10 Ways Cycle Count Software Reduces Shrinkage and Improves Accuracy

Inventory accuracy is the backbone of efficient supply chain management. Yet, businesses lose billions annually due to shrinkage—whether from miscounts, theft, or human error. In fact, a recent National Retail Federation Security Survey found that shrinkage costs U.S. retailers $112.1 billion per year, with nearly 65% of losses attributed to operational errors and internal theft.

Manual inventory counting is a major culprit behind these costly errors. Traditional full physical inventory counts are time-consuming, prone to human mistakes, and disruptive to daily operations. Employees must halt normal workflows to perform stock checks, and mistakes in manual data entry cause discrepancies that ripple throughout the supply chain.

So, what’s the solution? Cycle count software.

What Is Cycle Count Software?

Cycle count software is an advanced inventory management tool that automates and optimizes the cycle counting process. Unlike full physical counts—where businesses count every item at once, often requiring operational shutdowns—cycle counts are performed continuously in smaller, manageable sections of inventory.

With cycle count software, businesses can:

Count a subset of inventory without disrupting operations.
Automatically schedule and log cycle counts with scanning apps for improved accuracy.
Categorize subsets of inventory using calculations in the software
See when items in the count were missed
Have counts trigger automated replenishment
Detect discrepancies and shrinkage early and correct errors before they cause financial losses.

By minimizing disruptions and maximizing precision, cycle count software is an essential tool for any business that relies on accurate stock levels.

Who Benefits from Cycle Count Software?

Any business that depends on accurate, up-to-date inventory tracking can benefit from cycle count software, including:

Contractors: Contractors manage a wide range of equipment and physical tools stored in multiple locations or service vehicles. With constant movement and usage of inventory, manual tracking is difficult and prone to error, to say the least. Cycle count software ensures that contractors have a reliable inventory replenishment process that provides visibilityinto their stock levels and auto-replenishment when needed.
Distributors: For distributors tasked with keeping their customers’ stockrooms replenished, cycle count software is often synonymous with vendor-managed inventory (VMI) software. Distributors use software like this to count the items that remain in the customer stockroom and the cycle count software sends auto-replenishment orders back to the distributor’s business systems. Or, the distributor can give the cycle count software to their customer in a customer-managed inventory (CMI) model and let the customer do self-service replenishment.Cycle count software allows distributors and their customers to automate their counting processes and set min/maxes, reducing the risk of overstocking, stockouts, and the errors that commonly arise from manual checks, ensuring that they can meet demand without disruption.
Emergency Medical Services (EMS): EMS providers require precise control over medical supplies, equipment, and medications to ensure patient safety and comply with strict regulations. Cycle count software enables EMS teams to monitor their inventory lot numbers and expiration dates, while triggering replenishment orders when quantities hit a minimum. The software , ensures that life-saving supplies are always available when needed while preventing stock outs or expired items from affecting operations.
Medical Service Providers and Clinics: Healthcare service providers, like clinics, hospitals, and specialized medical services, depend on accurate inventories for everything from medications to medical devices. Cycle count software helps these organizations manage replenishment of complex inventories, track critical items, and maintain compliance with healthcare regulations, ensuring that no essential item is out of stock when it’s needed most.
Maintenance, Repair, and Operations (MRO): MRO businesses, which stock a wide range of parts and tools across different locations like manufacturing floors, need to keep their inventory levels optimized to avoid downtime. Cycle count software provides tracking, visibility, and auto-replenishment, enabling MRO teams to stay on top of inventory movements, prevent shortages, and reduce waste.
Service Trucks: For businesses that rely on service trucks, keeping track of tools, parts, and materials across multiple vehicles can be a logistical nightmare. Cycle count software allows businesses to track the inventory that remains on the truck at the end of a shift and auto-replenish inventory from backstock or from an order to a distributor, ensuring that service trucks are always fully stocked and ready to go, reducing the risk that a contractor won’t have the right part for a job.

10 Ways Cycle Count Software Reduces Shrinkage and Improves Accuracy

1. Automates Inventory Counting Schedules

One of the biggest challenges of manual inventory counting is maintaining a consistent schedule. Without automation, cycle counts are often done sporadically, increasing the risk of unnoticed discrepancies.

Cycle count software eliminates this issue by automatically scheduling and tracking counts based on predefined rules. Businesses can:

Set recurring cycle count schedules for high-value or frequently moving items.
Assign counting tasks to specific employees, supporting organizational accountability.
Prioritize cycle counts for inventory prone to shrinkage or high turnover, like electronics and pharmaceuticals.

By integrating automation, cycle count software removes human oversight errors and ensures inventory checks happen exactly when they should.

2. Reduces Human Errors in Counting

Human error is inevitable during manual inventory, even if it’s minor. Mistakes happen when employees miscount items, enter incorrect figures, or forget to count items. However, even small mistakes lead to significant discrepancies over time.

Cycle count software minimizes these risks by:

Using barcode and RFID scanning to eliminate manual data entry mistakes.
Preventing missed counts by guiding you through your list of items
Preventing duplicate counts and preventing inventory misalignment.

Zebra Technologies recently found that average inventory accuracy can increase from 80% to 98% with RFID tech and technology similar to it, like FOOD-TRAK®. By automating data capture and verification, cycle count software reduces costly errors and increases operational efficiency.

3. Identifies Discrepancies Faster

Traditional inventory counts often reveal discrepancies too late, forcing businesses to spend time investigating missing stock. Cycle count software, on the other hand, detects anomalies as they happen. Here are three examples:

Tracks expected vs. actual stock levels in real-time.
Alerts inventory managers when there are significant variances.
Flags potential shrinkage issues before they impact financial reporting.

For instance, if a service truck consistently miscounts a high-value product, the software can flag that SKU for higher-frequency cycle counting, helping to identify theft, misplacement, or process errors early on.

4. Minimizes Operational Disruptions

Full physical inventory counts are disruptive. They often require business closures, overtime labor, and halted production.

Cycle counting eliminates these inefficiencies by allowing inventory checks to occur without interrupting daily workflows. Here are three ways this is done:

Employees perform cycle counts during slow periods rather than shutting down operations.
The software segments inventory by priority, ensuring that high-turnover products are counted more frequently than low-demand items.
Integrated inventory auto-replenishment orders ensure that counted stock is immediately compared to min/max levels in the software. Integrated orders are sent to distributors when counts fall below the minimum.

By reducing operational downtime, your business maintains productivity while ensuring inventory accuracy.

5. Tracks Inventory Movement

Shrinkage isn’t always due to theft—it’s often caused by misplaced inventory, improper transfers, or inaccurate stock adjustments.

Cycle count software:

Monitors inventory movements as they happen.
Logs stock transfers across locations, reducing misplaced inventory.
Tracks consumption patterns, helping managers spot inconsistencies.

For example, in an ecommerce warehouse, an item might be moved from backstock to a stockroom but not properly scanned into the system. Cycle count software ensures these movements are recorded, reducing stock discrepancies.

6. Supports Compliance and Audit Readiness

Regulatory compliance and internal audits are critical for businesses that handle high-value inventory, pharmaceuticals, electronics, or other sensitive products. Failure to meet compliance standards can lead to hefty fines, legal issues, and operational setbacks.

Cycle count software simplifies compliance by:

Maintaining a digital log of all inventory counts, ensuring historical accuracy.
Providing real-time audit trails, showing when, where, and by whom inventory counts were completed.
Integrating with compliance frameworks, such as FDA regulations for medical supplies or generally accepted accounting principles (GAAP) standards for financial accuracy.

7. Improves Forecasting and Demand Planning

Without accurate inventory data, businesses either overstock or run out of critical items—both of which hurt profitability. Cycle count software feeds real-time data into forecasting models, allowing companies to:

Predict demand more accurately using up-to-date stock information.
Reduce overstocking, freeing up capital and truck or storage space.
Avoid stockouts, ensuring customers always get the products they need.

8. Reduces Labor Costs and Counting Time

Manually counting inventory is one of the most time-consuming tasks in a warehouse or retail setting. Employees must:

Physically walk aisles, scanning or tallying items.
Record data and compare it to inventory reports.
Investigate discrepancies manually.

Cycle count software automates much of this process, leading to:

70% faster cycle counts compared to traditional methods.
Lower labor costs, as fewer employees are needed for inventory checks.
More efficient use of staff time, freeing staff to focus on higher-value tasks.

9. Integrates with Barcode Scanning

Manual data entry is a major source of inventory errors. Cycle count software integrates with barcode scanning, reducing human mistakes and speeding up the process.

Barcode scanning allows a user to capture with one scan: locations, supplier, item number, item description, min/max level, and more, updating the system.
Mobile integration allows employees to scan stock from any location, reducing bottlenecks at fixed terminals.

10. Prevents Inventory Theft and Loss

Frequent cycle counts increase accountability, making it harder for shrinkage to go unnoticed. Theft and misplaced inventory are major sources of financial loss, and cycle count software helps businesses detect and prevent these issues before they escalate.

Here’s how it works:

Frequent automated counts create an audit trail, discouraging internal theft.
Tracking of quantity on hand allows you to detect anomalies before they become an unsolvable issue.

With cycle count software, businesses get fewer surprises, better data, and more control over their inventory. The right software:

Automates repetitive tasks, reducing human error.
Improves inventory visibility, ensuring accurate stock levels.
Improves demand forecasting, leading to smarter purchasing decisions.
Saves time and labor costs, boosting operational efficiency.
Prevents loss and shrinkage, safeguarding your bottom line.

You don’t need us to tell you inventory accuracy is more critical than ever. Shrinkage due to miscounts, theft, or human error can quickly add up, impacting your bottom line and hindering your ability to serve customers efficiently. Thankfully, cycle count software provides a proven solution to these challenges by automating and streamlining inventory management processes.

Cycle Count Software: The Key to Auto-replenishment and Accuracy

By automating cycle counting, businesses can reduce manual errors, identify discrepancies faster, and minimize operational disruptions. The benefits don’t stop there—cycle count software also enables companies to auto-replenish inventory using min/max settings to prevent stockouts.

This results in a more accurate, efficient, and cost-effective inventory management system that drives operational success.

Throughout this article, we’ve covered the main four advantages of cycle count software, which include:

Automated counting schedules that eliminate human error and ensure consistency.
Faster identification of missed counts or discrepancies, allowing businesses to resolve issues before they become major problems.
Automated replenishment if counts go below min/max thresholds, which reduces stockouts and the time it takes to send replenishment orders.
Seamless integration with existing inventory systems, allowing for integrated ordering from any distributor, which saves time and reduces the risk of mistakes.

Perhaps the most impactful benefit is how cycle count software empowers your business to be proactive about its inventory management. Instead of waiting for major issues to arise, your team can continuously monitor and adjust your inventory, ensuring that stock levels are always optimized for demand and reducing losses.

Start Your Journey to Improved Inventory Accuracy with eTurns TrackStock

If you’re ready to experience the full potential of automated cycle counting, it’s time to take the next step. eTurns TrackStock offers a comprehensive, user-friendly solution to automate your cycle counting process, reduce human error, and streamline inventory operations for good.

Whether you're a warehouse, distribution center, or retail store, eTurns TrackStock can help you:

Automate cycle counting schedules to ensure consistency and reliability.
Integrate with barcode scanning technologies for fast, accurate counts.
Provide real-time inventory updates across multiple locations.
Generate customizable reports that help you track shrinkage, spot trends, and make data-driven decisions.

Don’t wait for the next inventory issue to become a crisis. Start a free 30-day trial of eTurns TrackStock today and discover how automated cycle counting can help transform your inventory management system, replenish efficiently, and ultimately drive your business forward. Start your free trial now.