A wall-to-wall count once a year stops the warehouse and tells you how wrong the numbers were months ago. Cycle counting spreads smaller counts through the year, catches problems near the cause and keeps stock accurate between counts.
Set up counts by class
- Classify items by movement or value: A for the fastest or most valuable, B for the middle, C for the rest.
- Count A items most often, B less often, and C at least once a year.
- Spread counts by location so each day's list is short enough to finish.
Add triggered counts
- A location goes negative.
- A pick is short.
- A receipt or transfer is corrected.
- A bin has not been counted in a set period.
Count blind and set thresholds
Show the counter the location and item but not the expected quantity. Compare afterwards. Set tolerances by value and class: small differences post automatically, larger ones need a supervisor and a reason code.
Find causes, not only differences
Record why each variance happened: mispick, receiving error, damage, unposted return, wrong unit. After a few weeks the reason codes show which process to fix.
Getting finance and auditors to accept it
Ask your auditor before you stop the annual count. Auditors generally look for a documented program, counts by class on a schedule, controls on adjustments and reconciliation of the perpetual inventory to the ledger. Bring the program documentation and the last quarter of count results.