Inventory Cycle Counting – A Must Do


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Use of Inventory cycle counting is a recommended task that requires continuous monitoring of stock on a weekly, monthly or bimonthly basis. Better results of inventory management can be obtained by acquiring certain knowledge about this scheme which is available at

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Inventory Cycle Counting – A Must Do

  1. 1. Inventory Cycle Counting – A Must DoInventory is an important element of any business and its supply chain. Inventory cyclecounting is essential to accurately managing the inventory of any business. If the inventory isnot properly managed the business will suffer financially. Before, we start discussing thebenefits of cycle counting, it is important to fully understand what is cycle counting?So what is cycle counting? Simply put, it’s an alternative to the usual way in which inventory iscounted. Instead of conducting a taxing yearly physical count of all the items in your store andwarehouse, you conduct daily or weekly counts on some of the items, such that all items arecontinuously counted, several times a year.Cycle counting is process of regular assessment of the inventory. This is extremely importantfor large stores because unlike smaller stores or retailers, they are unable to regularly count alltheir inventory items cost effectively. Therefore, they cycle count a small portion of theirinventory in order to make sure that the information about their inventory is accurate and anydiscrepancy is fixed quickly. This also helps them precisely identify and investigate underlyingissues that result in inventory record errors, thereby fixing the root cause of the problem.Businesses can design their own cycle count program based on available resources and
  2. 2. accuracy required. This approach ultimately improves the efficiency of all staff responsible forhandling inventory, as they are constantly aware of the need for accuracy due to the regularaudit of their processes and procedures.Major Benefits of Inventory Cycle CountingThe major benefit of inventory cycle counting includes:i) Improved Inventory AccuracyCycle counting ensures that each of the items in your inventory is counted more than once ayear. This brings an increase in the overall accuracy of the inventory data and significantlyimproves the inventory skills in the management of the business. This process is necessary forthe accuracy assessment of inventory, because errors can occur in many areas of the businesssuch as the sale process, planning and scheduling, receipting and dispatching. These errorsultimate create problems in the operation and supply of products, resulting in late or earlyreplenishment of the inventory, which affect sales performance, level of inventory and theimage of the organization.ii) Pinpointing the Source of Inventory ErrorWith cycle count occurring on a regular basis, the inventory manager and the concerned peoplefind it easy to investigate the reason for the discrepancies in the inventory record. This will helpthem in streamlining the overall process of inventory management. If it pertains to softwareproblems or certain employees or any other such causes, inventory cycle counting ensures thatthe cause of errors in the inventory records are identified quickly.iii) Increased Operational EfficiencyInventory cycle counting ensures the appropriate arrangement and organization of the businessinventory every time a cycle count is going to be done. This means that your inventory isreviewed on a regular basis. This approach ultimately improves the efficiency and attitude ofthe staff responsible for inventory management. They realize the important role they perform,their impact on inventory accuracy and the need for well-documented processes.
  3. 3. Cycle Count DesignDifferent experts have different perceptions about a Cycle Count Design, but there are someessential elements that should be incorporated in an effective design, as listed below:i) Assignment of Count AreasTo achieve the count accuracy, it is better to assign specialized count areas of the warehouse tocycle counters.ii) Report PrintingTo incorporate transparency and accuracy into the process, experts suggest not printing theinventory quantities on the report. The original quantities and variances are only revealedwhen all the required transactions have been completed and verified.iii) Count FrequencyIt is best to assign the frequency of count based on the Items ABC Inventory Classification codewhere the A items are counted more often than the C Items. For more information on the manyuses the ABC Inventory Classification code refer the authors website Investigation and DiscussionConsult the inventory database to pinpoint the reasons behind errors and share your findingswith the concerned warehouse manager and cycle counters. Try to identify underlying patternof errors (if there is any) and come up with solutions to avoid them.v) Inventory AuditTo streamline the processes to make them error free, schedule inventory audit regularly anddisseminate the resulting information among all concerned employees to keep everyone on thesame page.Conclusion
  4. 4. Inventory Cycle Counting is definitely a must have for large and small businesses alike, butimplementing it in bits and pieces can only lead to further inaccuracies and discrepancies. So,make sure you seek all the professional help you might need to get things done in a systematicmanner.Remember with New Skills your Future Starts NowFinally…If you found this article helpful, contact Wayne at about otherinventory management-training guides and inventory planning spreadsheets that enable“learning by doing”. Here you’ll find guides based on e-learning principles that are very costeffective, focused, current and developed by practitioners with a real passion for the subject.Try them. You won’t be disappointed