Cycle counting is an effective method to verify that your physical inventory counts match your inventory records. By performing regular counts of specific products, you gain more visibility across your warehouse operations, avoiding errors, improving productivity, and increasing efficiency. However, although cycle counting contributes to inventory management efficiency, it is also a time-consuming process.
As a result, some warehouse managers skip this step to reduce labour costs. Unfortunately, this increases manual errors and leads to inaccurate inventory counts, which negatively impacts customer service levels. It also leads to poor decisions based on inaccurate information that impacts profitability. Here we look at how counting with precision through automation revolutionizes cycle counting, providing the most effective inventory management method.
The Benefits of Automated Cycle Counting
Automated cycle counting provides warehouses with the best of both worlds. They benefit from cycle counting accuracies and don’t have to worry about additional labour costs related to outdated manual counts. Automation improves accuracy and productivity, so your team gains trust in stock levels and avoids time-consuming corrections related to manual errors. You have complete, real-time visibility of inventory counts using a state-of-the-art warehouse management system (WMS), allowing your team to:
- Implement accurate cycle counting leveraging technology such as barcode scanners and robot counters
- Set scheduled cycle counting by defining rules based on preferred timing, warehouse locations, categories, etc.
- Provide inventory details to team members, 3PL clients, inventory managers, etc. in real-time and in specified details right down to the bin location
Integration with Warehouse Management Systems
Automated cycle counting with a WMS deploys cycle count work orders to teams as part of their daily routine. You can include reminders about when and what counts are required for the day, and warehouse staff then complete using scanner technology, item allocation mapping, and handheld devices to enter quantities once confirmed. They also have access to the most recent counts to compare counts and spot discrepancies automatically.
Adjust Cycle Counting to Suit Your Needs
You choose the timing based on the type of cycle counting required using cycle count best practices, including:
- ABC Analysis (Pareto): When you need to count essential products, you should base counts starting with the highest frequency for “A” items, reduced frequency for “B” items, and then the least counts for “C” items. You then decrease counts as your records become more and more accurate.
- Usage Only: If you have established adequate controls for your higher value items and find you need to increase the inventory, increase counts for these items, and decrease count frequency for less used items.
- Control Group: If you discover errors in your process, focus counts on the troubled areas several times in a short period to find out where the issues lie.
- Opportunity-based: This method works well for specific situations such as drops in predetermined thresholds or when you short-ship orders. In this case, you time counts at stages you feel are the most vital in your inventory process.
- Random Sample: This should occur daily in warehouses stocking many similar items.
- Objective Counting by Surface Area: These counts are restricted to specific locations in the warehouse, and you can rotate them to ensure each location is counted at least once annually.
You should also develop hybrid cycle counts based on your warehouse needs.
Ongoing Cycle Counting Improvements
Despite using automation, you still take time to conduct cycle counts. Therefore, you should focus on higher-value, faster-moving items for more frequent cycle counts and limit counts for other items to quarterly or even annually to remain efficient. Because cycle counting helps discover issues in your process, you should also follow the same steps for each count to track changes over time. These steps allow you to improve your cycle counting process continuously:
- Review your records and make corrections so you are working with an accurate database of counts
- Upload reports to the counter’s mobile device so they can review the information and make comparisons to what they see on the shelf
- When differences are found, use the information to spot patterns and identify group or system weaknesses
- As you find weaknesses, improve your process so you are continuously becoming more efficient
- Make sure count changes made to your inventory database are correct
- Track your inventory accuracy percentage to spot changes
- Use your cycle counts to mark sellers from high to low so you can classify them and consider reassignment of location
- Create a cycle that counts all warehouse items based on a minimum quarterly schedule
- Use automated zero-count triggers and have staff check empty bins to confirm count levels
- Use count checks to confirm worker counts so you can create an ace counting team based on the most accurate counts
- Follow up on errors to determine why they occurred
- Keep records of your process and the results
Precision counting with automated cycle counting is critical to effective inventory management. You help eliminate manual errors, create more accurate inventory counts, and create progressively more efficient processes.
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