Daily Cycle Counts – Inventory Accuracy Insurance

It can be said that your health is a function of a number of daily disciplines such as getting enough sleep, eating right, and even flossing. Similarly your warehouse health is a function of daily habits such as labeling, receiving, putaway, picking, shipping, and cycle counting

In theory if you practise perfect warehouse processes, the need for cycle counts is eliminated. However we live in the real world and stuff happens or doesn’t. Just as we buy insurance to protect our property and valuables, daily cycle counts are your insurance against losing inventory accuracy.

Daily cycle counts.   There are several considerations and approaches for performing a cycle count.

ABC Categories- This consists of categorizing your inventory into three categories. The ‘A’ category products are counted most frequently and account for 80% of your sales, while the ‘B’ products represent the next 16%, and ‘C’ represent the final 4%. However this approach makes sense if your sales fall into the 80/20 rule whereby 20% of your products represent 80% of your sales. The number of inventory turns for those products will determine how frequently you count those products.

Pick Location- A simpler approach is to count every pick location at least once per month.  Locations with greater through-put should be counted more frequently. When counting pick locations it is important to not have any picking or replenishment activities being performed. 

Raw Materials- You can take a value based approach whereby the most valuable items are counted more frequently or a volume based approach which counts the items most frequently used. I prefer a hybrid approach of counting items that are the most valuable and most frequently used. However even the lowest value items are important in that their sudden absence can affect production.

Trace- When counting it is also important to note trace information such as expiry dates and lot numbers. As result cycle counts is often followed by turning over inventory that has expired or about to expire.  

Schedule It- Whatever way you decide to count your inventory requires that you create a schedule and execute daily on that schedule. Choose a time during the day that you are not picking or performing replenishment activities. In fact replenishment activities should be performed after the daily cycle.

 If performed correctly and consistently, cycle counts allow you to maintain a high level of inventory accuracy with a minimum of disruption to warehouse operations. 

Truly cycle counts are that ‘stitch in time that saves nine.’

All the best!

Jeff Lem