Quality Count

Problem: The PAFC has experienced a high Defect Per Million Opportunities (DPMO), specifically as measured by our
Inventory Record Discrepancy Report (IRDR) ‘snapshot (on 23 April 2018 18,277 and 22,304 respectively.) Specifically,
‘stowed physically not virtually’ is the biggest driver of errors in our building which indicates a quantity style error not a
product type error (validated by sample taken on 4/23 and 4/18 of 6000 completed counts.) The labor associated with the
type of counting currently being conducted to identify and resolve these issues exceeds allowable budgeted hours. The
reason the counting is so labor intensive is because the sku based method requires each authorized counting associate
verify sku level correctness rather than quantity level correctness. The direction on counting the sku level is to adhere to
Sarbanes Oxley Act of 2002 (Sections 404 and 409). Changing from sku to quantity counts will enable the ICQA team to
move more fluidly through the counting process while identifying errors quicker (addressing section 409) while still
monitoring the placement of the inventory (section 404)

Proposed Solution: To remain compliant while reducing the resource intensive nature of counting, the ICQA team is
proposing quantity counting of the bins during regular cycle counting. This will permit the ICQA associate to walk up to
a bin / location and preform a quantity count. This will reduce the added steps of scanning each item in the location. This
will enable the authorized counting associate to move XXX as fast through the counting process. Current process requires
a second system triggered count if there is a discrepancy in the location. This requirement will not change when moving to
quantity count. If there is a count discrepancy a second triggered count will need to be completed at the sku level.

Process steps:
PAFC will require assistance from the DEV team to work through the change in WMS functionality.

Steps:
1. Authorized Associates Logs into WMS
a. Section 404 requires and audit trail of transfers of inventory. WMS Log in can not change
2. Associate utilizes Cycle Count tool within WMS
a. Section 404 requires a segregation of duties and the associate will need to have training and systemic
permissions in order to count.
3. Associate will be directed by the system to count locations
a. Logic currently build into Cycle count 5.0 will not change. Proposed change only occurs during first
count.
b. The system will direct the associate to enter the numerical quantity of items present in the bin / location.
4. Associate will be directed by the system to count locations
a. The same associate will not be sent to complete the second count. Following the same logic built into
cycle count 5.0 a separate associate will be directed to count the defect location.
b. The system will instruct the associate to scan bar codes for verification
When a quantity count defect is identified the second count will verify SKU level and the following defects which will be
inspected:
1. Mislabeled Item?
2. Extra / Short Physical item
3. Extra / Short Virtual item
The discrepancies will still be tracked in the cycle count tool within WMS.
Cycle Count DPMO will still be reported on the Perfect Order Score Card

Data Review:
.

Target Results:
- Increased bin health as measured by a decrease in IRDR DPMO and decreased overall Cycle Count DPMO.
- Secondary benefit will be a reduction in inventory shrinkage in the FC.

April 2018 – William Brent Page 1 of 2

 Quality Count

Timeline for Roll Out:

Week beginning 4/30/2018 – Communicate process to GM / SOPS and Network.
Week beginning 4/30/2018 – Communicate DEV in Seattle
Week beginning 07/01/2018 – Begin New Count method

Recognition Process:

April 2018 – William Brent Page 2 of 2