What are cycle counts and why do they differ from physical counts? Cycle counting is the process of counting a prescribed number of stock. As a result, you can keep units (SKU) at regular intervals. This allows you to count your stock more frequently (weekly or monthly) and accurately.
On the other hand, physical counts are more sporadic, usually occurring annually. In this case, you count all of the stock in your inventory at one time. Physical counts require operations to be shut down for this time. However, cycle counts are much less disruptive as you only count a small amount of stock at a time.
Why should I choose cycle counts over physical counts?
Improve overall efficiency
Cycle counts improve your overall efficiency as you are constantly counting your inventory items. This forces you to ensure that stock is always in its right place. Employees will become aware of what is physically in stock and how it compares to the stock in your system. This will ensure that the data in your inventory system is always current. As a result, you will know the info is reliable. You can trust in its accuracy when you make decisions. Also, this will improve the benefits of fulfillment and replenishment functions.
Error-free data
Frequent cycle counts can help you rid of error in your data. They can reveal errors on a regular basis and allow you to solve these issues when they arise. One example of this may include finding a discrepancy between cycle count stock numbers and the numbers in your system. With cycle counts, you can identify and solve issues like this as they occur. On the other hand, physical accounts mean these errors may be long term. As a result, it can be hard to find their root.
Reduce costs
Physical counts can be costly, since you will need to shut down operations until all of the inventory in stock has been counted. This disruption can be quite a loss for your business. Since physical accounts are annual, it’s harder to track lost, stolen or expired items. Cycle counting reduces these costs by being a less disruptive and more reliable method for counting your inventory.
Increase visibility
We now know that cycle counts give us higher quality and more accurate data. This increases your visibility into your stock. As a result, you can better assess product performance, improve accuracy when reordering, and stop shortages and excess stock. Using cycle counts to increase your visibility can help you streamline your operations, improve your efficiency and reduce the costs associated with inventory errors.
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