A general rule of thumb for assessing whether the use of statistical inventory sampling makes sense for a warehouse is an estimated time requirement of (at least) two days for a full physical inventory involving a significant number of employees, while simultaneously disrupting normal business operations.
When deciding whether the use of statistical inventory sampling is “worthwhile” for a company, the “type of storage” plays a key role. In a warehouse with 10,000 ground-level, sequentially numbered storage locations and no opened packaging units, a complete inventory can be carried out relatively quickly. In such cases, statistical inventory sampling would likely not lead to significant savings. By contrast, a fully automated warehouse or a multi-level manual warehouse would require several days for a full review. When making such a decision, not only the time required for conducting the inventory must be considered, but also the opportunity costs associated with a full count. These include losses due to unavailability of goods, reduced productivity, etc., which contribute to overall inventory costs.
A “good” basis for decision-making can be provided by data indicating the actual time needed for statistical inventory sampling. This makes it possible to compare the effort required for a full count versus statistical inventory sampling and thus to determine the rationalization potential.