What is cycle counting? A 2024 guide 

Any business that handles inventory knows the challenge of ensuring its physical stock matches its records. Discrepancies often arise from inaccurate records, poor inventory management, or inconsistent warehouse practices. To address this issue, many turn to cycle counting, a preferred method for maintaining accurate stock levels.

What is cycle counting?

Cycle counting, beneficial for companies that hold large inventory, is a method businesses use to regularly count a part of their inventory instead of counting their entire inventory at once. This process involves comparing your counted items with the actual stock and correcting any discrepancies to ensure your stock records are accurate.

Cycle counting vs. Physical counting

This table outlines the main differences between cycle counting and physical counting, highlighting how cycle counting offers continuous insights and efficiency, whereas physical counting is more disruptive but comprehensive.

A closer example

Let’s look at an example. Picture a store deciding to change how it counts items in stock. Previously, it closed for a day each year to count everything. It was a big problem because it stopped sales and only updated the stock list once a year. The store made an intelligent move and started counting items regularly in cycles. This change keeps the store running smoothly without interrupting sales, cuts down on the cost of paying workers for the big count day, and lets the store know what’s in stock more often. With this new approach, the store can quickly deal with any stock issues, make smarter choices for the business, and keep better track of inventory all year round.

The verdict

Choosing between cycle counting and physical counting depends on what a business needs. However, cycle counting’s regular updates and smoother process often make it the better choice.

Understanding cycle counting methods

Control group method

You pick a specific group of items and count them often, which helps you understand how well your counting works. If mistakes keep happening, you know where to look. This practice improves your current process and prepares you to apply it more effectively to other groups of items, streamlining your overall inventory management.

Random sample

This method involves picking items to count by chance from all your inventory. It’s good because it gives you a surprise check on different items. In this way, all parts of your inventory get attention over time.

Opportunity cycle count

Counting items when moving, getting, or sending them out makes good use of your time. You don’t need extra steps to check on these items because you’re already handling them.

 ABC analysis cycle counting

Think of your items in groups A, B, and C. A is the most valuable, and C is the least. Count A items the most often, B less, and C the least, focusing your effort on what matters most.

How to implement cycle counting

Here’s how to start:

1. Organize your stock into zones and categories.

2. Decide how often to count different items—some need checking more than others.

3. Pick people for different counting jobs; everyone should know their tasks.

4. Start counting items and write down what you find.

5. Compare your count to the records and look for differences.

6. If the numbers don’t match, find out why, and correct any errors.

7. Change your inventory records to match the count, and write reports about your analysis.

8. See how well cycle counting works and look for ways to improve.

Tips for better cycle counting

Use tools: Inventory software or scanners help a lot; they make counting faster and less error-prone.

Pick what to count first: Use the ABC analysis and count valuable items or those that sell fast more often.

Choose a counting method: You may like random checks, going in order, or focusing on essential items.

Team training and collaboration: To enhance team training and collaboration, setting clear guidelines for counting is essential. You must provide comprehensive training for your team to ensure they’re well prepared. Also, integrating cycle counting seamlessly with other inventory-related tasks is crucial for smooth operations.

Following these steps and tips can help keep your inventory right. It also ensures the smooth running of your business.

Benefits of cycle counting

Here are its key benefits and its impact on business operations.

Keeps inventory accurate

Cycle counting helps keep track of inventory. It ensures that what you have on record matches the stock and enables you to quickly find mistakes, which is crucial for managing inventory well. It also helps prevent stock losses. Keeping an eye on inventory reduces the chances of items being stolen, damaged, or lost. In this way, cycle counting protects your goods and helps you profit more.

Improves efficiency

Cycle counting makes checking stock quick and easy. It’s part of the everyday routine and doesn’t slow things down, unlike physical counts that take a lot of time and effort. You don’t need to hire extra people or halt your business to count everything. You always know what’s in stock by doing little checks often, making it easier to keep things running smoothly without extra costs.

Boosts customer satisfaction

Cycle counting regularly updates inventory records, making it easier to manage stock levels. The products are more readily available when customers place orders, ensuring swift dispatch. On-time deliveries make customers happy because they get what they ordered without delays.

Conclusion

To sum things up, cycle counting is a smart inventory check that catches errors early, keeps your stock details accurate, and saves hassle. It’s also great for customers because they get what they’re looking for faster, and it helps businesses make better choices about what products to keep in stock.

Consider experiencing the benefits of cycle counting firsthand with Zoho Inventory. Our platform simplifies the counting process, providing accurate, real-time inventory data. Sign up for a free trial today and see the difference it can make. Our support team is ready to help at support@zohoinventory.com for further inquiries or assistance.