10 Jun 2016

Inventory Counting with Drones at Walmart

Inventory Counting with Drones at Walmart

Inventory Management has been a pain point for many companies – retailers, manufacturers and service companies alike. Companies have been fighting high inventories with various initiatives  – from simple automated min-max systems to advanced inventory optimization systems and through the algorithmic approach of inventory targeting, inventory positioning and network optimization. However, companies overlook the importance of inventory accuracy – it is not given its due when it comes to inventory management. Even with the best of planning systems an inaccurate inventory count will lead to service failures and poor fill rates besides obsolescence. It is important correct the foundation of information that is fed into the Inventory Management Systems.

What are the various challenges when it comes to inventory counting? • Same item physically present in different locations – A Raw material item either In-transit, or in the Inventory Store, or in the factory as part of Work in Process • Inventory present at the wrong locations – FG inventory present in a wrong manufacturing warehouse or the wrong shelf • Obsolete or expired items present in the warehouse calculated as inventory on hand • Human error in inventory counting • Extra-ordinary amount of Time and resources used up in a physical inventory count . Walmart has planned to use Drones for inventory counting to overcome the challenges faced in a Distribution Center layout. The drones would take the inventory count of entire Walmart distribution center in a single day as compared to a month long process when done manually with hand held devices. The drones equipped with RFID readers will take an accurate count of the items in the DC. Drones would fly up and down storage aisles, taking 30 images per second. Benefits to Walmart by using Drones • Accurate Inventory count in significantly less time and reduce the risk of human error • Inventory count can be done more frequently to keep the Inventory Management Systems synched up to the actual physical inventory • Better Compliance with the GAAP and Sarbanes Oxley for financial reporting • Alert on item(s) stored at wrong location and expired/obsolete items • Avoid Out of Stock issues due to inventory inaccuracy

In general, Better inventory visibility is a good starting point when it comes to improving the supply chain. Having information about the stock on hand and good future demand forecast will help in outlining the steps needed to improve entire operations of the supply chain starting from inventory optimization to improving the Customer Service Level and better Order Fill Rate. We shall see in next few years the bottom line improvement in Walmart’s supply chain and any upcoming trend in retail industry when it comes to Inventory Management.

Reference – Walmart plans to use Drones and Imaging to Take Physical Inventories in its DCs


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