What is Cycle Counting and Why is it Important for Warehouse Inventory Management?
Daily inventory management in a warehouse can be more complex than you imagine. What happens if your customer asks for a product that you may think you have but you don’t? You may promise to ship it to the customer only to realize that it is out of stock. The contrary is often the case as well. You may assume a product is out of stock simply because you are unable to locate it, so you order more only to realize that you have it in excess. Mismanagement can be a colossal waste of time, labour, and money. This is why cycle counting on a periodic basis is important.
What is Cycle Counting?
Cycle counting is an important part of inventory management. It ensures that the inventory and its valuation is accurate on an ongoing basis. Organized warehouses perform cycle counting every week or month. However, there is more to cycle counting than meets the eye. A robust cycle counting schedule also minimizes errors, prevents potential mismanagement and ensures timely delivery of shipment.
Cycle Counting Approaches
Manual Cycle Counting: The frequency of cycle counting differs in each logistics company. Many warehouses employ staff to manually conduct the process, following the ABC or ABCD system that prioritizes counting certain inventory items over others, based on the value and frequency of use. High priority/value items that are placed under the “A” or “B” category are counted more often (weekly or monthly) than those under “C” or “D” that may be counted semi-annually or annually.
If the process sounds cumbersome, it usually is. It requires several warehouse workers to work overtime to ensure the accuracy or the company may need to shut shop for a day or two. Sometimes extra hands are hired to do a thorough job. This leads to added costs, even business losses. Still, there is never any guarantee that the counting is accurately done.
Automated Cycle Counting: Larger, tech-savvy logistics companies automate this process through the ERP system. Automated cycle counting ensures 100% accuracy and saves substantial time, effort and money. This allows the process to be conducted at regular intervals more easily and ensures precision. There are several other advantages to automated cycle counting.
- There is no need to risk waiting till the year-end to check inventory count.
- Automation ensures frequent counting cycles on a periodic basis so you can produce reliable reporting year-round.
- It can be easily conducted during regular business hours.
- Inventory is never out-of-stock.
- It is easy to reorder, receive, store and ship leading to complete customer satisfaction.
- You save time, money and effort and offer high performance consistently.
- During annual inventories, there is often discrepancies in calculations and data that can lead to unexpected losses, especially when high value items are not checked frequently. Automation allows all departments in the company, from accounting to financial, to remain on the same page. Data and reports are accurate on a consistent basis.
Accurate Automated Cycle Counting at WTG
There’s an easy way to ensure accurate automated cycle counting of your warehouse inventory. Rely on experts who have a track record of high performance, success and trust. WTG offers innovative, tech-savvy solutions and ethical, reliable logistics and warehousing services in North America. Check out our website to learn more.