What is the major purpose of cycle count?

Hello Team,

Cycle counting is an inventory management approach where part of an inventory is counted as per schedule. A counting schedule is developed, and specified areas of inventory are checked according to the schedule. Cycle counting is an important inventory management approach that provides many benefits.

Cycle counting, involving inventory assessment with an automated system, keeps accurate data with less chance of error because fewer items are inventoried at one time. Fewer items will be stolen from inventory if employees understand that inventory levels are accurately updated on a frequent basis. In addition, management will be alerted more quickly of other problems with inventory levels.

Warehouse workers will be more productive with cycle counting because the location of items in inventory will be more accurate. Less time will be spent trying to locate items that are no longer in inventory or have been moved to another location. When inventories are inaccurate, it may be difficult to expedite customer rush requests. In addition, if finding items takes more time, then to compensate for the additional time, higher expedited shipping costs may be incurred.

A more accurate inventory reduces the amount of time management exceptions that occur. For example, if a customer order cannot be fulfilled because of an assumed wrong inventory level, the customer has to be contacted and management must seek other methods to satisfy the customer’s needs.

A more accurate inventory reduces the number of stock outs and allows for a lower level of safety stock. Safety stock is an added level of inventory maintained to prevent not having enough inventory on hand.

To implement a cycle counting program, management should announce the program to impacted employees, explain how the program works and assign someone responsibility for managing the implementation. In addition, one or more individuals should be designated to maintain the program that was originally set up. First, a complete physical inventory must be taken. Inventory is then divided into smaller sections and a schedule is developed covering on what day each section will be inventoried. When an inventory is taken of a section, access to that section must be blocked until the inventory is complete. Other departments, such as customer service, must be informed of the schedule when inventory access is not available. Upon completion of inventorying one section, computerized inventory records must be updated.

Regards,

Saiyid

Cycle counts are less disruptive to daily operations, provide an ongoing measure of inventory accuracy and procedure execution, and can be tailored to focus on items with higher value, higher movement volume, or that are critical to business processes.

Inventory can often be the most frustrating part of owning a product-based business. Implementing smaller cycle counts allows your entire operations team to see your stock accuracy as a vital part of your business, allowing them to feel more confident about the business decisions you’re making. It will also decrease the amount of stress it causes, allowing for it to be accomplished with minimal haste.

To know the exact number of stocks that went in and out of the warehouse and to check for discrepancies if there are any.

Cycle counting involves counting a small amount of inventory each day, with the intent of cycling through the entire inventory on an ongoing basis. Any errors found during these small incremental counts should result in an adjustment to the inventory accounting records.

Main purpose of cycle counting is to verify the inventory accuracy. 

inventory management approach where part of an inventory is counted each day