Companies can use inventory control software to conduct regular cycle counts and generate the data needed to make good inventory management decisions.

Understanding customer needs and making smart inventory management decisions that not only accommodate those demands, but also accurately predict future needs, have always been strategic imperatives for product-focused organisations. Achieving this balance is even more important in today’s selling environment, where customer demands change daily and the next competitor is just one click away.

To overcome these and other inventory management challenges, more companies are using inventory control software for cycle counting. An ongoing process whereby companies count a small portion of their inventory over time (versus counting it all at one time), cycle counting allows organisations to choose when they want to perform the count, exactly which SKUs will be counted and how frequently they’ll repeat the process.

“When a cycle count is performed, there are two inferences that are made,” The Balance points out in Cycle Counting in the Warehouse. “The primary inference is that the accuracy of the items in the cycle count can be used to determine the accuracy of the items in the warehouse as a whole. The other inference is that if an error is found in the cycle count then that error could be expected to occur for other items in the warehouse.”

The Three Types of Cycle Counting

Focused on a single subset of inventory that’s audited in a specific location at a specific point in time, cycle counting identifies any differences between the inventory quantities that should be in stock and the actual quantities that are on the warehouse, distribution centre (DC) or store shelves.

According to The Balance, the three main types of cycle counting are:

  • Control Group Cycle Counting: The process usually focuses on a small group of items that are counted many times in a short period, and reveals any errors in the count technique (which can then be corrected).

  • Random Sample Cycle Counting: Just like it sounds, this is randomly selecting a certain number of items to be counted. The count can be performed each day or workday so that a large percentage of the items in the warehouse are counted in a reasonable period.

  • ABC Cycle Counting: This method assumes that 20 percent of the parts in a warehouse relate to 80 percent of the sales. These are the “A” items (“B” items account for 30 percent of the items and 15 percent of sales and so forth). The items are identified as A, B or C items—a step that’s “usually achieved with the help of a computer system, such as inventory control software,” The Balance adds.

The Benefits of Cycle Counting

No matter how good their replenishment, tracking and management systems are, organisations must do regular checks of actual inventory levels for key items. Maintaining an accurate item count can help reduce required safety stock and lower overhead costs.

Because it doesn’t force companies to shut down their operations and perform a full physical inventory count at once, cycle counting has become a popular inventory management strategy for companies across all industries. Other benefits include:

  • Higher order fulfilment rates
  • Better customer service levels
  • More accurate inventory assessments
  • Higher sales
  • Less time between physical counts
  • Fewer errors
  • Less inventory write-offs and obsolescent inventory
  • A more efficient operation overall

Tech-Enabled Cycle Counting

Thanks to technology, the cycle counting process has become easier, less intrusive and requires even less manpower. By replacing their Excel spreadsheets or other manual inventory control systems with inventory control software, companies can more efficiently track their stock—all while reducing human error and saving time, money and valuable man-hours.

NetSuite’s Inventory Count feature, for example, improves inventory tracking and provides increased control over key assets. With this feature, firms can categorise inventory based on the volume of transactions and/or value, and enter regular periodic counts of on-hand item quantities in order to maintain inventory accuracy.

With its standard functionality, NetSuite not only helps you gain better control of your cycle counting, but it also takes a step further by extending those activities to its warehouse management solution and mobile radio frequency (RF) devices.

By implementing a cycle counting strategy that’s supported by inventory management software, companies get more accurate inventory levels; automatic prompts for items that need to be counted; the ability to categorise items based on volumes or value; improved quality assurance; and higher customer satisfaction rates.

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