Moving to a cycle counting system can revolutionize the way your company handles inventory. It can drastically reduce waste and ensure that you are on top of your inventory year-round. Over the years, inventory experts have outlined a few best practices that you should work into your plan from day one to guarantee success.
- Dedicate a Team - To be effective, cycle counting needs to become an integrated part of every single day in your warehouse. Some companies assume that they will be able to dole out cycle counts at the end of the day to anyone who has a spare minute. Unfortunately, they quickly fall behind on the schedule and things don't get off on the right foot. Before you begin, make sure you have a dedicated team who will take on cycle counting as part of their regular duties.
- Check In Often - At the outset, you will be dividing your stock into ABC categories that determine how often each one is counted. The dollar value of the product is important when determining the category, but the categories are also often based on the volume of each product in question and how quickly those items move through your warehouse. It's important to remember that trends change, and last season's hot items could now be lingering in your warehouse. Reassess your products every quarter to decide whether or not they are still in the proper category.
- Plan on Counting Every A Item at Least Once Per Quarter - There may be some high value items that you only sell once a year. That doesn't mean you should leave them uncounted. Make sure that your cycle counting program for A parts fits neatly into a single quarter so that each SKU is accounted for four times a year. Letting some items go longer sets you up for unexpected losses when you finally come back around to them.
- Redundancy Is Best - Companies who use annual physical inventories because they don't have the ability to cycle count often conduct blind recounts to improve accuracy. This concept can be applied to cycle counting too. You should make sure that when an item shows up on the cycle count schedule, two independent individuals should count it, and compare numbers later. Conducting blind re-counts is a great way to discover anyone cutting corners, and catch minor discrepancies that can add up to huge shrinkage over the course of a quarter. Setting a goal for accuracy is a good way to remind your team that you need the numbers to be right if you are going to see any benefits from cycle counting.
As you set out to begin cycle counting each day, make sure that your team understands the importance of an accurate count. You should have a dedicated counting team in place that has enough individuals to manage blind re-counts in a timely manner. Don't neglect your cycle counting schedule after your first round. You need to constantly check in to determine whether or not items need to be counted more or less often than the previous quarter. These are just some of the best practices that can make or break your new cycle count program at the outset.