November 26, 2020
4 Fundamentals of A Cycle Stock Count
In many companies annual stock taking takes place, mostly at the end of the financial year and in some cases it takes place twice a year. It is a nightmare period for most organisations, having to close their doors to sales for the duration of the count.
There is an alternative method to the old annual stock taking way to counting stock and it's known as cycle stock counting. There is a variety of cycle stock counting methods that are popular and used in many organisations. All methods have the same 4 fundamentals in common with each other.
It's Cyclic & It's Regular
As the name suggest its a cycle counting method of stock. It is the method of assigning inventory lines to a cycle in which the stock levels will be assessed, as to what is in-stock and the stock that the system is showing as available. The cyclic nature of the stock count means that it is counted in regular intervals.
In comparison to annual stock taking, where the operations and sometimes office environments are stopped in order to carry out the stock count, cycle counting is done in manageable intervals. Annual stock taking is the process in which all inventory items are counted at once. Whereas cycle counting can be incorporated into either each month, week or day of a warehouse coordinator. Once a cycle count of all products has been completed then the cycle starts again.
Less Chance Of Stock Discrepancies
With annual stock taking often comes the errors and the gaps in the data from the previous year. Often there is unexpected losses and discrepancies in the data between the two years of data. This is especially the case on high dollar value inventory that wasn't checked regularly during the year.
With cycle counting, a recommended method is to break the inventory records into products groups based on their value and priority of needing a stock check. This will ensure that the more valuable stock is getting a more regular count than the stock items of a low value. With this process in place it will lower discrepancies as there is less time between stock counts and there is less time for errors to get out of hand.
Operations Can Continue
The bigger the organisation and stock lines the bigger the annual inventory stock count. With business expansion the annual counting method can become more cumbersome and difficult to perform. In many cases operations may have to cease operating over that time to get the count completed and to a high level of accuracy without items leaving the warehouse in that time.
With cycle counting essential the counting is being broken down into smaller and more manageable chunks. And the counting can be incorporated into the routine work of a warehouse coordinator. It doesn't cause a significant downtime for your business.
In an annual stock take often companies engage the majority of the staff in the count in order to get it completed. This can range from receptionists, directors to the warehouse workers. Given that most are focusing their time into the stock count, customer can go neglected and other responsibilities on the staff go overlooked. Another potential issue is that some staff may not have the patience or care in counting the stock leading to inaccuracies, confusion and even recounting.
In comparison a cycle count engages the staff best suited to the job. It is a role that is incorporated into their job and they are trained to count correctly and with a high level of accuracy. It will deliver more consistent and accurate results using this method.
Annual Stock Taking Vs. Cycle Counting
In wrapping up, it is easy to see why so many large organisations engage in cycle counting as a way of counting their stock. It gives an accurate and consistent view of the stock levels and relieves the disruptions and costs of annual stock taking.