If you ask 10 different companies to define inventory cycle counting, you will probably receive at least 15 definitions. In addition, many professional organizations have their own definitions for cycle counting. The good (or bad) news is that all of these definitions could be applicable to your business. What’s important, then, is determining which one(s) is best for you.
At its core, cycle counting is “A systematic process to count inventory.”
But there are many ways to perform a cycle count. Let’s look at a few of the most common methods used by medium-sized businesses.
There are two primary business reasons to initiate a cycle count program.
Many companies will start with counting specific items and then migrate into a complete cycle count process.
To replace an annual physical inventory count with a cycle count program, the general rule is that all bins (or items if there are no bins) must be counted at least once a year. This can be accomplished in a number of ways, based on the characteristics of the items you stock:
A full cycle count process can be implemented with or without bins. Implementing cycle counting without bins can be difficult if the item is stocked in more than one physical location and might create more inventory accuracies than correcting. If each item only has one physical location, than you can implement a cycle count program using most of the same criteria as when using bins.
Cycle counting can be used to validate inventory when items are being discontinued or for other business processes. With RF-SMART’s Cycle Counting, you can create a count for an item or use one or more filters that include class, department, manufacturer or vendor.
One of the failures of many companies is that they do not have a clean cutoff for transactions or do not take action on the counts that have been performed. An inventory management solution like RF-SMART provides the ability to perform real-time counting even when other employees are picking, perform line item approval, and create new counts from existing counts.
No matter which cycle count method you use, performing cycle counts instead of an annual physical count will result in higher inventory accuracy and also will identify issues quicker.
