Cycle Counting Doesn’t Suck!July 8th, 2015
In my university years, I remember speaking with other students about our stats courses. The general consensus was that statistics courses were hard and many people didn’t care for them one bit. I was fortunate enough to have an excellent professor, who brought the subject to life and helped the entire class to understand just how useful statistics can be. Seeing signs posted for a tutoring service at the university called “Stats Doesn’t Suck!” really hit the point home with me. The truth is stats really can suck, unless you understand how powerful the subject is, and are equipped with the right tools.
Now let’s talk about cycle counts. From most people I have spoken with, I get the impression that inventory counting is seen as a necessary evil, only needed to write down a number for accounting purposes, and only to be done once a year or whenever necessary. Let’s work on throwing this misconception out the window.
The truth is, cycle counting can provide your business with so many incredible benefits. Sure, your information system can keep track of inventory based on your purchases, sales, inventory adjustments and transfers, but in real life, we all know that what the screen says and reality are often not the same. The unfortunate reality is that boxes get broken, products become obsolete, things get stolen…you get the point.
By performing regular cycle counts, you give yourself an opportunity to compare the quantities from your information system with the quantities actually counted. This variance report is a powerful opportunity to identify where your inventory system is working well (little variance) and where you may have a control issue that needs to be tightened up (high variance). If you notice that your numbers are way off, you now have an opportunity to find out why the problem is happening and take corrective action. Keep in mind, using regular cycle counts allows you to take corrective action more frequently. For example, if you perform monthly cycle counts, you have 12 opportunities to fix problems, vs 1 when performing annual physical inventory counts.
Another important difference between cycle counting and taking physical inventory annually; By having a staff member/members perform cycle counts of segments of your inventory regularly, you negate the need for shutting down your operations for a weekend just to make sure your numbers are correct. Of course, closing down your business for any period of time can be costly, and paying your employees overtime to perform physical inventory counts can add up as well.
With all this in mind, it’s time to take the attitude that “Cycle Counting Don’t Suck!”
Nice article on cycle counting. Found an interesting article on reducing chargebacks in retail supply chain in this article.