The ABCs of Cycle Counting

Cycle counting was introduced as a way to alleviate the stress and disruptive nature of performing a complete physical inventory count. Cycle counting breaks your inventory down into several different categories and allows your team to conduct rolling counts throughout the year instead. Choosing to manage your inventory this way comes with several benefits, including a large boost to your warehouse efficiency.

The ABCs

Your inventory likely falls into one of three categories:

• A: High-dollar and high-demand items that move quickly through your warehouse and require exact accuracy
• B: Average-demand items, or high-demand items with low value
• C: Low-demand items

Each product in your inventory can be placed in one of these categories and set into a cycle counting rotation. Items in category A will typically be counted every one or two months, category B items will be counted every three months, and category C items will be counted every six months or once per year. Your team members will receive a random selection of items to count each day of the year, comprised of A, B and C products.

Benefits

The goal of cycle counting is to work inventory counting into your day-to-day routine and eliminate the need for a warehouse shutdown. In addition, your highest-valued items will be counted more frequently than your low-value items, ensuring greater accuracy where it matters most. In the event that a discrepancy is discovered, you will be able to isolate the problem to the most recent counting window and have a better chance of resolving the issue.

You will find that warehouse efficiency increases notably with the use of cycle counting for two main reasons. Your overall inventory will be more accurate throughout the year, meaning you can depend on products being in stock and where they are supposed to be. Plus, by performing cycle counts each day, you are more likely to catch errors or signs of theft than if you complete your inventory at the same time each year. Your team members can easily work a few cycle counts into their daily routine without dramatically changing their work regimen.

When used in conjunction with warehouse management software, cycle counting will have a major impact on your warehouse efficiency. The WMS will track products across each category, select which products need to be counted each day, and dispatch them accordingly. It will also flag any discrepancies for review instantaneously, so nothing goes unchecked.