SKULabs Academy

Introduction to Cycle Counts

Counting inventory in your warehouse is as important as it is agonizing. No one enjoys the grueling task of taking every single unit of every product off of the shelves, counting them and recording the counts, and replacing those units where they were found.

Cycle counts in inventory management

However, inventory counting is the best way to catch discrepancies in reported figures. The trick is to find the best way to perform inventory counting. Luckily, there's a way to make inventory counting more accurate and more efficient while also making it easier for your team to perform.

The best alternative to the traditional physical count is a process called cycle counting. Cycle counts are smaller, more digestible counting tasks that cover one small fraction of your total inventory at a time. By covering a different part of your warehouse with each count, you'll be able to "cycle" through your whole catalog more often — and with much less headache!

Simplified inventory counting

Annual inventory counts are exhausting. Most ecommerce warehouses have thousands or tens of thousands of products that need to be counted. To make matters worse, errors made while counting can render the results of the count worthless.

Cycle counts can be performed much more quickly than regular counting, since the counter will be focusing on a much smaller part of your catalog. The minimized repetition and organization needed eases mental strain and reduces fatigue. This allows the counter to focus their efforts and avoid mistakes.

Reduced inventory errors

The whole purpose of regular inventory counting is to keep inventory errors at a minimum. Discrepancies should be few and far between so that the on hand count reports can be trusted. To help reduce inventory errors, it's important to count goods as often as possible — especially top sellers.

Cycle counting makes this easy by allowing you to integrate inventory counting into your daily workflow. It's common for warehouses to assign one cycle count per day to team members. Once the counts are done and discrepancies are reported, there is time to spare to investigate and diagnose those errors.

Faster counting with barcodes

Counting and tallying inventory with paper and pen is simply asking for trouble. The practice is too slow and too error-prone to be reliable as your business grows. You need to be able to count faster and without mistakes if you want to smoothly integrate inventory counting into your day-to-day operations.

Just as barcode scanning is revolutionizing order picking, so too is it making inventory counting faster and easier than ever. Instead of visually confirming that you've located the right product, a barcode scanner can quickly confirm the product that you're counting and where it should be located. You can also keep an accurate count of what you've pulled so far without relying on tallying with a pen.

Smarter product grouping

Are all products in your warehouse treated with equal importance? That's doubtful — every retail business has their top sellers, as well as stock that barely moves in comparison. One advantage of implementing cycle counts is that you can count those top sellers more frequently. This can be easily organized by categorizing your products in ABC groups.

ABC cycle counting follows the Pareto principle, which states that roughly 80% of the effects come from 20% of the causes. Most retail businesses can assume that 80% of their sales will involve the top 20% of their catalog. Those items would be grouped into the "A movers" and would be counted the most frequently. The B movers generally make up 30% of your catalog but only 15% of sales, while the remaining 50% of your catalog are sorted into the C movers group. The C movers can be considered "low risk" and won't need to be counted as frequently as the higher-volume sellers.

Take the next step in inventory control and order fulfillment.