Warehouse Dispatch

Cycle Counting vs. Physical Inventory: Who Wins?

Posted by Reid Curley on Oct 26, 2015 8:00:00 AM

Cycle Counting vs. Physical Inventory: Who Wins?Cycle counting inventory via an automated warehouse management system has become a critical component for efficient modern warehouses. And yet, many companies today are still attempting to manually manage their warehouses using physical inventories, which begs the question, "Is cycle counting really so much better than physical inventories that I should consider using a warehouse management system?"

Battle Royale: Cycle Count vs. Physical Inventory

  • Round 1: Warehouse Shutdown
    If you are utilizing a physical inventory system, how often do you have to shut down your warehouse to take a full physical inventory? Shutting down the warehouse once or twice a year to take a physical inventory is a major issue for many businesses because it requires initiating an operational halt to put everything away. It also implements a temporary stop to customer orders, which can disrupt the entire company.

    Cycle counting allows you to keep picks, orders, and putaways going while also being able to count specifically identified areas of your warehouse in a systematic way.
  • Round 2: Consistency
    With the massive operations disruption caused by a shutdown for a physical inventory, going six months to a year between inventories is a recipe for disaster for companies that rely on having accurate product counts.

    Cycle counting, on the other hand, since it can happen with very little or no disruption to order fulfillment, simply becomes part of your day-to-day operations and delivers the benefit of consistently accurate counts that annual or semi-annual inventories cannot.
  • Round 3: Replenishing stock
    With the inconsistent scheduling of physical counts, it is difficult to stay on top of what products are running low and what shelves are empty at any given time. Often, the realization of low or missing stock occurs at the point of needing to fill an order with that item, and a delay occurs for the customer as you scramble to replenish your inventory.

    Cycle counting, however, maintains ongoing awareness of inventory levels in real time, which allows you to replenish low or missing stock so that you are better able to get orders shipped to customers as soon as possible. When warehouse accuracy is good, the inventory should be a 99.99%, if not 100%, match to your current inventory count, which then serves to increase warehouse efficiency and improve customer service.
  • Round 4: Damaged products
    Similar to the issue of replenishing low or missing stock, the expanse of time between inventory checks can create an unwelcome surprise when you find a damaged item that has been sitting unattended on the shelf for a long period of time. Cycle counting can immediately tell you which products are salable and which products need to be replaced due to damage.
  • Round 5: "Lost" inventory
    It is frustrating when you know you have a product, but you can't seem to find it because it's "lost" in the warehouse somewhere. Warehouses are big spaces, and it may feel like you're searching for a needle in a haystack!

    Automated routine cycle counts systematically take you through all parts of the warehouse, and eventually, (sooner rather than later), all "lost" inventory is found. As an added benefit, cycle counting helps workers become aware of sitting inventory that is losing value, and encourages workers filling orders to use those older items first.
  • Round 6: Customer satisfaction
    If you cannot rely on the accuracy, quantity, or condition of the inventory inside your warehouse, you cannot assure customers that orders will be filled correctly and shipped on time.

    Cycle counting ensures that you have stock on-hand, in good condition, and ready to go when the customer orders come in.

So, cycle counting vs. physical inventory... who wins? You decide.

New Call-to-action

Topics: warehouse efficiency

Reid Curley

Written by Reid Curley

Subscribe to Email Updates

Recent Posts