As with all process improvements, before you can make the switch to cycle counting, you must first decide which metrics you are going to use to measure performance. Changing from one inventory system to another cannot rightfully be called an improvement until you have the data to back up your assertion. Here are some of the most important metrics that you need to look at right away.

Accuracy: Your Number-One Priority

Many companies launch a cycle counting program focused solely on productivity and efficiency. They look only at the time that it takes to complete a physical inventory and fail to recognize that accuracy is the absolute most important part of this equation. In fact, without accuracy, it doesn't matter how fast your team moves through the warehouse at all. Before you even think about looking at any other metric, make sure that you have a system for measuring accuracy, and that your goals are clearly outlined.

All speed and productivity is derived from accuracy first and foremost. You want your team to be as close to 100% accuracy as possible. Most warehouses that have high accuracy use blind counting (where the worker performing the count does not know what the expected quantity of the part is) and perform a sample of randomly selected recounts by sending a different team member to count parts a second time to confirm the accuracy of the first count. These spot checks paint a picture of the overall accuracy of the inventory, and give you a library of information about each individual counter and how they are performing over time.

Productivity

Once you have mastered accuracy, you can finally start looking at the productivity numbers. The productivity of your cycle counting team can be measured in several ways. The most common way of measuring productivity is by looking at how many pieces per hour are being counted. You can also look at how many locations per hour or per day are being counted. Finally, depending on how you have set your program up, you might look at your total cycle time. This will tell you how long it is taking to get through one complete cycle of your A, B and C items before you begin again.

The importance of accuracy as your primary metric cannot be overstated. Through accuracy you can improve productivity, but without accuracy your productivity is entirely irrelevant. It is possible to work on both accuracy and productivity at the same time as you become more comfortable with your new cycle counting system, but you should always make accuracy your first priority. Many companies print daily reports of these statistics to show each team member where they fall on these metrics, as well as cumulative results of the entire team.