Even if your business maintains state-of-the-art inventory management systems, regular manual inventory counts are still needed to ensure that what’s on the shelf is the same as what’s on the computer.
Cycle counting is a way to avoid a complete inventory count while still having a good idea of your inventory accuracy.
How Cycle Counting Works
Inventory cycle counting lets you manually track your inventory more frequently so you can keep your supply chain optimized and avoid costly stock-outs and backorders.
Basically, cycle counting means counting a small amount of physical inventory on a specific day. There are a variety of cycle count procedures, including the following:
- Control Group – Count the same items on an ongoing basis over a short period of time. Control group counting can reveal mistakes in your inventory counting so that you can maintain more accurate counts.
- Random Sample Counts – In a random sample count, you choose to count a certain number of SKUs and avoid having to disrupt your entire warehouse or product category.
- ABC Counts – Based on the Pareto principle, ABC counts involve categorizing your inventory according to its value (Category A being highest value and category C being lowest value) and counting high-value items more frequently than lower value items.
Benefits of Cycle Counts
In addition to the optimized supply chain and fewer stockouts mentioned above, you can realize a number of other benefits from doing cycle counts.
- Have More Confidence in Your Inventory Control Software – If your sales team relies on your IMS to fill orders, cycle counts can help ensure that the data is accurate without the headache of full manual inventory auditing.
- Fewer Operational Disruptions – You can tailor your counts to minimize the effect on resources and operations.
- Reduce Costs – They are simply more time- and cost-efficient than full inventory counts.
If you enjoyed this post, check out pour recent article about six proven cost reduction strategies in supply chain management.