Cycle counting

Cycle counting offers continuous accuracy measurement without a warehouse shutdown. These are some of the advantages of cycle counting:

• Cycle counts reveal inventory errors more frequently than an annual physical count.

  See Physical counts.

• Cycle counts enforce operator accountability by revealing the problem shortly after it occurred and holding those on the shift responsible. This encourages employees to be accurate with inventory.

The key is to meet the predetermined counting requirements and ensure the accuracy of each inventory location. The benefits of cycle counting over annual physical inventories are lower costs and continual verification. Cycle counting must be performed consistently to achieve maximum accuracy levels.

Cycle counting is a random counting method that uses shelf-to-sheet counting. Every day a set number of products is printed on a list. These products are scheduled for routine counts and are listed in bin location order. In theory, a counter can move from one bin location to another and from one product to another. The next product on the shelf should be the next product on the count sheet. Otherwise, the product is in the incorrect location, or is a found item and must be reported.

Establish a daily cutoff time by when all orders must be entered and picked, and all received products must be entered and put away. Hold orders and receipts that occur after the cutoff time must until the count is complete. Products that are staged must be included in the count to reflect the entire quantity. Locating the entire quantity can be difficult, even when everyone performs their jobs correctly. Therefore, procedures must be in place to ensure paperwork and staged items are handled correctly.

Count sheets might not include all of the locations for a product. Because tickets and count sheets print in bin location order, multiple occurrences of the same product might not be listed together on the count sheets. Products with a questionable quantity or location might be included on the count sheets. These types of products are referred to as must counts.