What is an Inventory Cycle Count?
An inventory cycle count is basically an inventory control and auditing process in your warehouse. Instead of blocking all the warehouse, a small set of selected inventory is counted daily. Cycle counting is a must-have functionality for an advanced warehouse management system.
As we have been emphasizing in many of our previous posts, accurate inventory is the key to success in various forms of retail business. Counting the inventory and evaluating what we have in hand periodically will enhance our inventory accuracy.
Why is Cycle Counting Crucial?
Cycle counting is a repetitive process which guarantees the accuracy of the inventory. We have seen drastic accuracy increases in the warehouses which implement cycle counting. The main benefits of cycle counting are:
- Increase accuracy in the warehouse
- Prevent human errors
- Do not block whole warehouse, so the rest of your warehouse keeps going.
- Prevents over selling and missing sales opportunities
How to Select Locations and SKUs
One of the crucial processes before starting a cycle count is selecting the warehouse locations and SKUs to be counted. I usually use pareto analysis or ABC classification to select my locations and SKUs. A better way to classify your SKUs as A, B and C type is to check the sales reports. The fast movers are the ones you sell more. I suggest selecting 80% of your locations and SKUs from the A type of fast movers and 20% from the slow moving B and C types.
In some industries, the value of the products is also important. Some of the products are more expensive than the others. You should also consider to include expensive products into your selected cycle count list.
Do you need an inventory management system for cycle counting?
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