Inventory Cycle Counting 101: Best Practices & Benefits

Tired of shutting down shipping and receiving each year to complete a physical inventory count? Save time and money by transitioning to a cycle counting system instead. These are the key benefits of cycle counting and a few best practices to keep in mind to create a dedicated and methodical cycle count system for tracking inventory. 

What Is Cycle Counting?

Cycle counting is a method of counting inventory that involves systematically counting smaller categories of inventory, instead of counting everything all at once in a physical inventory. This type of system requires strict organization and a solid foundation, but the benefits of cycle counting far outweigh the work when implemented well.

Cycle counting allows businesses to keep a closer eye on inventory through more frequent counts, and saves time and money by allowing counting to take place alongside other business processes. 

Key Benefits of Cycle Counting

Saves Time

Taking physical inventory takes warehouse managers and supporting staff away from other important and strategic tasks for extended periods of time. This decrease in productivity for your workforce can have serious implications for your bottom line. On the other hand, cycle counting can be completed on a regular basis and directly uploaded into inventory systems while other business is conducted. One of the largest benefits of cycle counting is that it does not require the shutdown of your entire business while counting is completed. 

No Interruptions

Physical inventory means you must shut down all inventory activity while all inventory in stock is counted. This causes disturbances in the supply chain and can throw off your operations in the long-term as you recalibrate after the interruption in shipping, receiving, and sales. Completing physical inventory on a regular basis, even if it’s only once a year, can cause challenges for your partners and clients, thus damaging your business. The cost of labor and lost revenue for this process can be catastrophic. 

More Accurate

Instead of waiting until the end of the year to take physical inventory, one of the benefits of cycle counting is that it allows you to pinpoint errors and discrepancies much more quickly. This way, instead of allowing these inventory errors to build on themselves all year, they can be addressed quickly thanks to the spot-checking process of cycle counting. Auditing cycle counts on an ongoing basis allows for more accuracy compared to physical inventory.

In addition, implementing the right technology in your cycle counting system offers even more accuracy. For example, if you accidentally miss or forget to count an item in your scheduled cycle count, the eTurns TrackStock app will notify you. Tools like SensorBins can even take a weight measurement of inventory multiple times a day to ensure your stock levels are adequate and trigger automated replenishment when needed. 

Trigger Auto-Replenishment with Min-Max Settings

TrackStock give guidance in setting min/max levels for each item so that cycle counts trigger automated reordering of items that are below the minimum level, further saving the user time during the order process. 

Added Flexibility

Every company’s counting process is different, which calls for a variety of needs when it comes to the details of cycle counting technology. It’s common to break down inventory for cycle counting into various categories, which determine how often cycle counting should occur for any given item. TrackStock allows users to choose how each item is classified and to choose whether to utilize item inventory turns (based on consumption or orders) or item cost to segment items into cycle count categories.   

In addition, instead of staying stuck with only ABC classification options, the TrackStock app allows you to create your own range of values  for each category and have more than a dozen categories. You can even have TrackStock reclassify your items automatically after each item pull or once a day.  

Best Practices

Adopt the Right Technology

One of the strongest determining factors for the success of your cycle counting system is whether you utilize the right technology. Trying to reap the benefits of cycle counting through a purely manual system is extremely difficult. On the other hand, with the right software, you can turn cycle counting calculation into a smooth and simple process that hardly requires any hands-on work. 

With automation capabilities and various options in the way you classify each of your items, the eTurns TrackStock app brings simplicity and accuracy to the cycle counting process. This technology even allows you to count consigned and customer-owned inventory, with separate tracking to keep each location straight. 

Differentiate Categories

When working with a system with added capabilities for properly categorizing your inventory items, it’s important to take the next step and differentiate between each category. Decide how often each category needs to be counted by considering aspects such as how important, how fast-moving, and how expensive each item is. The TrackStock app can even help you automate this differentiation by taking into consideration the actual usage of each item. This will provide you with the correct frequency for counting each item. 

Leverage Reports

Using the eTurns TrackStock app provides added benefits to cycle counting such as reliable and consistent reports. These reports can outline whether there are discrepancies between counts and allow you to quickly address these differences, instead of allowing them to go unaddressed for as long as a year as they would with physical inventory. Plus, users can incorporate additional tools such as automatic replenishment into their cycle counting routine. When you perform a count and the total is less than the minimum inventory level for that item, you can easily place an order directly within the TrackStock app. 

With added capabilities, fewer errors, and a fast and flexible user experience, the eTurns TrackStock app allows you to complete your cycle counting calculations with accuracy and reliability every time. Reach out to learn more!