Have you heard about Cycle Counting? If you’re looking for a way to count your inventory without having to in its entirety, that’s the answer. Curious? Read this blog post.
What is Cycle Counting?
For startups, counting your inventory is easy, but as your business grows, so do the tasks involved. Cycle counting is an inventory-control or counting solution that enables businesses to periodically count various items in a warehouse and in different areas without the need to count the entire inventory. The method saves a lot of time, avoid expenses on overtime, and increases the accuracy of inventory. Applicable per location or zone, or per product categories.
Basically, the cycle count method can reach two inferences:
- Items in the cycle count will have the same count in the whole warehouse.
- An error in the cycle count for an item will affect all the items in the entire warehouse.
Methods for Using Cycle Counting
In cycle counts, it needs to manually count at a predetermined frequency, a portion of an inventory so that each item is counted at least once in an accounting cycle (usually a year). While some items are counted regularly, expensive and fast-moving items are counted more frequently than slower and less costly ones. To do this, you can choose from three methods:
- Control Group Cycle Counting
This cycle counting method usually includes counting a small number of objects several times in a short period of time while detecting and correcting potential counting technique errors. A control group tracks the system for the best result.
Random-Sample Cycle Counting
Cycle counting requires to randomly count items, there are two methods that can be used, these are the counting of constant population and the counting of diminished population.
For diminished-population counting, the number of items that have been counted should not be counted again. That is until all warehouse items have been counted. Thus, each count requires the collection of items from an ever-decreasing number of eligible items to be counted.
- ABC Cycle Counting
The Pareto principle states that 80 percent of the results come from 20 percent of the triggers for certain cases, and that is what ABC cycle counting is based on. Here’s how it works:
A Products : 20 percent of the items in a warehouse correlate to 80 percent of sales.
B Products : items account for 30 percent of the items and 15 percent of sales.
C Products: items represent 50 percent of the items in the warehouse but, just 5 percent of sales.
Pro Tip: Investing in inventory-control software can help your company do a cycle count or even other methods of inventory counting. It saves more time, improve accuracy, and less expensive rather than hiring more people to do so.
See Also: ORDER MANAGEMENT PROCESS
