" present in a count. As a result the notion of "process accuracy" doesn't get stressed very much, and really why would an inventory service stress it at all? Speed is viewed as a more important facet during the process of counting anyway. Focusing on "process accuracy" can mean counting in a more time consuming manner. Wheather this could save more time at the end of the count is debatable.


As long as the magnitude of mistakes can be kept at a manageable level, and a service can deal with them in an efficient manner, they probably won't mind mistakes if it means that counters are productive. With more modern methodologies there's no such thing as too fast, especially when mistakes can be dealt with. Of course, in regards to mistakes, speed and accuracy are not necessarily adversarial concepts. Sometimes process accuracy is speed. Counting something once is faster than counting it twice. Nothing brings that point home more than the ICAL. If the ICAL has one redeeming value it's that it teaches you that sometimes the fastest way to count something is to do it correctly once and be done with it. With the ICAL "process accuracy" and "product accuracy" practically become one in the same, and essentially the process becomes everything.

Monday, November 16, 2009

The Stats You Keep

Years ago I was counting at an inventory for some outdoors retailer. They sold a lot of fishing, camping, hiking merchandise, a lot of basic outdoor and nature stuff. At one point near the end of inventory count I ended up counting inside this one kiosk in the fishing department. Behind the counter they had giant spools of fishing wire for us to count. Luckily for me the store had already precounted the fishing wire for us, all I had to do was scan a few barcodes on a precount sheet and enter in the quantity that the store had precounted. The store however had tons of fishing wire, and apparently each inch of fishing wire was considered a quantity unit. The precount sheet only had 4 barcodes for me to scan, but the quantities listed were ridiculously huge. The first barcode, had a quantity somewhere in the 300,000's, the second barcode was at least 100,000 "pieces", and the last 2 barcodes each had quantities in the tens of thousands. At the end I had over 500,000 pieces in my area. I filled out my area ticket with my piece count and then I saw an area manager nearby, I yelled over to her and asked what the APH goal was for that day. She said it was about 1100 pieces per hour, which at that point I showed her my area ticket displaying a half million pieces and she laughed. I responded by saying "Fishing wire". Four and a half years later, I'm attending a 2 day meeting at the corporate office of Quantum Services, who I had just started working for. One by one each person who worked at the corporate office stood up and spoke to us about working for their company. I don't remember a lot of the stuff that was said, though there were a few good speakers. One person I do remember talked about the concept of productivity, at one point he utterred the phrase "What gets measured, gets impacted". This phrase I can't forget, mainly because I find there to be a great deal of truth to it.


If you spend any amount of time working for any external inventory service, the one thing you will never get away from is the concept of the average per hour, the amount of merchandise (wheather it be pieces or money) that you can count per hour. Obvisously the APH, and the manhours spent doing the inventory are important factors in determining the cost of an inventory. In order to control the manhours spent on any inventory, the auditing company must communicate very clearly the APH goal for that inventory. It needs to put that benchmark out there for counters to attempt to achieve. It may also need to take additional measures to ensure that the APH goal is being met which may include offering an incentive for counters to reach their goal. In many cases the incentive can simply be better pay. Jack Henry warned about the dangers of this type of scenerio, on the History of Inventory link, he is quoted as saying:

"If the service has no built-in checks and balances, such as spot- counters, a pay scale based upon production is detrimental to your company. Such a system begs for mass estimation by unethical auditors"

Such systems do exist, and have been used very recently. RGIS not too long ago came up with a program called the EAPH. This program basically predetermined your "expected" APH (hence, EAPH) for each inventory, and kept track of how much your actual counting average come in above or below your EAPH. Of course the EAPH was based on only one factor and that was your pay rate. Thus at $10.00/ hr your EAPH would be at a certain level. At $10.15/hr, the EAPH would be a little higher, at $10.25/hr a little higher still and so on and so on. If you constantly counted above your EAPH you would be bumped up to a higher pay rate, if you constantly fell below your EAPH, then your pay rate would be reduced. Even though RGIS has stopped using this system, it did serve several purposes during it's implementation, one it readjusted the pay rate for people who the company probably thought were overpayed, and two it gave counters a real incentive to pull a good APH on each inventory they did. No longer was a good APH merely about making profits for some faceless corporate hotshots up in Detroit, now your APH had a financial impact on your own wallet.

In terms of inventory counting though how does one go about obtaining a number when it comes to APH? How does one purposely go out and achieve a APH of $12,000 per hour, or of 800 pieces per hour. How does one achieve this particular level of this statistic while in the act of counting a store's inventory? I suppose there are many different approaches one could take to accomplish this goal. One could attempt to master the techniques and nuances of counting like handkeying to the point where one is able to develop actual ability in terms of being able to count fast. There are people, believe it or not, who do have legitimate talent when it comes to inventory counting, and who can achieve their APH goal with their talent along with some applied effort. Counters with a great deal of experience are probably most able to do this. For others who may not have as much talent, nor the desire to put in the hard work neccessary, they have the ability to "cheat", cut corners, to utilize the techniques of profitable counting. In the most extreme cases counters will employ immoral measures like plugging number in order to achieve a good APH. When a counter "gloss counts" a box of candy, they probably have a lot of reasons for doing it, but mainly they do it in order to maintain a good APH. They know that taking the time to count it accurately would negatively affect their APH,so they try to estimate here and there to minimize the damage counting this area would do. The notion of counting candy does bring up another approach to take in order to achieve a good APH. Counters don't have to cheat in order to reach their APH goal, as my "Fishing wire" example proves sometimes a good APH isn't about how you count, as much as it is about what you count.

If you tried to think about all the factors that might effect a person's APH, there could be literally dozens of different things that play into what your APH eventually becomes at the end of the count. Below is a few of the more common factors.

--One's talent, ability and work ethic
Even if we were able to keep all other factors constant, or possibly negliable, the fact of the matter is that invariably some people are going to count faster than others. Counting at the core still requires some physical ability to do the work, and some people are just going to be more adapt at performing the work than others. Apart from the notions of ability, there's also the aspect of one's work ethic, some people are more willing to put in the work that the job demands and this can affect one's APH to some degree. No matter what everyone's APH eventually becomes, one has to consider that not all counters are created equal.

--One's Experience
Apart from the basic natural ability at the job, one's experience or accumulated knowledge can affect APH. When counting a grocery store for the first time, one might not very fast due to being unfamiliar with the merchandise, however by the time you've done hundreds of grocery stores, counting the merchandise offers few challenges that one hasn't already seen before. Over time one will learn the 'tricks of the trade' if you will and find ways to deal with counting certain sections of the store. The experience factor can also be related to the way one is able to use the counting equipment, being comfortable with a counting machine and knowing how to use it can certainly affect one's APH. Becoming a fast counter often doesn't happen overnight, in many cases it occurs over a long time and alot of stores.

--One's physical and mental state of mind
Ultimately you would want counters to be 100% healthy, but most of the time this isn't the case. When you consider that this job at times can involve handkeying on a counting machine for hours at a time, incidences of carpel tunnel are not foreign to inventory counting. Not to mention that inventory counting is essentially 'field work", it's going to involve a lot of standing, strecthing, bending over, sitting down, and so forth and the body does incur some punishment from time to time. As for the mental side, well I can't say from experience that everybody who counts inventories, is happy and content. It's hard work, for very little pay, and little respect, the mood and mindset of counters is not always going to be positive, and this can certainly affect the way they work. It should also be mentioned that sometimes this job requires working some insane hours, I've worked plenty of day shifts following night shifts and the lack of sleep in between stores can certainly be a factor towards APH.

--The sections of the store one winds up counting
The "Fishing Wire" story is a great, albeit extreme, example of this idea in action. In any given store not all areas are created the same. Some sections can and will significantly boost your APH when you do them, conversely some sections can slow you down and deflate you APH. The strategy of some counters who want to achieve a high APH is to find the sections that will boost their APH and count them, while avoiding the mucky, tough to count sections that will hurt their APH. This phenomeon is called 'cherry-picking', and usually 'cherry-pickers' are not held in high regard by counters who get relagated to counting the hard-to-count sections. In financial inventories (which mainly tend to be grocery stores) 'cherry-pickers' will tend to look for expensive stuff to count like, cigarettes, liquor and alcohol, maybe even HBA, while trying to avoid counting cheap items things like candy, or spices, or canned soup. In a barcode inventory, finding the APH boosting areas may be a bit more difficult. A cherry picker, would probably need to find an area with a lot of pieces that is organized enough so that it can be counted fairly quickly. One definitive possibility would be areas where one is able to enter in their own quantities, generally called "multi-count" areas. This gives a counter a huge advantage in regards to APH over a counter who only counts "auto-quantity" areas, where a counter has to scan each piece. Another good area for cherry-pickers are precount sheets, these essentially allow them to input a bunch of numbers without actually 'physically' counting any merchandise.
--The level of organization with the store
An example of an area that would kill an APH, might be an area that is cluttered, dense, and/or poorly organzied. Granted some things are always going to be hard to count, but then there's some stores that will do their own job of increasing the degree of difficulty. If you spend enough time counting, you'll find out that some stores are just 'easier' to count. And if you're someone concerned with accuracy, or you find yourself in a situation where accuracy is highly important, then a crammed, disorganized section of merchandise will definetly slow your down. Store prep can also be a factor, a clothing retailer can actually affect APH by doing some simple things like pulling the barcode tags out for easier access for scanning, or by making sure as many items are tagged as possible. Every SKU check a counter has to call for, will slow him down affecting his APH. And apart from Ashleyesque counters, most counters will have a limit to how often they call for help.
--The team that one works with
If some counters in a store wind up cherry-picking and other counters wind up getting bogged down in tough, densely packed, and disorganized areas, you could examine peoples APH's at the end of the count and see that the cherry-pickers counted more than the other counters, and conclude that the cherry-pickers did a better job. That type of conclusion would be almost too simplistic, for one it would ignore the factors that caused the APHs to end up being what they were, it would also ignore the notion that each counter ended up counting a different set of sections. In any inventory that involves a team of counters, every counter will encounter a different portion of the store to count, and this will effect one's APH. Let's say that counter A counts 1500 pieces an hour doing his set of sections called "D", and counter B counts 1200 pieces an hour doing his set of sections called "E". One could argue that counter A is faster than counter B, or that the set of sections "D" is either easier to count, or more condusive to higher APHs than the set of sections "E". Trying to determine which of these conclusions is true is not easy, and it may differ from situation to situation, and in many cases the ultimate truth may lie somewhere in between these two conclusions. But not only is each counter dealing with their unique portions of the store, but (baring recounts of course) each area is only counted by one counter in each inventory. Every area that a certain counter counts prevents anybody else working in that same inventory from doing that area. Any area another counter counts is an area you will not count in an inventory, thus there exists a notion that everybody's APHs are not independent of each other, that they're all inter-connected. If a counter counts a really tough area that slows him down, he'll probably see his APH decrease, but on the other hand he may also be helping the APH of everyone else, because he keeps them from doing that area. On the other hand a counter who cherry-picks and takes a lot of easy to count areas, may boost his average, but at the same time makes it difficult for others to increase their APH because they may get relagated to counting more difficult areas. For a cherry-picker to truly avoid counting a tough area they ultimately need someone else to count it. If you want to have a high APH you're better off working with "grinders" than you are working alongside cherry-pickers.

But of course counters don't usually get to pick who they work with, nor do they have a lot of control over how a store is organized. In some situations a counter may not even get to decide what sections to count in a store. A counter's APH may ultimately depend on factors that the counter has absolutely no control of. In many cases an auditing company manager can affect a person's APH by assigning them to count specific sections. In RGIS' current incentive scheme, counters are divided into classes based upon their APH. Some audit supervisors I've worked with feel the need to protect counters in the highest class, the "top-guns", by assigning to count areas that boost thier APH. One supervisor I've worked with once said that "in the old days, you weren't allow to cherry-pick, now you have to", in some case counters are specifically told to cherry-pick. But the notion of uncontrollable factors can show up in many different situations. During my days with Quantum I spent some time doing inventory counts working solo. When you work by yourself obvisouly the team you work with is nonexistant, so it's not a factor at all, plus you really can't cherry-pick because you're gonna have to count it all anyway, so what you count isn't much of a factor either. But the state of the store was still a factor and at times a pretty sizable one. Granted some stores were more organized than others and thus easier to count. But beyond that some stores had alot more merchandise than others did, and the type of merchandise that constituted their inventory at times really made a difference in my APH. I noticed after some time that the stores that had a ton of cigarettes where usually the stores were I put up the biggest APHs. Over a span of about 3 months, I did 75 inventory counts by myself and kept records of my APH and the number of cigarettes counted at each one.  In the preceding post you can see the data itself.  For the sake of science I measured the correlation of these two variables and ended up with a correlation coefficient of 0.77, which indicated a significant relationship between these two variables. In general most of my best APHs came in stores that carried a ton of cigarettes. In fact my best APH of all just happened to occur in the same store that also carried the most amount of cigarettes. The strange thing about all this was my overall counting style never really changed all that much, from one inventory to the next. It's not as if I did something special or radically different at the inventory where I counted $34,704 per hour, the main difference at this store was the high volume of cigarettes, my high APH wasn't the result of anything that I had any control over. Nor was it the result of any drastic changes on my part.

Based on the dataset my overall average of all these store was $19,685 per hour. But obviously there's a lot of variation from store to store, clearly I'm not counting $19,685 per hour at every single store, and this variation is mainly caused by outside factors. So what type of counter am I? Am I a fast counter who sometimes gets bogged down in some stores, or am I a slow, meticulous counter who can occasionally get a major boost from some stores? In their excellent book "The Numbers Game" the authors, Blastland and Dilnot spent a chapter discussing the trouble with averages. One of the themes expressed in that chapter was the idea that an average doesn't display the variation that exists behind it's creation. My overall counting average may be $19,685, but clearly I don't count this fast at every store I go to. And if I count $34,704 per hour in a store, this does not mean that I'm counting $34,704 every single hour on the hour. If I spend an hour counting $68,000 in cigarettes, and wind up with a APH of 23000, then obviously I spent the rest of the day destroying my APH counting the rest of the store. In some stores maybe my APH does stay more constant over time, but if I wind up in "Fishing Wire", then it'll skyrocket to a utterly ridiculous level. These types of variation get lost when one simply looks at the APH.

All that an APH says is that you counted this much merchandise in this amount of time. An APH can tell you the end result, but not how you got there. The path one takes to an high APH is probably more interesting to examine then the destination. Along the way many factors, including some of the ones I mentioned above, will show up to either boost my average or destroy it. Also how do we interpret a statistic about a counter, when there exists factors affecting the value of this statistic for which a counter has no control over. There may be things about the way a counter works that don't get conveyed by the APH. Probably the biggest problem with statistics is that no one statistic can explain everything. The correlation between cigs and productivity does appear to be a strong relationship, but it's not a perfectly linear relationship, there were still other factors at play in determining my APH. One can not obtain total knowledge about a person or an object on the basis of one statistic. With each statistic there exists a limitation of knowledge, it will reveal some information, but not everything that can be known about the subject matter. This limitation arises out of the complexity of factors that contribute to the occurance of this statistic. It's not that statistics lie or mislead, it's really a case of them being incomplete . All statistics are incomplete. An APH can say that I counted $34,000 per hour, but it says nothing about how I pulled it off, an APH is not a complete measure of an inventory counter.

But here it really doesn't matter that statistics may be incomplete, or that they don't tell the whole story. The idea behind the APH is not to determine who the best counter is, or in determining how one counts, the APH has a different purpose. Here statistics are not being used to try and measure any great truths, but rather they were being used to persuade a specific counting style. It's purpose is to generate productivity among the counters, to get them to count in a cost efficient manner. It is the sole basis for determining what type of counter you get classified as, and for how people judge you. I've met people who will disparage someone solely on the basis of their APH. I had dinner with a manager from Quantum once, and I brought up a counter who I had worked with briefly several months ago, and her first thought was "he doesn't count very fast, I don't know what I'm going to do with him". You know his accuracy, his integrity towards the job, his work ethic, his personality, what kind of guy he was, none of that mattered, the first thought that came to mind was about his APH, and that seemed to define her attitude towards him, and it definitely did not seem to be a positive attitude at that as well. In the same dinner this manager would also talk favorably about counters who were able to count 4 stores in a day working solo. But the importance of one's APH and of how fast one counts is nothing new, this concept has been around probably as long as external inventory counting has.

Even when I was relatively new to the inventory counting trade, APHs were very important. A few months after I starting counting inventories, I remember doing a store, where on the trip down to the store, our area manager claimed that it would only take about 2 or 3 hours for us to count it. Well long story short, the store took a little longer than expected and we were there about 5 hours. When everything was done, and everybody was back in the van at the end of the day, our area manager got in made sure all the doors were closed and then just screamed at us because we were way to slow. He made sure to mention that a smaller crew had done that same store in less time on the previous count. One counter who was with us had the audacity to ask how our accuracy was. At this our manager calmed down considerably and said it was okay, but you could tell that this offered hardly any consolation whatsoever. He was extremely angry at how we counted, and he made that clear to every single one of us in the best way he could, though a fit of rage. On the Misfit's blog there are numberous examples of how important APHs are to the world of RGIS. During one stretch of "Batch? Natch" he writes:

"...the DM would print up a list of how many dollars everyone had counted in the previous inventory, make copies, and pass them out at the beginning of the next day's inventory. Of course, if you batched, your APH would be much higher than someone who counted legitimately. Printing out our APHs was supposed to be a sort if incentive for us to count faster, as in "Hey! So-and-So counted $90,000.00 worth of stuff, and I only did half that. Gosh! I had better count faster this time, so I can do as well as him!"
I also remember another instance back when I was just starting out when a group of us where traveling home from a store. Our area manager (hint: the same one as before) started asking how much each of us had counted. He asked one of my co-workers, and she replied with a dollar amount somwhere around $100,000 or so. He then asked me, and I just shrugged and said that I didn't know. I honestly was never one to keep track of how much I counted or how fast I was going during an inventory. For me keeping track of your APH while you were counting is a bit of a distraction. I have always felt more comfortable not knowing my APH during a count, for me I prefer to focus on the job at hand which is counting the merchandise. Judging by the Misfit's quote and my personal experience auditing companies for the most part don't agree with my approach. For them increasing counter productivity is an extremely important goal. So important that they won't wait until the inventory end to let you know that your average needs to be higher. RGIS especially have stressed the importance of constantly monitoring one's APH. At one store I did for RGIS, I remember a manager literally going around asking everyone what their APH was during the count. Every couple of seconds it was the same phrase echoing over and over again "What's your APH?".... "What's your APH?"........."What's your APH?", and so on and so on. Sometimes she would inject some feedback indicating that the counter needed to pick it up. I've always wondered though, wheather constantly being aware of one's APH during an inventory count is a good thing, does knowing your APH at all times actually help a counter work faster RGIS clearly puts a heavy focus on APH. So much so that they don't seem to care about how one counts. They care more about the end result, and not how one gets there. As long as you hit your APH goal, RGIS is happy, and they probably could care less how you did it. With APHs, its more about the ends, then it is about the means. But consider what it takes to actually count the merchandise. It takes some level of focus and concentration when dealing with the merchandise in order to maintain a certain pace to your work. Does stopping to check your progress help or hurt your ability to maintain this pace? Is it a source of inspiration or a distraction?

The idea that stopping to check one's stats could be a distraction is not without merit. In other walks of life where performance is measured similar ideas have been expressed. A professional archery teacher from New Zealand named Tim Strickland was quoted many years ago as saying

"Nothing interferes with performance like concentrating on the goal rather the process of one's game"

He further adds:
"If your technique is correct, the target never enters your mind. It's just there to catch your arrows."

Can a Stricklandesque approach work in inventory counting? Maybe the idea isn't to go towards a high APH, but rather to have a high APH come to you. Perhaps it's better to master the techniques and tricks of trade in inventory couting to a point where a high APH practically occurs naturally, instead of efforting towards a high APH through strategic maneovuring. A golf instructor, named Dr. Richard Coop included the Strickland quote in his book "Mind Over Golf", and in a very interesting chapter on concentration recalls a round of golf with Michael Jordan weeks following a playoff game in which he scored 63 points against the Celtics. He said that Jordan admitted to being in a such a zone of confidence and concentration in that game, he felt unstoppable. Dr. Coop writes:
"He recalled that he hadn't been aware of the game score or how many points he was accumulating. Jordan had been lost in the process of his game. He was doing, not thinking...."

This quote reminds me something a DM with RGIS said when I first started working as an inventory counter, at a training session he said "Don't take this the wrong way, but you have to try and not think too much when you do this." I can understand what my DM was saying. Inventory counting is something one does. You don't have the luxury to stop and think, or to be very contemplative or reflective. Once an inventory starts "it's go time". It's also a fairly simple job to do. Now I'm not saying that counting is easy, merely that it's not a real complex thing to do. You don't nned to think too much to figure out how many widgets are sitting on a shelf, in a lot of cases you just look at what's there, maybe move the merchandise around a bit and then enter the data into your machine. It's not that you'll never need to think in this job, but when you do you have to think efficiently. Everything you do in this line of work has to be done within the parameters of a certain pace or rhythm.
Every so often I'll hear counters talk about getting in a good rhythm when counting, and once a counter gets into a rhythm while counting, they usually want to stay there, mainly to keep their APH up. In his book Dr. Coop also talks about the notion of zanshin, the Japanese word for unbroken concentration or a state of total concentration towards an activity or project. Dr. Coop ultimately dismisses this idea for golfers because of all the downtime that exists between shots in golf. But in counting this idea may not be all that crazy, for one counting is designed to be more of a continuous activity, one that doesn't lead very well to intermissons, stoppages, or breaks (even though breaks are required by law in some situations). Inspite of all the legal trouble inventory companies have had with breaks, I've actually met counters who honestly don't like taking breaks in some situations. Stopping to monitor one's APH, can break that zone of concentration when you're in such a rhythm. To stay in rhythm one is best served to stay focus on the process, and not the end goal (or the product). Monitoring one's APH could become a distrcation that keeps someone from getting lost in the "doing" portion of the job. The best way to get away from the goal orientated mindset is to focus in on the here and now, to take a micro view of things. A golfer probably wouldn't want to walk up to the first tee, thinking about shooting a low round, or about breaking par, but rather where they want their first tee shot to land. In a similar vein a counter shouldn't focus on achieving a certain APH, they should focus on getting through "their portion" of the store in the best possible way. For all the talk about APH, essentially a counter has to "play the course". But what makes counting interesting is that (apart from solo counts) one's course is not predetermined and it's something that can develop outside of their control. The course that one plays depends alot on the supervisor and one's co-workers. Can knowing your APH be a source of inspiration? Maybe but once you get stuck on a course how much inspiration can it offer.

But wheather the constant vigilance of one's APH works or not, the end game here is ultimately about one's productivity. Going back to the opening quote "What gets measured, gets impacted".  Perhaps what a company like RGIS is really after isn't so much the measure, but rather the impact. With the APH, you're instilling in a counter how important it is to be productive when counting, and it showcases how much you value people who can be very productive. In some ways the values that a company has, or the values that it thinks are the most important, can be seen in the stats they keep and in the stats they don't. This is especially true in cases where statistics are used more for the impact that they could have. The APH mainly is of value to the company that employs counters, and nto really to the clients themselves. The APH's aim is to bring people closer to the Bradleyesque style of counting. And it's not just a company statistic, it's THE statistic. It is the single, lone measure of a counter. The Misfit's account above seems to describe the notion that some auditing companies want to turn inventory counting into some type of contest or a sport, to see who can count the fastest. The concept of counting as a sport to me is a dangerous one. Inventory counting should be a team effort towards providing a service to a client, not about having counters engaged in an internal contest to see who can best excell in regards to one lone metric. A metric that is primarily concerned with speed. But what about other qualities of inventory counting; accuracy, integrity, thoroughness. How do these concepts get impacted, because they sure don't get measured?
The APH focus is essentially a focus towards productivity and profitability. Is this all there is to work, one has to perform the job in a way as to make the most money? Are we in some ways just slaves to numbers? Is the whole point of work merely to turn out profits for the companies we work for? If the answer is yes, this seems to be a pretty dim view of inventory counting, although it would not alone in the dark. A lot of moments in life seem to be about trying to achieve some quantative level of success. Our salary is a measure of how successful we are, the grades we get in school indicates how smart we are. Units sold is a measure of how popular a certain commodity is. And so on, eventually we end up judging everything based upon these measures. But does what does this do to the way we look at things, does our perception of things get skewed towards the stats we keep. Are the best movies the ones with the better box office number? Are the best TV shows the ones with the best ratings?, are the best websites the ones with the most "hits? And what about the things that aren't measured. Or even the things that can't really be measured at all, the "intangibles" as some will call them. I suppose it would be nice to have a measure that can quantative say this counter is accurate at this certain percentage. But such a measure would be difficult to capture, and in some cases almost impossible to tabulate. Then there's concepts like integrity which seem almost impossible to ever really quantify. The idea that we could "score" such a concept sound downright absurd.

If these things don't get measured how does this effect how we view a counter. What is the impact that of all this heavy APH focus. What types of counters are created as a result of this focus? Do our views about the quality of a counter skewed heavily towards the notion of speed? Is a faster counter necessarily a better counter? What exactly is a good, (or even a great) counter? How would we go about making such distinctions? There seems to be only one stat that we keep to make such distinctions.

If the nature of statistics is such that they can be incomplete and at times unable to properly measure certain qualities, then does there exist an understanding beyond mere statistical anaylsis? If statistics can't get the job done, what can we turn to to grasp the nuances of how one counts a store's inventory. One simple thing could be to just simply watch a counter work. Observing a counter in the act of doing their work, can probably allow one to better see that mysterious thing called one's counting style, and offer a better sense of how one goes about doing the job. I spent a little less than a year once working for a inventory service once. The owner of this company spent a lot of time, out in the field observing me work, seeing how I count, and to this day I have absolutely no doubt that this man has a far better conception of what type of counter I am then anyone who has spent time analyzing my APHs from an office building hundreds of miles away.

Counting Production and Cigarette Volume

Counting Average per Hour     Number of Cigarettes     
        17504                                          4585
        17611                                          5476
        17319                                          6865
        14597                                          4210
        21332                                        10655
        19280                                          4890
        19730                                          4968
        20072                                        10743
        17806                                          8016
        34704                                        23842
        21453                                          7769
        16392                                          8542
        18752                                          7153
        18575                                          4412
        22163                                          6979
        14702                                          5316
        20488                                          8985
        19930                                          5458
        23521                                        12257
        21185                                          8854
        19147                                          7266
        18843                                          9609
        27181                                        10559
        19700                                          7428
        18219                                          5762
        21137                                          9936
        23350                                          7000
        21646                                          7750
        24713                                        11608
        23915                                          9730
        21899                                        11196
        22448                                          8568
        15541                                          5427
        17123                                          7038
        24241                                        12516
        16484                                          2707
        17887                                          4369
        15663                                          5458
        24014                                        15783
        16767                                          5040
        17075                                          5783
        17962                                          6798
        20479                                          4714
        14428                                          5739
        13898                                          5108
        19543                                          7767
        28731                                        18274
        14851                                          3868
        17200                                          6860
        25633                                          9344
        19514                                          7719
        20533                                          6975
        16458                                          7670
        22415                                          7841
        19426                                          8388
        20387                                        12913
        21071                                          6384
        17959                                          4916
        16127                                          7620
        21018                                          7909
        11677                                          4099
        18056                                          5769
        16869                                          5151
        19076                                        10691
        21786                                        14954
        20084                                          7547
        24518                                        13581
        18806                                          9316
        14253                                          7529
        15256                                          5464
        22038                                          9265
        21934                                          5727
        18506                                          6229
        18846                                          4911
        22966                                          8238

Monday, November 9, 2009

Who do you work for?

    One day I was in a convenience store counting merchandise tucked away in a storage bin that pulled out from underneath a gondola.  The merchandise was through into the bins in a somewhat disorderly manner, and because these items remained out of sight, little thought was made to order or neatness.  To get an accurate count I emptied all the contents onto the floor, counted each one and threw them back in. The store manager was standing behind the counter and could see me counting the merchandise in this manner. By this point in my inventory counting career I was used to the idea of having people watch me work, and frankly I never really noticed nor even cared if someone was watching me.  Once I got done counting all the bins on that one side of the gondola and pushed the last bin in the store manager made a remark about how he liked my "counting style".  The comment kinda struck me as a little odd rarely does anyone express what I do in terms of a definite "style". 
 
With the notion of style, I can't help to think about Henry's quote:

"By the very nature of their job function, auditors [or counters to be more accurate] as a whole, whether internal or external, will not now, nor will they ever win the confidence of the majority of managers."

While I can see where Henry is coming from, and can understand the point that he's making.  There's one aspect of this statement that bothers me.  Henry seems to suggest that all inventory counters are the same, they are universal and indistinguishable from each other.  That they all count the same way and are ultimately dispensable.  This notion is not quite true, and I feel compelled to strongly disagree with it.  Not all inventory counters are the same, there are many different types of counters out there, with many different "styles" of counting.  Even Henry himself suggests this with the very next sentence he writes:

"Of course, there are individual exceptions"

      Okay so, let's say that there are indeed "individual exceptions", what makes these people different from the lot who fail to win the confidence of most store managers? The answer probably lies with the notion of style and what that is comprised of.  There are a lot of things that can distinguish two different counters, their level of experience and knowledge, their integrity, their talent and ability, their attitude and philosophy.  Most of the time though counters are distinguished by their effectiveness, how well they perform their job, how well they meet the desired goals and objectives set out for them, i.e. how fast they are, other objectives may include, how accurate they are, how much integrity do they have when they perform their job, how dependable they are, and so forth.  What's interesting to consider about all of these different aims of the job is that not all of these aims are necessarily compatible with each other.  Take for instance the aims of speed and accuracy when counting.  These two aims can be highly incompatible at times, being accurate means being thorough and highly detailed and that can be time consuming, and time consuming usually equals 'slow'.  Being fast on the other hand, may mean counting more loosely, cutting corners, looking at the bigger overall picture of things, being more pragmatic when encountering difficulties in counting, this usually involves a drop-off in the level of accuracy.  The idea of style can arise out of the decisions we make when confronted with two seemingly incompatible aims of our jobs.  The aim that we feel is the most important determines what our style becomes.  If I want to be accurate when I count, I'll take all the items out the storage bins and count them one by one, and this becomes my style.

     The conflict between speed and accuracy is clearly the most interesting conflict among all the aims of a inventory counter.  But keep in mind the most ideal way to handle this type of conflict is to attempt (however daunting it may be) to satisfy both aims.  A counter who can be both fast and on the mark is pretty special.  We shouldn't think of speed and accuracy as mere choices, as if we either have to be one or the other, but rather as two separate forces on opposite ends of a continuum constantly pulling on us to count in certain ways.  An inventory counter's style is about the balance of these two forces. It be interesting to consider what kind of inventory counters would exist at the absolute extreme ends of this speed/ accuracy continuum.

     On one end of this continuum lies a counter hopelessly obsessed with accuracy.  For simplicity let's call this counter Ashley.  For Ashley an inventory count has to be 100% correct at any cost, and there's nothing that shouldn't be done to achieve this purpose.  Ashley will pull stuff off the shelf and actually touch the merchandise.  Ashley will verify her counts to ensure accuracy.  Ashley will check prices for unmarked items, Ashley will check every nook and cranny in a store to ensure that nothing's been missed.  Ashley will tag, and double check her work. Ashley will work at a "measured" pace.  Which for some people will essentially mean slow.  Ashley is primarily concerned with the notion of quality, the idea that an inventory count has to ultimately represent exactly what is present in the store, and that it provides the best possible picture to capture the store's inventory.  The ultimate goal is to provide the highest quality count possible.  Ashley is a "grinder", working meticulously, and constantly focused on her work.

     On the other end lies a counter obsessed with the notion of speed, and in how fast one can both count and complete the job at hand.  Let's call this counter Bradley.  Bradley will not object to using shortcuts to counting.  Bradley may even at times resort to cheating, or employing low integrity methods like fudging numbers to expediate the process.  Bradley is no stranger to estimating , and Bradley will estimate a lot, especially when he needs to get through difficult to count sections. He will utilize the techniques of profitable counting.  He will do a lot of sight counting, will utilize "standard industry pricing", he won't waste the time doing price checks. Bradley won't waste time on much at all, he needs to work at a quick pace and not get bogged down into detail.  He will look at the "big picture" when counting, he figures as long as he's within the tolerance levels for his counts, he's okay.  Bradley is mainly concerning with the notion of productivity, of how efficiently or quickly can the inventory count be completed.  He is a "speedfreak", plowing through areas with almost reckless abandon.

     The notions of counters like Ashley and Bradley are probably theoretical and may not actually exist.  Ashley would certainly be labeled by her auditing company as "slow", her hardcore tactics to counting would be discouraged by the auditing company, and she would probably get passed up for jobs by faster counters.  Bradley on the other hand, could get into too much trouble with the client with his "counting" methods.  Bradley is a counter an auditing company would have to handle carefully.  Bradley is a counter who could easily get kicked out of counting certain sections of the store, or the entire inventory completely.  To be a good counter, you have to develop a style between these two extremes.  Most counters will invariably fall between these two ideals recognizing to some degree that both aims are important.  But it's the balance (or perhaps imbalance) of these two ideals that's left up to the counter to decide.  Some counters might fall so much in the middle that it's hard to distinguish what type of counters they really are. The line that divides counters who lean in opposite directions may be impossible to determine, but one thing is easy to spot, and that's the styles of counters who lean drastically towards opposite ends of the spectrum. 

     During one of my numerous stints with RGIS, I ran across two people who for me have come the closest to these 2 extremes than any two people I've ever worked with.  The Ashleyesque counter was mocked and ridiculed by the area manager for being "slow".  It would take her hours to do, what might take a normal counter 30 minutes.  One time me, her, and another counter counted a small grocery store.  I assigned her to do the 'the checkout" (the store was so small it only had one), and it took her an hour and a half to finish counting it.  What slowed her down was the fact that she had to check the price on anything that didn't have a price on it; a carton of cigarettes,a cigarette lighter,a pack of gum, 'anything'.  The notion of estimating a price on anything seemed foreign to her.  And if she had to wait to find the answer to a question on something, (and she wasn't shy about asking questions), then she would wait.  Multi-tasking wasn't her forte either, every issue had to be resolved completely before she could move on.  Now granted, you could always count on the accuracy and integrity of her work, the problem was there was no pace or sense of urgency to her work.  She did whatever it took to get her counts to be correct, the concept of time seemed meaningless to her.  Even accurate counters will have enough sense to know that they have to develop a certain pace to their work and achieve some level of efficiency, if not speed.

     For the concept of speed I can turn to the Bradleyesque counter that I had the pleasure of working with.  He was always looking to cherry-pick, and find ways to count as much stuff as possible.  At one store that I ran, he showed up hoping to count the precounted backstock, in order to boost his counting average.  When I didn't allow him to do this, he made up an excuse to leave and just split.  This sort of summed up his attitude towards his job, it was either cherry-pick or don't count at all.  And if time was a meaningless concept to the Ashleyesque counter, then integrity was a meaningless concept to this guy.  I remember at one inventory, we where walking with the store managers at the end of the count, he leaned into my ear after the store managers had left us momentarily and he said out of the side of his mouth "If they ask if we counted something, the answer is always yes".  This guy would at times get kicked out of counting certain sections of a store, because the client didn't like the way he was counting.  He would often moan at the notion of an area that had to be printed off for the store to review.  My favorite memory of this guy though was one fairly good sized grocery store that we did (This one had about 7 or 8 checkouts, and maybe 10-12 aisles).  He ran the inventory and only had me, himself, and another counter as the crew.  After showing up an hour late to the store, and despite only having 3 people, we still got the store done in roughly 7-8 hours.  I spent most of the day on the opposite side of the store from the other two counters, as they did Lord knows what.  This may be Bradleyesque's one true redeeming quality, he's able to get things done.  I'm sure few people (if any) at RGIS would be upset at getting a store done using so few manhours.  The problem is, you'll walk away from a store like that and wonder how he was able to pull it off, and then you really start to wonder about how much "counting" actually took place.

     What causes two such counters to even exist?  Most likely it's the forces exerted by the entities referred to as "C", and "I".  Small "c", or the store management may play a role in influencing counters as well, but much like counters they may very in terms of where they fall on this accuracy-speed scale.  If a counter and a manager both lie near each other on this scale they actually can get along fairly well.  Most often though they exist at opposite ends of the scale with managers leaning more towards accuracy and counters leaning more towards speed, and thus we get the quote from Jack Henry.  The positions of "C" and "I" are far more firm and constant, and more importantly in conflict with each other. 

    "C" ultimately wants to see counters employ a counting style that leans more towards accuracy, and integrity.  A style that is efficient, but at the same time meticulous and detail-orientated.  "I" will of course want to see counters employ a style more predicated on speed and production.  A style that "gets things done", both quickly and most importantly cheaply.  A counter can at times be torn between these two aims, and at times they may have to balance these two aims, and attempt to offer both sides something to satisfy them.  What ultimately divides counters from one side to the other is the simple question, who do you work for?

     The Ashleyesque counters seem to count with a great sense of duty towards the client that they work for.  For them the work they do is about providing a "service" for the client who's merchandise that they are counting.  To give the client the most accurate, honest count they could possibly get.  The needs of the client are more important then the needs of the company that they work for.  For the Bradleyesque counter the clients are irrelevant.  They are simply agents of the company that they work for.  They are dispatched by their company to work on jobs, and count according to their wishes.  So who do you work for?,  the client who's inventory you're counting, or the company who provides your paycheck?

    When working for an external service, the force of "I" is extremely dominant, and it's pretty clear that they want "their employees" to achieve their own standards for the job and no one else's.  With all the things that "I" does to promote their own style of counting it's hard to believe that people like Ashleyesque even exist, and it's still hard for me to believe I once worked with someone like that.  With all the things that "I" does I suppose it's nice to know that their attempts to have everyone conform to a productive counting style doesn't always work. It's nice to know that conformity isn't always perfect, that there's always going to be someone in the crowd who bucks the trend, and goes against the grain.  Even if Ashleyesque counters do exist, they are still rare.  The pressure that "I" puts on their counters to produce can be intense, and in recent times it has grown in some companies.  "I" not only needs to put pressure on counters to produce it also needs a way to determine what type of counters it has, to separate the Ashleys from the Bradleys.  To do this and to influence the counting style of it's workers, "I" will resort to it's most common weapon, it's use of statistics.

Monday, November 2, 2009

Inside Out

      While the existance of external inventory servcies goes back primarily to the 1950's, the concept of inventory counting is much older. In the early days of inventory counting, all counting was done internally by store employees and then by internal audit crews. Internal counters were employees dedicated to the task of performing inventory counts at the company’s stores. This was a thankless task that was cumbersome, difficult, and time-consuming for the employees who were assigned to this work. Because of these reasons, the quality of the work produced suffered. Internal counters had to in many cases take financial counts at cost, and in an era before barcodes, or standard inventory counting machines this was not an easy task. Eventually the notion of external inventory counting developed. The idea was to have dedicated, professional counters not associated with the store or the company itself come in and do the work of counting. Having people who have willingly chosen to become inventory counters perform a count, had to be greatly preferred over store employees who may have been begrudgingly selected for this duty. Also the client would not have to spend money to have counters on the payroll, nor spend money to train people to do the work of counting. Instead of paying money to have a counter on the payroll, you could merely pay for the ‘service’ of inventory counting whenever you needed an audit done. As a result of these factors, external inventories took off and have grown a great deal in the last 50 years. Early on external services where for the most part a collection of inventory counters, organized so that they could be dispatched to meet the inventory needs of many diverse clients. But despite of the presence and growth of external inventory services over the last half-century, the notion of internal counting is not dead. There still exists counters who work solely on the behalf of clients, and not for any inventory service that exists. Based on my experience this world couldn’t be any more different from the world of external inventory counting.


      The dynamics of internal counting are somewhat different. For starters the concept of “I” is virtually done away with. A counter deals solely with the client, in fact the notion of client and company here are pretty much combined. You don’t deal with a store manager as a customer, but rather as a co-worker. You are far more cogniscent of things like loss prevention, and accounting, and of what they want and need out of an audit. As a result the focus of the work can be strikingly different. There's less demand on averages and productivity, and greater emphasis on concepts like accuracy and thoroughness. The overall needs and goals of a counter are for the most part the same, but the priorites are shuffled into a different order. This may require a different approach or mindset than one would take when working externally. But ultimately is one system of inventory counting better than the other. If we attempted to take an objective analysis of external counting versus internal counting, we would probably find some advantages, and disadvantages to both. Fortunetly we already have an inventory service who has weighed in on this matter.

   Quantum Services has on their website a link that takes you to a listing of the Top 12 Problems of Internal Audit Services. Without further ado they are:

1. Our internal audit function costs too much
2. Stale Ideas….Old ways of doing things
3. What will happen to my costs when we start scanned audits?
4. Lack of a career path for internal auditors means we’re mired in mediocrity
5. Overhead and fixed costs of our internal audit function make it hard to run a lean operation
6. Our internal auditors get too chummy with store managers
7. Investments in non-core areas drag down profits of the entire company
8. We are missing opportunities for growth
9. How can I get flexible capacity without fixed costs?
10. Our recruiting efforts aren’t focused
11. The blame game vs true accountability
12. How to increase shareholder value?

     I can’t help but notice the repetiveness of these problems. First isn’t problem #1 and #5 basically expressing the same general problem that internal counters can be costly for a company? Problem #7 takes the issue of costliness and expands on it slightly by saying companies shouldn’t focus on areas that don’t offer much return on their investments. Of course inventory counting wouldn't be alone in this category. I can't imagine a company making a huge return off of the loss-prevention or accounting departments. Don't companies have to investment something into non-core areas? Problem #3 once again brings up the issue of cost, this time in relation to developing technology in inventory counting. Of course couldn’t this problem also arise for external services that develop new technology as well? Then there’s problem #2, which pretty much gives the exact opposite situation as #3. If an internal counting program was stuck doing the same methods and procedures, how much of an issue will developing new technology be?

     Apart from the constant emphasis on the cost of internal counting, my main criticism is the notion that some of these problems are unique to internal counting. For instance for problem #4, where exactly is this great career path that exists at external services? For some companies, there are opportunities to advance to manager and supervisor position, which offer more pay, albeit with a lot more responsibility. Outside of this there isn't much, the career path that mainly exists is from a counter to a ‘supervisor for counters’. Also consider that for companies like RGIS, or Washington, the numbers of counters is far greater than the number of managers. Most counters in these companies aren’t on a career path that will take them anywhere. Granted internal counters don’t stand much of a chance of moving into a different position within the company they work for, but the options for external counters aren’t much better. Breaking out of the inventory counting game is not an easy thing to do; it’s probably one of the reasons why some people continue to do this job for years and years. The notion of chumminess with managers being solely an internal problem is even more laughable. There are going to be relationships that develop between counters and store employees. This is unavoidable especially given the cyclical nature of inventory audits. The fact that people are returning to the same store over and over again, it’s only natural to expect relationships to develop. Chumminess is not necessarily a sign of trouble, nor is it neccessarily wrong, ideally you want counters and managers to have a good professional relationship, you want them to get along. I mean how should counters behave when doing their job? Should they act like insolent, insufferable, douchebags? Can chumminess hint at some sort of collusion between the counter and manager? Maybe, but most of the time it signifies very little. Of course on the flip side of that there’s the notion that a cold chilly relationship between the counter and the manager could hint at the possibility that the counter will “count low” to make the manager look bad. This situation is certainly not better. But external services also work in a cyclical manner in regards to audits. Why is not possible for external services to become familiar with their clients and develop a relationship with them? Collision can still occur with external services as well. The external argument though would be that they have the option of sending different people in to count the store, making it harder for collusion to take place. This would be a strong advantage for external services. Still the notions that chumminess is one a serious problem and two that it's unique to internal counting are simply not true.

    Then there's problem #11; “The blame game vs true accountability”. This statement seems somewhat vague, but hints at the potential difficulties that arise when a counter’s work is called into question. If the results of a count turn up bad, I couldn't imagine any counter internal or external who wouldn’t argue to defend their work. Regardless of who they work for counters simply aren't going to come out and just freely suggest that their counts might be wrong. But for the issue of accountability, internal counters might be better. An external counter is more likely to be in a rush to wrap up an inventory, and maybe more likely to argue that a big variance is the result of theft or bad paperwork. They may even try to point out possible evidence of these things, or resort to typical explanations like departments flopping or audits bouncing back from previous audits to make their case. External counters too often get into the count and run mode, this makes it hard to make a case for them having greater accountability, it's even harder to suggest that accountability is only an issue with internal counters. Internal counters might have more time and freedom to check the accuracy of their work, and more importantly they will have more impetus to do so, since it’s far more likely for their superiors to demand and judge them on their accuracy. Internal counters may also be more inclined to try and figure out what has caused these variances to occur, instead of merely pointing out potential problems which might exist. As an employee, there'd be more interst to dig deeper into an audit variance. Some of these other problems listed are extremely vague (Shareholder value?) and could use some greater detail to flesh out the ideas being expressed. But in general it seems the main problems with internal counting are cost, and a slightly greater potential for collision, with some other problems that might also exist for external counters as well. This list does not address the notion that external counters are prone to some of these problems, or that they may have some unique problems of their own, or that there may be some advantages to internal counting. But then again this list was comprised by an external inventory service. It shouldn't come as a shock to see such a strong slant in favor of external inventory services. For further analysis of the internal vs external debate, we can turn to Jack Henry for insight. According to the information found at the NAAIS site, Jack Henry did spend some time working for an external service, before leaving to pursue a career in loss prevention. For the most part Henry strongly believes in using external services, and unlike Quantum he goes into greater detail on why.
     Henry talks about the internal/ external debate in relation to different store types, the small regional, large regional, and national chains. For the small regional chains, Henry points out some of the issues with external services, one that they have a need to keep their costs below the rate that they charge. Two, that their employees tend to be more counters than auditors, who develop the count and run mentality, which is probably tied to the cost issue. And third that the accuracy and quality of the service can be so poor that the store's become frustrated with external services to the point that they switch services often. Yet despite theses problems, not to mention the occurrence of audit results that bounce from one audit to the next, (Something that isn’t necessarily the counters’ fault), Henry ends by citing the cold economic truth “…the cost to hire the least expensive service is so much cheaper than the increased expense to develop an internal auditing crew.” Henry goes much deeper into the cost issue by listing the different cost expenditures for internal counters, there’s payroll, travel, lodging and meals, training, benefits, and the cost to fill out paperwork like payroll and other forms. Frankly there’s very little to argue with here, many of these costs like training, benefits, and payroll aren’t present with external services.

     Henry also talks about the idea of specialization. The notion here is that companies that specialize in certain types of stores are better than companies that offer their services to all types of stores. Companies like RGIS or Washington whose counters may wind up counting inventories for a wide range of businesses. I don’t necessarily think that this is a bad thing, there might be some value in having counters exposed to a diverse set of situations in inventory counting, it can be a good learning experience, and there’s probably some aspects of inventory counting that are common to all types of inventories. The idea that a well trained and experienced counter couldn't tell the difference between as department store and a grocery store doesn't make much sense. The argument that Henry makes for specialization is pretty weak, and then even if specialization is preferred, that would seem to favor internal counters. They don’t just specialize in one type of store, they specialize in one particular client. Internal counters are the ultimate specialists.

     Henry also spends time mentioning crew size, as a major factor in determining weather to use internal counters. Counting inventories for some stores will require a great deal of manpower and effort, not to mention equipment and supplies. If you consider how much money it costs in payroll and benefits, travel, training, and so forth for one internal counter, multiple that cost by the number of people needed to count a store accurately and efficiently. It’s pretty clear that bigger stores with massive levels of inventory have no choice to go external. The choice for big box retailers may essentially come down to RGIS or Washington. I’ve heard stories that some clients will intentionally switch from RGIS to Washington all the time to keep the cost of inventory audits low. However the smaller the store, the less manpower that is needed for an inventory count, and more importantly the lesser the cost to get the job done. For convenience stores that require financial counts done, the cost to count an inventory can be relatively small and far more manageable allowing internal counters to be a viable option.

     Henry goes on to compare internal and external services, on other aspects, mainly with the scheduling of audits. Henry argues that both sides will struggle with providing audits on desired inventory dates and with being able to schedule recounts. Granted scheduling inventories is a difficult task, and making everybody happy is near impossible, for either internal or external services. But of course each one experiences difficulty for different reasons. Obviously internal crews will be limited in their manpower, but manpower is relative to the volume of business that a service has. External services will always have other clients to service and for them they have to balance the needs of all their clients. Scheduling for external services gets complicated when they have to please multiple clients who probably don’t care about the other clients an inventory company might service. Scheduling issues with internal services at least stay within one company who at least can weigh in on which stores need an audit more. Henry also talks about crew stabilization, namely getting the same counters each time. He reasons that if an external service can’t send the same people to a store each time, neither can an internal service. Of course if the manpower of an internal service is small enough, it seems that crew stabilization might happen by default. The fact that internal counters are specialists would make crew stabilization easier for internal crews. Of course the notion that crew stabilization is difficult for external services can be challenged as well. RGIS has for years utilized dedicated crews for some of its clients. The issue here may not be crew stabilization, but rather crew control. And control is one of the main reasons people consider using internal services. With an internal service the client can have some input on who counts which stores on which days, whereas with an external services, they are at the mercy of whom the service dispatches to the job, and when the service can fit them in. But does having more control over the audit program, lead to better counting and more confidence in the counters who perform the inventory counts. Henry poses this very question and vehemently claims that the answer is no. In my all time favorite Henry quote he writes:

This has been my experience since 1965, when first entering the inventory service business. I have seen very few owners, supervisors, managers, and lowly employees collectively, and perpetually respect internal or external inventory auditors, much less have confidence in them.

Henry further adds that:

By the very nature of their job function, auditors as a whole, whether internal or external, will not now, nor will they ever win the confidence of the majority of managers.

I find it strange that Henry talks about external services being a must, but then here he seems to suggest that it doesn’t matter whether you go internal or external. I agree with Henry that to some extent an inventory counter is an inventory counter, and that there’s going to be some natural aversion to them regardless of whether they represent an inventory company or not. But is theis aversion the result of the fact that this job function has to be done, or is it because of the way this job function is performed. Perhaps Henry is right, who cares about weatehr to go internal or external, perhaps the real issue is the individual person doing the job and how they go about doing it. Ultimately a business wants someone or a group of people who can come in and perform a solid, accurate count. that’s the end game here, and how a client goes about obtaining this (whether through external or internal services) is probably far less important than wheather or not that they do. I'll give Henry credit for pointing out that there are difficulties prsent in both options. But there are still some sharp differences between external and internal counting. The ciurcumstances under which the counting gets done in these two options can be vary different indeed. In the client's quest for a high quality inventory count, some consideration should be given to these differences.


Internal vs. External Counting:
As I have experienced them


    Henry at the beginning of his internal and external analysis calls the notion of having store employees count the stock 'archaic'. Let me just make a clarification here. I would never suggest to have a random employee be tasked with counting the store's inventory. I want to make a distinction between this type of scenerio and one where a company has a trained inventory counter on staff. For me an internal inventory counter is one whose principal job is to count the inventory for a store, and who performs their job solely on behalf of the company they work for, and not for any inventory service. I have spent over a decade as an inventory counter, and I have had the opportunity to spend some time working internally in the latter scernerio described above.
     When I got hired as an internal inventory counter, I had already spent about 4 years working as an inventory counter. So I came aboard as someone who had a good deal of prior counting experience, albeit all of it at that time was with RGIS. Becoming internal meant getting used to a different culture, a different set of goals to achieve, and even different equipment to be used to perform the count. Nothing I had experienced before had really prepared me to succeed in this world, and unfortunately I would realize this almost immediately. The first internal inventory that I performed was a disaster, I had trouble getting used to the ICAL that I was using to count with and I just never felt comfortable. But not only that, I was still in the RGIS mode of counting, and that was not good. I screwed up the departments on a lot of items, I missed some merchandise that was hidden underneath the checkout counter, and made a good number of handkeying mistakes, evidence of such could easily be seen on some of my section totals. The results of the audit were bad and the accuracy of my numbers were questioned, and rightfully so. The loss prevention manager was there with me that day, and he actually considered not booking the audit because it was so bad. I suddenly saw how sloppy and inaccurate my work was and it bothered me a great deal. The LP manager decided to schedule a recount in 3 days later. The company I worked for tried to downplay this inventory in order to keep my spirits up, but I knew better. I wasn’t happy with the job I had done, and it didn’t matter what anybody else said. I knew I had to change the way I did things, or I wouldn’t last long with this job. When I did the recount, I approached the job far differently, I was more cautious, and far more meticulous in my counts. I also was far more comfortable with the ICAL, I did anything I could to make sure that my counts were right. I probably spent way too much time reviewing my past keystrokes on the machine, not to mention looking at it. I probably 'saw' more of my ICAL for this count then for any other count I ever did. The end result was that the audit was over roughly the same amount that it had been short 3 days earlier.

     I took with me a few things from this early experience, one that I could not continue to count inventories the way that I had for the better part of the last 4 years, and two if I was going to be successful here, I had to be accurate. I was starting to come into contact with the world of “C”, and I was about to see what they desired from me as an inventory auditor. Throughout the first few months on the job, I remember getting calls from LP asking me questions about my counts from the day before. I was aware that my work was under scrutiny, by managers, district managers, LP, and others, and more importantly that if I wasn’t accurate then my work would be challenged. The importance of accuracy was stressed from day one, and it would continue to be a constant theme. A lot of the feedback I got from my “co-workers” dealt with accuracy, even when my accuracy was great. But what was most interesting about this experience was what the company didn’t stress as important. Nobody whom I worked with, not my boss (who worked in the accounting department), not LP, not any manager ever talked about my average per hour. This statistic pretty much didn’t exist at this company. Granted people did talk about how long it would take for me to get these audits done, but nobody ever came out and said I counted $9000 per hour or $10,000 per hour, nor did they talk about what my APH should be, or what my goal was in regards to my APH. Nobody probably really knew how fast I counted any store, and most likely it wouldn’t have meant much had they did. Working in an environment where APHs were nonexistent was a little weird, yet at the same time somewhat liberating. I had never really got into all the APH talk when I worked for RGIS, so I felt comfortable working in this culture, and I flourished in it. As a result I worked hard on my accuracy, developing somewhat hardcore tactics for achieving it. I remember going to some small kiosk sized store and thinking, I can take the time to count every last item accurately in this store and still get the audit done in a decent amount of time. Why not? I began to take this why not attitude to bigger stores, and despite what Henry has said, I did earn the respect of a lot of people I worked with; managers, lowly employees, DM’s, LP, accounting, and more. I began to acquire a very good reputation for the high quality of my work. But of course no matter how much equatity one’s reputation could build, there is still potential for my work to be challenegd. There could be no greater challenege, then tabluating results that seem impossible to believe.

     When I first started working for this company they referred to this one store as one of the good ones, where shrink percentages are always low and inventories are sometimes skipped in favor of more pressing issues. However the results of the first two audits that I did at this store were unusually bad, which caused some concern from my boss and LP. The result of the third audit would cause a great deal of concern. My current counts were fairly consistent with the previous counts, and yet they resulted in huge variances. The manager of this store was someone whose respect I had earned very early on, he very much liked the way I did my job. Despite this, the results were still bad enough for me to worry about how he would react. Surprisingly he let me live, actually I would find out that the manager had looked at his inventory levels weeks before and he could see than that he was headed for trouble. He actually expected a bad audit, and the results of my work actually confirmed his suspicions. He never questioned the accuracy of my counts, in fact when he was on the phone with LP he uttered four words I’ll never forget “The kid can count”. I didn’t think much of it at the time, but this was probably the biggest complement anyone’s ever paid me, especially when you consider the circumstances under which it was said. After my work was done, LP proceeded to investigate what was taking place and what they found was somewhat stunning. Without getting into any specifics, (which I'm not really aware of) there turned out to be a great deal of internal theft taking place at this store, most of it occuring at night with one or two clerks as the main culprits, and this went on for awhile. The investigation by LP accomplished two things, it further confirmed the manager’s suspicions that something wasn’t right, and two it validated the work that I had done.

     Looking back on this audit years later, I had a strange thought, that this disastrous result was a good thing for the store and the greater company that I had worked for. This audit helped exposed a serious level of theft that was taking place allowing LP and the store management to implement actions that would resolve this issue. Isn’t this what inventory counting is all about? To determine if any issues are taking place at a store, to expose possible theft issues that may be occuring. As a result of my audit actions got taken against the employees who were responsible for this theft, and in the upcoming months the audit results returned to the levels that they had been prior to my arrival. By that point my work had already served its purpose, and the respect I had from this manager was fully earned. From this audit I had a chance to see how important my work was to the people I worked with especially LP. I become aware that decisions get made, and actions get implemented because of the work that I do. It made me take my job very seriously and caused me to continue to work hard to make sure that my counts were on the mark. Working internally allowed me to see the true purpose of inventory counting, of how important it is to “C” as it were, and how even a truly bad audit can be a positive thing for a company. The experience of working internally has had a profound effect on the way that I do things. It has changed the way I look at an inventory counting, and more importantly has made me a better counter.

     Despite this there are still some common arguments against internal counting. One is the idea of independence. External counters aren’t representatives of the company whose stores get audited, and thus are less likely to “fix an audit”, or collude with the manager. Granted external counters will have a drastically different relationship with the store manager and the overall “client” as it were, but then again are external counters really independent? They may have little need to do the store manager any favors, but they are beholden to do favors for the company that they work for, namely “I”. The biggest difference between external counters and internal counters is that external counters work under the shadow of “I” and their needs, whereas internal counters are more in tune with the needs of “C”. What effect does “I” have on external counters? “I” will promote the techniques of profitable counting; they will extol the importance of counting averages, and will occasionally mention accuracy. During one practice session while working for RGIS, I remember a manager suggesting to us to “look at things in a big picture”, a detailed-orientated approach predicated on precision counting will never be the preferred counting style for “I”. And as for the concept that a count is meant to investigate possible theft, for some external services this idea is rarely if ever mentioned to the people tasked with performing inventory counts. The nature of the business of inventory counting has in some respects helped to decrease the quality of inventory counting. Of the entire “History of Inventory Services” article I read on the NAAIS site, half of it is devoted to discussing audit fraud amongst external services, Henry and Jackson even list 7 reasons for why it exists. The truth is that no one is truly independent; everybody will eventually be forced to serve the company that they work for. External counters will count in order to best serve the company that they work for, which means producing high APHs and not getting bogged down in minor details. Internal counters will be more concerned about providing a service for the company that they work for, which meaning accurately measuring the level of shrink, and attempting to find explanations for the presence of audit variances. And the notion that internal auditors can’t be independent is not always true. When I worked internally I had no stake in the outcome of the audit, nor did the people I worked under either in the accounting department, or LP. I knew what they wanted and more importantly needed from me in regards to the audit and they really didn’t interfere with the process that I employed to get the job done. Granted if I did something that they didn’t like, they would let me know, but for the most part they let me figure things out on my own. Strangely I felt more independent working for them then I ever did working for an external service.

     The other big reason to support external services is the notion of professionalism among the audit crew. When external services first started up, probably one of their strongest appeal was the notion that they can bring a professional crew of well-trained counters to perform the inventory count. Despite the existence of external services for over half a century, the notion of a professional inventory counter has really failed to fully develop. For one thing the average “career” length of inventory counters is pretty low. Sure you’re find people who have been counting forever, but you’ll also run into people who are just starting out in the business, and who may not be around in a month or two. The turnover rate in some external services is pretty high, mainly caused by the difficulty of the job, combined with the low pay and the low prestige of the work, not to mention the increasing demand for productivity. But the demand for “bodies” to get the job done, will force many external services to hire “amateurs”, people with no counting experience at all. In fact in today’s times, most counters will first enter the inventory counting business though an external service, I fall into this category myself. Good inventory counting has to come from professionals who have a lot of experience and know how when it comes to counting. But there’s no reason why a highly experienced counting professional couldn’t work internally. To develop a good internal counting program you won’t necessarily need “I”, but the trick is you need “i”, someone who has the basic skill sets to get the job done.

      And as I hinted at before perhaps, it's less about the service and more about the people. A client, whether it’d be a manager or LP, or lowly employees, will not have confidence in a service or an audit program, so much as they will have confidence in people. A company that hires good, honest counters to work internally can have good results. Still the biggest problem for internal services is cost. For a internal service to even exist, and to work well, a lot of things have to be in place. One you have to have stores that can be counted using little manpower and equipment. Ideally you would want to pay a counter salary to one keep the costs fixed, and to allow a counter time to do the job right and to investigate variances, without worrying about the cost to the company. Paying a counter salary would mean you'd have to have enough stores to keep a counter or two busy, so that you can get plenty bang for your buck. You also might want to have stores that aren’t too scattered across a geographical region, so that transportation costs aren’t too high. Despite the success I had working internally I do have to admit that the situation I found myself in was well suited to make things work. A different company might not have things situated as well to facilitate a successful internal program, and on top of all this you have to find a good enough counter to get the job done. Pulling a good counter away from an external service is pretty easy to do, especially if you mention things like benefits, a company car, and a decent pay rate. The biggest trick is getting the counter to convert form an external mindset to an internal mindset to counting. A good counter will bring plenty of experience, but you have to work at promoting the things you want out of a counter, accuracy, precision, a detail-orientated approach, greater accountability. I succeeded internally because I was able and willing to make that adjustment. If anything I’ve had more difficulty adjusting from internal counting back to external counting. I’ve fallen too much in love with the counting style I developed internally. I still think about my first internal audit, that great cataclysmic failure and how it forced a huge shift in how I went about counting inventories, and honestly I’ve never truly recovered from it. After leaving my internal counting position I returned to the world of external counting and brought with me a far different perspective of the inventory counting process, and of the business itself. The results of this new perspective are what you are seeing when you read this blog.