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For example, companies with current cycle counts of key SKUs or manufacturing parts can avoid unnecessary orders and deploy their cash more efficiently. Establishing cycle counting may involve coordinating with accountants to ensure counts are accurate, that counters follow consistent processes and everything ultimately gets counted when it needs to.
Finally, when cycle counts and physical counts reveal discrepancies, the business has a timely opportunity to improve before the problems get out of hand.
But it only works if managers are prepared to quickly act by identifying and resolving the causes of the problems they discover. For instance, they might find that some items are more susceptible to loss, spoilage or theft than anticipated and require greater attention to safekeeping. Cycle counting can be viewed as a closed-loop process that triggers continuous improvement.
As warehouses and other facilities become larger and more complex, physical annual inventory counts become more difficult, time-consuming and costly, and the relative business value of cycle counting increases.
Some companies rely on a mixture of cycle and physical counts. Some retailers cycle count stock all year , focusing especially on high-demand items.
Then, they do a complete physical inventory after the holiday season ends. Other companies may perform one final physical count to establish a rock-solid foundation for a transition to cycle counting. Cycle counting becomes much easier with a modern inventory management and WMS systems. Leading inventory management systems automate the cycle counting process, providing daily instructions for both individual counters and reviewers through intuitive checklists and dashboards.
Such software also supports cycle counting using smartphones and other handheld devices, which can make it a faster and easier process and updates inventory numbers in real time. Finally, inventory management and WMS solutions make it easy to highlight discrepancies between expected and actual counts, trigger recounts as needed and make inventory adjustments to the general ledger. They make what can be a long, arduous process straightforward and relatively low effort. Smart cycle counting, implemented with an inventory management system, can reduce expenses, improve customer service, enhance warehouse efficiency and eliminate much of the traditional disruption associated with inventory.
With cycle counting, a company continuously counts small samples of its inventory throughout the year. Cycle counting spreads out the inventory counting throughout the year, instead of concentrating it into a single intense period.
It can also enable companies to spot emerging problems sooner because counting occurs throughout the year. The more often you conduct cycle counts, the more accurate your counts will be.
This will help eliminate inventory write-offs and spot problems before they blossom into major headaches. How often should you conduct counts? Many warehouses do it daily. Just be sure to keep counting items in all three categories instead of just focusing on your best products.
This allows you to train team members to be experts at the counts. The size of your team depends on the size of your company. A large company will have squads of dedicated employees who make cycle counts their primary focus. Smaller companies, meanwhile, could benefit from training a small group of employees who handle inventory counts as just one part of their daily job duties.
Resolving the cause of inventory errors makes it easier to prevent them in the future. One good inventory is awesome, but cycle counting is a long game. Create an easy-to-understand document that explains how your cycle inventory works in detail. It should be simple enough that a new hire could read it and get the basic gist, but detailed enough so that employees know procedures for handling problems. If this is your first physical inventory, a mock count can help you better understand how long the real inventory will take while also allowing you to spot potential problems in advance of the official count.
Dispose of all defective and obsolete items before the count to speed up the inventory process. Designating count areas for teams makes it easier to monitor inventory progress. In the days or weeks leading up to inventory, ensure all equipment is working properly and that you have all supplies on hand.
In a perfect world, you will shut down operations for the count to minimize the potential for errors. To ensure the highest level of accuracy, keep the process of counting inventory and recording the results separately. Effective inventory management is a struggle for many companies. These are some of the most common questions we encounter.
The short answer is as often as possible. A full cycle count of all of your inventory should be done at least once a quarter. However, many warehouse operations do daily cycle counts for strategic sections to avoid counting large amounts at the end of the quarter. Physical counts should be done at least once per year. Ideally, your inventory counts should occur when operations cease at the end of the day or before they start.
If you must do your inventory while operations are continuing, you must have a system in place to account for newly arriving merchandising or items picked for shipping. Most warehouse operations have count teams or individuals that have been trained on procedures and are monitored for accuracy. You should have a tracking mechanism in place to assure your teams are counting accurately. You can do it all by hand and track it in Excel, but the risk of errors is significant. Counters look at the current inventory record to see if there are any discrepancies and, if there are any issues, they conduct a count.
This is because, at first glance, employees can simply choose the easiest inventory to count and skip difficult inventory by relying on the existing record, if they wished. Opportunity-based cycle counting conducts inventory checks at key points in the inventory management process. Instances in which an opportunity-based cycle count may be conducted are when:. Without question, a cycle count sounds incredibly convenient. Who wants to shut down operations for a day when you can count while you work?
To do so, keep the following cycle counting best practices in mind. If you receive new inventory, be sure to enter it into your inventory management system. Conduct a physical inventory count so you have an inventory accuracy starting point. Some companies have such tight procedures that their goal is to completely eradicate annual inventory counts and stick to continuous cycle counts.
By nature, cycle counts are not a one-and-done proposition. They must be conducted routinely. While some operations conduct daily counts for specific SKUs , your bare minimum should be a quarterly cycle count depending on the size of the count with a goal towards a weekly count.
Otherwise, identify what the priority areas or trouble areas are and focus on those. Randomly alternating between counting staff limits the chances of theft or coordinated attempts to rig the count. That said, balance the need for loss prevention with risk management.
Introducing inexperienced staff to the count can lead to losses in other ways. For instance, inexperienced staff may not know how to use specific software or operate forklifts to count by weighing. Inventory management systems are either manual or automatic. While many small- to medium-sized businesses employ manual or semi-manual inventory management processes, an increasing number of them are moving toward automated inventory management.
Typically, retailers or warehouse owners would have to manually upload inventory data to their system. Otherwise, your entire efforts are undermined. With an IMS, data is automatically updated, furthering your inventory management efforts. Instead of handing your workers pens and count sheets, consider giving them mobile scanners.
A worker scans the barcode and the information from the barcode is fed into the system. Not only is the count conducted automatically, but management can also easily pull a CSV file from the system if they need specific information.
In addition, mobile scanners make real-time inventory management easier. If RFID is used, this competency is further enhanced. Walmart has started testing robots for inventory monitoring tasks in its stores.
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