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Distributor Power Tools:
The HITS Report
The cost of inventory is rocketing, as raw material driven price increases continue to come through, and economic conditions are making
customer demand less predictable. Regular contributor Jason Bader offers some straightforward thoughts on using existing data from your
distribution software to control working capital exposure and tighten operating costs.
Have you ever wondered how to get more can use it for several different inventory the participants confirmed that most of the
out of your distribution software? Most of us management tasks. The most beneficial uses picking occurs in only the first row of his
use less than 25% of the capability built into are: organising the products in your vault for facility. Make sure that you give yourself
the package, yet we paid 100% of the cost. logistical efficiency, helping speed up the some extra room in the first couple of rows.
Now I’m no math major, but that just doesn’t cycle counting process, sniffing out the You don’t have to set up the facility in the
seem to fall into the category of best practice. nearly dead items in your product mix, and exact order from the report. I have seen
Over years of working with distributors and determining how much safety stock to apply several different adaptations on this theme.
software packages, I have come to realise to an item. One client has created a small high pick zone
that the best way to get your money’s worth I grew up in a warehouse environment located right next to the shipping dock.
is to master the art of extracting data into where we chose to keep all products from Another client has been experimenting with
meaningful reports. There are a number of the same vendor grouped together. The using a carousel conveyor system for their
‘power reports’ that can help you maximise products were arranged by manufacturer SKU high pick items. I like using the zone
your investment in any distribution package. number so that a picker could find something approach because of the different shelving
The one I’d like to tackle requirements needed.
here is the HITS report. Remember the goal
The HITS report is a here. We are trying to
little like an SKU popularity
contest. We are trying to
“If we set up velocity zones,
increase the efficiency of
our pickers by reducing
determine how many
times a customer has
we have automatically created
additional footsteps.
If we set up velocity
ordered a specific SKU in a
calendar year. In this report, an easy way to count our most
zones, we have
automatically created an
I am not concerned with easy way to count our
how many units they
popular items more often.”
most popular items
purchased when they more often. One of the
placed the order. I simply difficulties with cycle
want to know how counting by velocity is
popular an item is with that we usually have to
our customer base. Each order is recorded as relatively quickly. This was before bin move around the facility looking for our high
one hit. locations became integrated into our pick items. This is especially true when the
Right about now, many of you may be distribution software package. The problem products are grouped by manufacturer. With
asking, how do we account for requests for with this arrangement is that order pickers a zoned facility, your counters can really
items that we currently do not carry? Or, how found themselves traveling all over the focus their attention where you need it most.
do we account for lost sales because we did warehouse each time they filled an order. If Most inventory discrepancies will occur in
not have the product in stock? These types of you have a small facility, this doesn’t really your highest velocity products. Obviously, we
situations are very hard to capture from a seem like too big a deal; but if you are work- should count those most often. I recommend
systems standpoint. Actually, the systems ing in a larger warehouse, these additional that you shoot for 8 full counts of your
can capture the data, if someone is willing to footsteps really add up. fastest moving products in one calendar year.
record the event. I spent many hours taking One of the ways to improve the efficiency Most distributors struggle with dead
customer orders over the phone and counter. of your order pickers is to change your inventory. This usually ranks really high on
The last thing I wanted to add to my warehouse layout based on product velocity. the list of management headaches. When
workload was to create a non-transaction. Using the HITS report put your most popular the dead stock dollars rise too high, there is
Let’s be realistic here. If you are determined products closest to the shipping point. As you usually a concentrated effort on blowing out
to account for these occurrences, give the move further away from the shipping point, the material and cleaning up the shelves.
customer service person an easy method of the products become less popular. When you Once the threshold of pain is met, dead stock
recording the data. Something as low-tech as arrange your facility by product movement, management usually returns to its rightful
keeping a lost sales notebook next to the you will notice that most of the activity will place on the back burner. As items continue
order taker will help. be occurring in the first couple of rows. I was to lose favour with our customer base, the
Once the report has been generated, we discussing this at a conference and one of death toll rises and the whole cycle
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