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February 06, 2013

Cycle Count Procedure: 8 Tips to Remember

What is cycle count

Anyone responsible for inventory knows how frustrating managing and tracking these materials can be. Even when inventory is carefully monitored, issues still arise due to a variety of factors, the majority of which can be attributed to basic human error. It is not uncommon to discover that there is a discrepancy between the number of actual items on hand and the number that is on record, or for the wrong items to be received in place of desired products.

Discrepancies like these become problematic and can lead to out-of-stocks, loss of sales, and other grievances. In order to rectify these issues before they become problems, managers implement inventory counting methods that will pinpoint errors. One of the most popular inventory counting methods is cycle counting. 

The cycle counting technique is popular for good reason. Unlike physical counts, which requires a complete halt in operations and demands that every item in storage is counted manually, cycle counting is an ongoing process expressed in short burst. 

Cycle count definition

Cycle count procedure is a cyclical type of inventory auditing method, in which smaller subsets of your inventory are audited in specified locations on specified days. This method is very similar to physical counts but differs in approach. Instead of counting the entirety of your inventory at once, employees tackle small portions of inventory according to a predetermined schedule. 

The process can take anywhere from a week to several months depending on your inventory. Unlike physical counts, cycle counts can be performed on an ongoing basis to account for discrepancies in your inventory. And when you spend less time doing physical counts, you’re able to track inventory more accurately, and your business benefits. It’s that simple!

8 pointers for warehouse cycle count

Cycle counting can be an awesome way to rid yourself of the horrors of undergoing a physical count. When done right employees and managers benefit from the speed and accuracy that comes from cycle counting. However, before you set out to implement a cycle count procedure read over these pointers to make sure you get started on the right foot. 

1 | Do a minimum of one cycle count per year

Do at least one full cycle count per calendar year. We know. It's not fun. But we've found that an optimal cycle count period is once every 12-13 weeks - quarterly if you will. As we like to say to keep ourselves motivated...

2 | Do more cycle counts, less physical counts

Physical inventory counts are tedious, time-consuming, labor intensive, and can put your entire operation on standby - and nobody enjoys that. The more cycle counts completed on a regular basis reduces the need for multiple physical counts throughout Download our free cycle counting formula and calendar today!the year. And that's awesome.

3 | Cycle count in a pattern

Go in order through your warehouse - clockwise, zigzag, whatever - so long as it's easy for you to pick up again if / when you're distracted. It's okay to break from your pattern to cycle count trouble areas (every warehouse has them!), but keep your main focus on going through your warehouse(s) in a sensible order. It will save you a lot of headaches later on.

4 | Maintain an accurate inventory

  This point is key - out of stocks only lead to increased customer service costs and alienated customers. There are so many options out there for taking control of your inventory - with or without an inventory management system.

5 | Have a plan

We know how hectic it can get day-to-day in the warehouse, but try to make the cycle count procedure part of your daily / weekly routine. You don't want to be in the position where you're so behind that you have to wing it with a time constraint. Yikes.

6 | Organize

This one goes hand in hand with tip #4. Keep your inventory well organized - messy inventory is usually inaccurate inventory, and makes accurate cycle counts impossible.

7 | Budget for growth

Adjust your plan as you go and as your grow. No one wants to overspend resources on cycle counting, but always try to keep in mind that fewer errors reduce future labor time. Careful cycle count procedure leads to better ROI.

8 | Delegate and be aware

Post the cycle count schedule in a high traffic area, and hold your assigned employees accountable for upholding the schedule. Cycle counting is a big job and a big deal, and having good help makes a big difference.

So, there you have it - with a little planning and organization you can establish a strong cycle count procedure that will help you to manage your inventory more accurately and efficiently.

Tell us what you think: leave a comment below, and tell us what you do to track inventory discrepancies and prevent out-of-stocks in your business!

Emilie is the Creative Director at SkuVault. She graduated Summa Cum Laude from the University of Kentucky with a focus in Design & Marketing. She has been key in keeping SkuVault's marketing sharp by more than doubling leads year over year, and in focusing our front end user experience to ensure clients are making more money & better decisions. Emilie has a passion for beautiful and inviting graphic design, stylish and easily navigable websites, and drawing graphic novels.

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