How often should cycle counts be performed?
Inventory cycle counts is one of the important practices that ensures that your inventory records are accurate and free from any fraud, and Inventory cycle counts allows tracking the movement of inventory in terms of outgoing or incoming, and thus knowing the turnover rate of each product, and accordingly order management are prepared from Items that are not available, or orders for fast-revolving products in the appropriate quantities, and this is only done by continuous monitoring of stocks, and in this article on LOGSTIAT we will show you how often cycle counts should be performed.
What is an inventory cycle count?
An inventory cycle count means counting a small amount of inventory you own on a specific day without having to do a completely manual inventory, and it is a type of inventory sampling technique that allows you to match the accuracy of your inventory records with the actual inventory available.
Why Are Inventory Counts Important?
The process of inventory counting is very important, as it allows you to know the inventory that you have at a specific time. Here are a number of points that show you the importance of inventory counting:
1. Avoid running out of stock
Inventory counting helps you to store your items in an orderly and accurate manner and thus forecast demand,
And as a result you will be able to improve your inventory levels, and thus lower costs and higher revenue.
2. Determine the possible losses and reduce them
Inventory counting helps you determine and prevent your potential loss by determining how long and how much inventory you own.
3. Determine your inventory accurately
As we talked about in the introduction, inventory counting gives you complete and accurate information about your inventory levels, thus providing clear information for the entire supply chain management.
How often should inventory cycle counts be done?
There is no fixed number for calculating inventory cycle counts, there are many factors that in turn affect how inventory cycle counts, where:
- The value of inventory
- Inventory turnover
- The amount of seasonal demand for your inventory
- How accurate the inventory is and the efficiency of your employees
All of this will enable you to determine how often cycle counts should be performed.
Best practices for determining when to perform inventory cycle counts
Although there is no fixed number for calculating inventory cycle counts as mentioned in the previous section, there are a number of recommended practices that can help you determine how often cycle counts should be performed:
1. ABC Analysis Cycle Counting
ABC analysis is one of the ways to help companies or factories focus on controlling the more important inventory. For example, class (A) items include about 20% of your items but contain 70% of your inventory value,
And class (B) items include about 50% of your items but It contains only 5% of your inventory value, also Class (C) items include 30% of your inventory but contain only 25% of your inventory value and so on.
2. High-Usage Cycle Counting
If there are items that are delivered frequently, they should be counted more frequently no matter how expensive even if they are expensive, then the items with high and frequent use should be counted frequently.
3. Control Group Cycle Counting
If you are calculating specific parts of your inventory to determine whether or not your entire inventory is accurate, of course, the Control Group Cycle Counting method is suitable.
Thus, you do Control Group Cycle Counting more than once a month, which helps you identify any errors in your stock.
4. Random Cycle Counting
If you have a large amount of similar inventory, the Random Cycle Counting method is best suited, which means that you take a part, but not the whole, inventory to check how well the inventory matches what is already there.
How to automate inventory cycle counts
Inventory management systems take two forms, either manual or automated, and a large number of companies have started moving towards Automating the Cycle Counting Process, through:
1. Use of inventory management software
Traditionally, warehouse owners write inventory data manually, but with automation, inventory management systems have become more appropriate, more accurate, saving time, effort and labor costs, thus eliminating additional costs.
Inventory management systems transfer and process inventory data automatically and then upload it to your own system. The data is also updated periodically, which helps in promoting more effective inventory management.
2. Use of mobile scanners
Instead of hand-delivering and designing count sheets, there are mobile scanners, which provide inventory data by scanning the barcode on each item in your inventory.
That data is then transferred to your inventory system easily and quickly, so these mobile scanners make it easy to manage your inventory in real time.
So automate inventory cycle counts helps you keep track of your inventory properly and audit it in real time, eliminating tedious work and extra costs.
