It’s necessary to know that your inventory management system records match the physical inventory available in the warehouse. It is an important factor in inventory management. The cycle count is what determines how much business has control over its inventory.
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We are starting the topic by simply defining the count cycle and then further describe the procedure in detail.
What is a Cycle Count?
In simple words, count cycle is the name of an activity that is related to inventory. In this case, the company or business physically counts the inventory at a specific time. The purpose of this activity is to determine whether the physical stock matches recorded information or not.
Types of Cycle Count
Cycle count is different in different businesses. The reason is that there are different types of stock. It depends on the usage of the inventory as well. Well, here we describe the main types of cycle count.
1. Control Group Cycle Count
Businesses use this type of cycle count for a specific group of items. Then they evaluate their methods. After many experiments, they select a method. The selected methods are then applied to all products. This gives more accurate results.
2. Random Cycle Count
This cycle consists of a business selecting a random specific number of products from a huge quantity. The purpose of this method is to reduce the time period. Businesses can use this cycle count during business hours.
3. ABC Cycle Count
ABC cycle count depends on the value of the categories in inventory. That means A is high standard items that are counted more frequently than the standard B or standard C.
Importance of Cycle Counts
Why does a business spend their money and time on cycle count? How is it beneficial for the business? These queries are addressed in the following points.
1. Early Detection of Errors and its Measure
Cycle counts help in the early detection of errors in inventory recording. The business then takes immediate action to eliminate these errors.
2. Reduces the Risk of Loss
Businesses invested a huge amount of money in purchasing inventory. In case of theft, damage, or spoilage, they have to suffer loss. Cycle counts help point out these factors on time. Businesses can make strategies to avoid these situations.
3. Helpful in Eliminating Stock Out and Overstock Situations
What happens when the actual stock and record do not match each other? Two situations are possible; either stock is in excess quantity or available in less quantity. These situations can be avoided with the help of a cycle count.
4. Save Time and Money
All departments in a business rely on the recorded data of the stock. If the inventory record shows false statements, every department losses time and money.
How Exactly the Cycle Count Work?
We know what is going in your mind. You are thinking about how difficult cycle counting is, right?
Do you remember us mentioning an easy technique that helps to cycle count without spending extra money and time? We still stand by our words.
Why don’t you use an inventory management system to manage this process? This software makes it very easy to execute cycle counts.
Inventory management systems will reduce your effort and time consumption.
They will help you track inventory any time anywhere.
If a business has multiple departments, they all need to access stock data for a smooth flow of work. Some apps also allow access to multiple employees. In this way, all employees can perform their duties in a better way.
We hope this article was able to convey the importance of cycle counts. Do let us know how your business executes cycle counts. Good luck!