What is Inventory Recording Cycle Count

Inventory cycle counting is an effective check-and-balance process to verify the in-stock inventory and reset any inaccuracies found in the process. inventory cycle counting eliminates the need of counting the whole inventory in a particular warehouse. A small set of items is picked instead and taken as a reference to compare it with the count in your system to find out whether it is accurate or not.

This process doesn’t require halting the whole supply chain for counting purposes and is done with subsets of various categories or storage houses as per the given schedule.

So, the question is why is inventory cycle count important?

As a business, you might choose to refer to your sales and reorder point records to determine your stock; however, it is a time-consuming process, and using inventory management software helps you update the stock in real-time as events such as sales, shipments, and reorders occur.

It is important to note that there are times when both manual and automated tracking might lose inventory accuracy. That happens because shrinkage is not always accounted for. Besides, if any item in your warehouse is damaged or stolen, the system still makes the mistake of considering it in stock. Regular cycle counting is a great way to take note of products most prone to shrinkage.

Benefits of inventory cycle counting


1. Enhanced transparency

Enhanced transparency aids in lowering the costs of expedited shipments to compensate for the time lost due to flawed inventory information.

2. Smooth flow of operations

The inventory cycle counting process only takes into account a small sample and hence doesn’t require bringing operations to a halt.

3. Error mitigation

Frequent counting allows you to identify disparities and find their remedies quicker and thus reducing errors. Also, theft detection becomes easier and if you need to deploy any countermeasures, the implementation is no longer a herculean task.

4. Fixing problems before they escalate

Cycle counts can be performed according to a given schedule- weekly or monthly. If you use an ERP system, any errors found can be traced and recorded in the system to take corrective action before these problems escalate.

5. Maintain optimal inventory levels

Inventory cycle counts help bring every department on the same page by providing an accurate evaluation of inventory numbers. Also, your warehouse staff can generate financial reports at any given point in time. Your business can maintain optimal inventory levels and there is no risk of stock-outs.

Inventory cycle counting processes at a glance


1. ABC cycle counting

ABC analysis is one of the most common inventory cycle count procedures which is based on the Pareto principle. The principle suggests that 80 percent of the outcomes occur due to 20 percent of causes. In ABC analysis, a particular value is assigned to each product in the inventory. Items with a higher value get counted more frequently as compared to items with a lower value.

2. Random sample cycle counting

Another frequently used inventory cycle counting procedure is – Random sample cycle counting.
There are two techniques used in random sample cycle counting which are constant population counting and diminished population counting. The constant population counting process involves counting the same number of items every time a cycle count takes place.

In the diminished population counting technique, on the other hand, a number of items are counted and then excluded from being counted until all warehouse items are counted.

3. Control group cycle counting

In this inventory cycle count process, you count a small set of items quite frequently in a short period to figure out errors or inaccuracies. This process is considered beneficial as it also helps highlight any issues in the counting technique itself that might be causing errors.

The Bottom Line

Conventional physical inventory counts are not infallible and that’s why the inventory cycle counting process comes into the picture. Businesses with a well-defined and organized inventory control method can benefit from inventory cycle counting and the accuracy of your stock information largely depends on how you include a cycle count in your day-to-day inventory management procedure.

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