As you take your first steps into cycle counting, you may feel like the whole program is slowing you down more than anticipated. Once the fundamentals are in place, it's time to start looking for ways to make your cycle counting more effective and efficient. Fortunately, there are a number of fine-tuning methods you can use to improve your results once your cycle counting is in full swing.
Dealing with Discrepancies
The one area that tends to cause hangups more than anywhere else in the cycle count is what you do when you have a discrepancy. One approach is simply to make an adjustment and move on. At the other end of the spectrum, you could quarantine the location or the package where the discrepancy was noted and do a full-blown investigation.
Most companies set a threshold so that minor variances just get adjusted but major variances get investigated. The question then becomes where to set the threshold. If you set it too tightly, you will be overwhelmed with the number of items that require further action. On the other hand, if you set it too loose, you may not understand material errors when they occur. The point of a cycle counting process is to drive toward 100% accuracy at all times.
One manageable approach is to set the threshold so that you are fully investigating the largest 20% of your discrepancies. As your operations improve, you will need to drop the threshold to keep to that percentage. Over time, you will drive your inventory accuracy higher and higher.
Blind Cycle Counting
Some companies send counters into the warehouse armed with the quantities that are currently on the books. As you can imagine, the temptation is just to confirm that the number is correct. Best practices dictate that cycle counting should be "blind" so that the worker performing the count doesn't know what the expected quantity of the part that they are counting is. The whole point is to catch errors so that the root causes can be addressed. If staffing permits, you can even go "double blind" where the workers performing the cycle counts don't perform other warehouse functions, particularly putting inventory away.
Verification Through Sampling
If you can't perform blind cycle counts, you will need to provide for some redundancy within your cycle counting system. You should have an independent quality control group that randomly double checks items that were cycle counted that day. They will be able to tell you if a certain team member is consistently off in their counts, indicating a need for further training or a change of staffing. Even if you perform blind cycle counts, double counting a random sample of parts can be a useful check on the integrity of your cycle counting process.
As you grow more comfortable with the cycle counting system, you will be able to tighten up your variances and focus on building the strongest inventory team possible. There is some trial and error involved along the way, but the more you focus on quality issues and training, the more efficient and effective your count will be.
