Inventory cycle counting is the practice of counting specific subsets of inventory at regular intervals. Also known as a cycle count or cycle counting, an inventory count is a popular way to manage physical inventory and determine inventory value. In this article, we’ll cover how to perform inventory cycle counts in just a few easy steps and review some cycle counting best practices.
Related: What is Inventory Cycle Counting?
How to conduct inventory counts
Inventory cycle counts may seem simple enough, but depending on the size and complexity of your business it can be complicated. Here’s a step-by-step process you can follow. Keep in mind that this is a general overview; you may need to alter some of these steps to better suit your business.
- Create a schedule for inventory cycle counts, then stick with the plan.
- Order more than enough count tags, each sequentially numbered, so you can more accurately count your inventory.
- Preview your inventory! Know what you’re getting yourself into before you begin. Organizing your inventory ahead of time will save you a headache.
- Pause any warehouse action. During a count, nothing should be removed or restocked.
- Have a clear inventory count procedure posted, so there’s no confusion about the process.
- Break counters up into teams, if necessary.
- Distribute count tags, issuing them to the correct teams.
- Clarify where each team should count, if necessary.
- Count your inventory. Usually, one team member physically counts stock in a specific bin location, while the next person records all findings on a count tag. You can decide what information needs to be recorded on a count tag. Usually, it’s the item name, bin location, item description, quantity, and unit of measure.
- Transfer count tag data onto an inventory management system, such as the Sortly app.
If, after your inventory cycle count, you find any strange results, you’ll want to investigate further. Sometimes, that means a recount. If you use an inventory management system to track inventory, you might be able to resolve discrepancies by reviewing item histories.
How often should inventory cycle counts be done?
There is no perfect answer to how often inventory cycle counts should be performed. Inventory value, turnover, seasonal demand, the accuracy of employees’ inventory tracking, and many more factors affect how frequently you should cycle count your inventory. How and why you perform inventory cycle counts will dictate precisely how frequently you count inventory.
Here are some recommendations and best practices for determining when to perform inventory cycle counts:
ABC Analysis Cycle Counting
ABC analysis allows businesses to focus on controlling the inventory that matters most. Category A items are 20% of your items, but 70% of your inventory value. Category B: 30% of your inventory, 25% value. Category C: 50% of your inventory, but 5% value. For best results, count “A” items most frequently, then “B”, then “C”.
High-Usage Cycle Counting
Items that are turned over the most should be counted more frequently, especially if those items are also expensive.
Control Group Cycle Counting
If you are counting certain parts of your inventory to determine whether your entire inventory is accurate, those control groups should be counted several times over the course of a month or so. This way, you can determine if there are any errors with your stocking, counting, labeling, and so on.
Random Cycle Counting
If you stock a lot of similar inventory, you can randomly count some—not all—of certain inventory at random to ensure good inventory processes are in place.
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Inventory counting best practices
No two businesses are quite alike, so there’s no one-size-fits-all method for inventory cycle counting. How often your company conducts inventory counts depends on the number of items stocked, the accuracy and efficiency of the team, and how much high-value inventory you carry.
Whether you stock auto parts or aspirin, these tips and tricks can help improve the accuracy and reliability of your inventory counts.
Count when it matters most
Cycle counts are important because they protect against inventory loss. Since the best offense is a good defense, ensure you give the right inventory enough attention when it matters most. For example, if you’re an auto repair shop, you’ll want to count your windshield wipers with a little more intensity during the rainy season.
Count what matters most, too
While all your inventory is important, some stock is more valuable or essential than other stock. Determine what inventory is your bread and butter, then resolve to never run out of it. Inventory counts help you keep tabs on your most valuable stuff, so schedule them regularly and find a secure place, like inventory software, to track the data.
Put your best employees on the job
Because physical inventory cycle counts are performed by real people, human error is to be expected. To combat this, assign high-value cycle counting to your most efficient, reliable, and thorough employees. After all, you want cycle counts performed quickly and accurately! Otherwise, you’re just going to redo them anyway.
Stick to one category
While it can be tempting to conduct several cycle counts at once, most companies benefit more from counting just one group of things at a time. By reducing the number of items your team needs to count, you support more accurate cycle counting. Plus, employees who’ve got other responsibilities will still get their other work done, without affecting your operation’s productivity or your customers’ satisfaction.
Schedule counts recurrently—or not
Some businesses, unfortunately, do deal with shrinkage in the form of inventory loss or theft. While cycle counting is traditionally performed on a recurrent, regularly-scheduled basis, some companies choose to count more randomly to discourage inaccurate numbers.
Streamline inventory cycle counting with Sortly
Using inventory software, you can streamline your inventory cycle counts using key automation features like barcode and QR code scanning. Using your phone’s camera, you can quickly scan your inventory and enter in key findings from your cycle counts, making a tedious process way less cumbersome.
If you’re using cutting-edge inventory management software to track your inventory, you’ll likely need to audit your stockroom at some point using inventory cycle counts. Even if you only count a small sampling of what you have on hand, your cycle count data can help you determine whether the rest of your inventory is likely to be accurate.
Plus, the right inventory app can help you manage your inventory before things get out of control. With inventory management software, you can keep track of your inventory as you use it or move it. This means you’ll always know what you’ve got, how much of it’s on hand, and where it is.
If you’re interested in automating your inventory, try Sortly’s inventory app. It’s intuitive, modern, and requires no training or bulky equipment. Get started today with a free two-week trial.