Cycle Counting Exposes Inventory Ills

This is an excerpt from a Material Handling and Logistics article.

Cycle counting is a process designed to replace comprehensive annual inventories with smaller counts conducted on a continuous basis throughout the year. It can be conducted while normal business operations continue, eliminating the need for an annual shutdown.

While you do need a certain level of product/process complexity or volume to make cycle counting worthwhile, companies need not be large to benefit.

5 Top Benefits

1. Improved ability to fill orders: Cycle counting allows smaller batches of goods to be counted and allows counts of the same batches multiple times a year. Companies can decide, for example, to schedule six counts a year of their highest turnover items, reducing inventory variances in the ordering system and, in turn, reducing the number of purchase requests that must be placed on back-order.

2. Current information to manage the business: When inventory records are inaccurate, orders for extra supply often are placed to provide “padding” that insures goods will be there when needed. This excess inventory increases carrying costs and potentially increases the amount of obsolete stock on hand.

3. Faster recognition of breakdowns in shipping, receiving and inventory transfer transactions: This can reduce extra costs associated with expedited freight that is incurred to make up for time lost dealing with inaccurate inventory records.

4. Reduced disruption: Since only small batches are being counted at a time, there is no need to shut down operations for counting inventory. And since counting is done continuously, the process can be integrated into the regular workflow. Last, there is no need to hire and train temporary workers to do an annual inventory. Existing staff can cycle count.

5. Increased ability to reduce errors and theft: More frequent counting allows discrepancies to be discovered closer to the time they were caused. That in turn makes identification of those causes – and correcting them – easier and quicker, reducing the impact of errors.  More frequent counting also helps detect theft more quickly so that countermeasures can be taken.

The full article is available on Material Handling and Logistics' website.