When it comes to implementing a cycle counting program, you will achieve the greatest results when you choose the best method for your needs. There are several sampling methods available for your warehouse. Despite their differences, they still share all of the benefits that make cycle counting useful in the first place. So how should you go about evaluating the various methods for your warehouse?
Location of Products
One factor that can impact the method you choose is the physical location of items within your warehouse. Depending on the size of your staff, it may be impractical to send your counters out to canvas your entire floor. You may choose to conduct random sampling by zone each day or dispatch ABC-based counts in one area at a time throughout the day.
Depending on what kind of warehouse you are managing, it may also be helpful to consider what product categories you are dealing with. If you have a mix of finished products and unfinished products, there may be reasons to count them separately.
Another common factor that will help you decide on a cycle counting method is the relative value of your products. In general, ABC counting is used when there are highly valuable items mixed in with low value items because this system prioritizes certain items above others. The random sample method may not provide adequate insight into inventory discrepancies in your most valuable items.
Building off of the value of your products is the concept of sales rankings. In this case, you are not just looking at the relative value of a single piece of inventory, but the total volume of those items being sold. Higher volume items rank higher than slower moving products, even if they may be higher priced by unit. This is another case for the ABC counting method.
These are the four main points you should be considering as you decide which cycle counting method will serve you best. The ABC method is the most popular method today, but in some cases the random sampling method may be better suited to your needs. In addition, you should plan to improve your cycle counting program over time. With this in mind, you may choose to launch a random sampling program to begin with and later upgrade to a more advanced ABC program after you have collected enough data to separate your products into each category.