T-Outs Kaizen Team

In theory, inventory on hand for a given item should always be accurately reflected in the computer inventory file. Inaccuracies can cause us to either carry more inventory than we need for a given item, or to disappoint a customer by not being able to fill an order we thought we could fill. From a LEAN perspective, both are problems to be corrected by tightening processes to maintain strong inventory control. If we have 100 widgets on the shelf, our computer system should say we have 100 widgets as well.


Several times per day, our computer system communicates to our customers that we have an item in stock, but it is not available on the shelf when the warehouse associate goes to pick the item for the order. This situation is called a T-Out in Phoenix, and our objective is to have as few as possible. In October and November, our T-Out rate in Phoenix was too high at 0.13%. Our target is 0.10%.


During the 3rd week of November, we gathered a Kaizen team to look at our T-Outs and see if we could bring them down below our target. The team included six associates, two from inventory control, two from the receiving and put away shift, and two from the order fulfillment shift. They determined there are four significant opportunities for improvement that, if improved, will reduce T-Outs in Phoenix. Those key opportunities are Housekeeping, Pick Accuracy, Product Astray, Low Stock on Hand. The team created a RASIC chart with all action items to improve each area, a person assigned as responsible, and a completion date. We expect to see a 40% reduction in T-Outs, beginning as early as late December.