An inventory cycle count means counting a small amount of inventory on a specific day without having to do an entire manual stocktake. In other words, it’s a type of sampling technique that allows you to see how accurately your inventory records match up with what you actually have in stock on the shelves.
Cycle counting is a key part of many businesses’ inventory management practices, as it ultimately helps ensure that customers can get what they want, when they want it, while keeping inventory holding costs as low as possible.
How often you do a cycle count and how much stock you count will depend on the types of products you sell and the resources at your disposal. For example, you might do an ABC inventory analysis to determine your class A products, and do a cycle count on your most high-value items more frequently than your other items.
Regardless of your specific approach to inventory counts, here are some best practices to follow:
There are three main types of inventory cycle counts that you can use:
Using the company’s proprietary inventory system, on-site logistics managers can view their store’s stock levels and monitor any discrepancy in expected sales (unique to each store) versus inventory levels.
For example, let’s say that IKEA’s MALM bed frame has been selling much slower than expected. In this case, the logistics manager can manually check and confirm the stock of the bed frame. This means logistics managers only need to cycle count if the system catches a discrepancy.
Inventory cycle count can be a great strategy for businesses with a large amount of stock, or many different types of stock. Using this method, stock managers can reduce the amount of time they spend running inventory while still being on top of what they have on the shelves compared to sales.