You have probably already heard that cycle counting is the answer to all of your inventory woes. After all, cycle counting saves time and money year round and helps improve accuracy at every opportunity. Now it's time to dig a little deeper into the hidden costs associated with cycle counting and annual physical inventory counts.
What Do Inaccuracies Really Cost?
Too often, we discuss inaccuracies in our inventory as a percentage rate, but we fail to link those numbers to actual customers. In fact, we tend to think of inaccuracies in our annual inventories as a purely internal matter without considering how our customers suffer when our inventory is wrong. The truth is when inventory on an item is off, it means that customers are placing orders for items that aren't there. This results in delayed shipments, cancelled orders and missed opportunities. How much does it cost you to have an item out of stock? This number is measured in lost and dissatisfied customers.
Companies who switch to cycle counting report that they are able to increase visibility throughout their organization, not only by keeping more accurate inventories, but also by having more accurate information about when the next shipment will arrive. Customers receive better service because they are kept in the loop whenever there is a delay in shipment.
Another big shock to companies is the sheer amount of time and resources needed to pull off an annual inventory count. The weeks leading up to annual counts are usually chaotic and filled with stress. Team members are suddenly forced to organize row after row of stock locations that really should have been cleaned up months ago. Every re-count and investigation into inaccuracies adds precious minutes to the end of the inventory, threatening to keep you from staying on schedule with your next round of shipments. The bigger the warehouse, the more extreme this scenario gets.
Cycle counting offers a more adaptable solution for growing warehouses. Without disrupting normal operations, you can count just a few more items each day as your product selection expands. Your cycle counting software will automatically divvy these new items up and dispatch the counts as a matter of normal business. Ultimately, cycle counting is significantly less jarring to your employees, even if you go through a period of rapid growth.
When it comes to choosing cycle counting over annual physical inventories, there are plenty of reasons to make the upgrade. If you still aren't sure that it's right for you, consider the costs of not making the upgrade. The longer you wait to make the change, the more challenging it is to roll out a new system. By starting early you can provide customers with better service all along and ensure that your team is ready to handle the increased pressure of a growing enterprise.