If inventory counts don’t sync up with your available products on online marketplaces, you may be unable to fill orders. This is particularly true for eCommerce businesses. These discrepancies will compound over time and can eventually cost your business a significant amount of money. Human error, theft, and other issues can create discrepancies between your real-world inventory and the one you track on a spreadsheet or with software. The key benefit of taking inventory of your stock is understanding what you physically have on hand versus what your stock count or inventory management software says you should have. However, cycle counting gives you more frequent counts with arguably better data and results. Physical inventories are a viable option if you have the time and resources to complete them. Ultimately, there’s no right or wrong choice here. That being said, once it’s properly set up, it’s a much more manageable approach. The cycle inventory has more moving parts. A traditional physical inventory is straightforward: you simply assign sections and set people off to count, and then it’s over. One area where companies struggle is with setting up the cycle inventory system. With good sample counting, it’s possible to get accurate inventory figures without counting every individual item or shutting down your warehouse operation. This same principle can be used in cycle counting. They then take the sample figures and expand them to encompass the whole (with a small margin of error, of course). They don’t have the time or resources to call every voter, so they gather a small group that serves as a sample. Pollsters predict who will win elections by calling people and asking them who they’ll vote for. What is sampling? It’s basically counting a small number of items and using that data to extrapolate an average for the whole. You continually “cycle” through different inventory items until you get back to the beginning and start anew.Ĭycle counts also often skip full physical counts in favor of “sampling.” In the next period, you choose another thing. Rather than count everything in your warehouse all at once, the inventory cycle count breaks the process down into manageable chunks.įor example, one period will be spent conducting a count in one area or counting one type of thing in your warehouse –the rest of your warehouse functions as normal. Inventory cycle counts are a viable alternative to conducting a massive physical inventory. What if there was a better way to physically count your inventory where you could conduct the counts with greater frequency, do it without disrupting your operation, and complete it with a higher degree of accuracy? It’s a huge time sink in terms of workforce and effort.There are multiple issues with this approach: It’s not always practical to take the time to close up and count everything regularly, which is why many companies only conduct physical inventories once per year. The problem is that physical inventory counts can be a huge undertaking, even for a small business. Physically counting and comparing items on hand to what your inventory software or spreadsheets say you have can help you spot product loss and theft issues. Inventory counts are one of the most important components of accurately tracking products and materials in your warehouse and stockroom. You’ll learn what the cycle count is, how it can improve your inventory accuracy and the best practices for implementing it. Today we’ll show you how to take control of your inventory utilizing the cycle count inventory method. It impacts nearly every aspect of your business, and the ripple effect of inaccurate counting can affect your business for years. Accurate inventory is critical to sales forecasting, warehouse and returns management, and general logistics. When counts are off, it affects your ability to fulfill orders, provide excellent customer service, and it can lead to things like excess carrying costs on inventory you don’t need and aren’t likely to sell.īecause of this, maintaining accurate inventory counts should be the goal of every business. It’s also a problem that’s easily solved. Inaccurate inventory counts are one of the key ways companies lose revenue and sales.
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