The Benefits of Inventory Cycle Counts

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Although it can be an expensive task for companies to accurately track inventory for effective stock management, it is essential to make important decisions regarding re-stocking inventory, maintaining production schedules and distributing finished product. Not only does inventory inaccuracy lead to high overhead costs, but it also has a negative impact on the bottom line of the business.

Without accurate inventory information available, it is close to impossible for businesses to make inventory decisions effectively. This, therefore, causes delays in production, increased downtime, and ultimately, failure to deliver finished products on time to customers. For this very reason, it is important to improve inventory accuracy, and this is exactly where cycle counting can help!

What is Cycle Counting?

Cycle counting is one of the two main methods used for maintaining inventory, and since it is far more effective when done correctly, a growing number of warehouses are using it in order to better maintain their inventory. Cycle counting is the process of counting a predetermined set of materials and goods on a daily or weekly basis, so that eventually all your inventory has been counted several times a year. The purpose of cycle counting is to ensure inventory accuracy by identifying incorrect records, and correcting the main cause of the error.

The Benefits of Cycle Counting

This inventory management method can result in significant advantages for any warehousing and logistics operation, including:

  • Enhanced accuracy as workers will be able to effectively identify and fix incorrect data.

  • Improved customer service, if your inventory counts are accurate, then your salespeople can trust that when they tell their customer that the product is in stock, it is, that that you will always have the product you need on your selves.

  • Improved confidence and morale within the sales department that orders will be delivered on time and according to customer’s requirements.

  • Decreased overhead costs by ensuring operations are not halted by a full inventory audits.

  • Increased levels of productivity through eliminating the amount of time spent searching for inventory you don’t actually have.

  • Allows you to focus more frequently on items that have a greater chance of being counted or recorded incorrectly.

Cycle counting ensures the inventory of a business is always organized by identifying the root cause of inconsistencies among inventory information, correcting procedural loopholes, and improving upon human error.

Things to Consider When Implementing Inventory Cycle Counting

Moving to the all-important question, “What must businesses consider when implementing inventory cycle counting?” If you are planning to use this method for inventory management, here are a number of key pointers to keep in mind:

  • Cycle counting must be done on a daily or weekly basis, otherwise you might not be able to reap the full benefits it has to offer.

  • Prepare beforehand to ensure the inventory is ready to be counted.

  • Establish a schedule for cycle counting by setting up a periodic calendar.

  • All open inventory transactions must be closed before the cycle counting can begin. Restocking from back stock, understock or overstock should be completed beforehand.

To sum up, cycle counting will improve inventory visibility, decrease downtime, and increase customer satisfaction. If you are planning to implement cycle counting, and manage to do it correctly, it is safe to say your company is going to experience a considerable boost in revenues and profitability!

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