Cycle Counting Best Practices: Tips for an Effective Cycle Count
Using inventory management software like Zenventory is an ideal step to optimizing your business operations. Ensure the accuracy of your physical inventory with a steady cycle count schedule.
An inventory cycle count is a method of counting products in a warehouse whereby one small section is counted at a time, but counts occur more frequently than in traditional counting methods. Using a sample, the results of what is measured can be applied to larger parts of the warehouse, eliminating the need to count inventory for every single individual item. Cycle counting is easy with Zenventory, thanks to a feature built into our web app and mobile app, so your business can perform and track counts with ease.
Benefits of a Cycle Count
While less-frequent physical inventory counts can provide the data you need, they are time consuming and require a full staff of individuals to help. Cycle counts happen more frequently, more quickly, and with less required resources to improve accurate counts. An inventory cycle count can be used in conjunction with a more robust overall physical inventory count for even more precise insights.
Implementing a regular cycle count helps your business improve overall accuracy so you can better serve your customers and optimize your operations. Using cycle counting helps you to identify potential errors that could be affecting your entire warehouse. Benefits include:
- A more realistic assessment of the value of the physical inventory you have in your warehouse
- Help avoid over-ordering products
- Accuracy improvement within your inventory management system
- Helps identify where misplaced products are and improves organization in your warehouse
There are many methods to employing a cycle count for your business. Keep these cycle counting best practices in mind to improve your inventory Zen:
Ways to Execute an Inventory Cycle Count
How you implement a cycle count for your business will depend on your human resources and how many products you sell. If you have less people to work on cycle counting, you may choose to focus on more frequently counting your most important and expensive products, since they cost more to optimally stock. Once you’ve determined the frequency of your ideal cycle count schedule, here are some ways to go about it.
ABC Cycle Counting
ABC cycle counting means your business will group the products you sell into “A,” “B,” and “C” groups based on the impact those products have on sales. Your A group will be the top 20 percent of products that account for about 80 percent of your sales. Your B group will be the next 30 percent of items that account for about 15 percent of your sales. Your C group will be the last 50 percent of items that account for 5 percent of sales. Your A items will be cycle counted more frequently than C items.
To determine which of your products fit into which category, use Zenventory’s reporting features to see which inventory is performing best for your business. Your groups may also adjust throughout the year if you sell seasonal products. Within each A, B, or C group, you can either use control group cycle counting or random group cycle counting, which is discussed below.
Control Group Cycle Counting
If your business is new to cycle counting, using a control group cycle counting method can help you to refine your process. This means, you will cycle count the same group of products repeatedly over a short time period to identify potential counting errors in your method. This allows you to apply what you’ve learned to the method you use when you count other groups. In Zenventory, it’s easy to do this by isolating specific locations to count and assigning them to specific individuals on the team.
Whatever method you choose, comparing new results to previous measurements allows you to continually refine your process. Use the cycle counting reports in Zenventory to glean insights.
Cycle Count Tips to Keep in Mind
No matter what cycle counting methods you begin with or how your process evolves, you should use cycle counting to decrease errors that can be costly to your business. Here are some objectives to aim for:
- Make cycle counting a consistent, regular part of business. Aim to cycle count as frequently as you can with the staff you have. The more you cycle count, the higher your inventory accuracy levels increase.
- Don’t neglect inexpensive products. Depending on your resources, it may be tempting to focus all your cycle count efforts on your A group. If you can, be sure to count your B and C group products regularly, too, at least once a quarter if possible. You might discover important errors in these groups that have been affecting your entire warehouse. Or, you might experience an unexpected surge in sales for a particular group of products. If they haven’t been counted recently, you might incur expensive errors.
- Don’t limit counts to just one team member. Using a single employee to do your cycle counts can increase errors. On each group that is counted, at least one other person — and multiple, if possible — should work on the cycle count, to compare count results and improve accuracy. With Zenventory, you get unlimited user accounts, so each team member can be a part of the counting process.
- Freeze activity on locations and items that are actively being counted. Just like you’d shut down all warehouse operations to conduct a wall-to-wall physical inventory count on all your products, you should halt any activities that are being done on the specific group of products that are being counted. You can cycle count without impacting operations by doing it at the beginning or end of the work day.
Keep in mind that as your business grows, you’ll also want to account for more attention to cycle counts, as well. Diligently recording all cycle counts with your inventory management software is the best way to ensure accuracy and accountability.