Companies with extensive inventories don’t look forward to the annual inventory count. Shutting your operations down for a day to do the count disrupts business and costs money.
A better way to audit your inventory is to use cycle counting.
Unlike the traditional inventory audit where the entire inventory is counted at one time, cycle counting entails counting a small part of your inventory on a daily basis. Each day, a different part of the inventory is counted until everything is covered. Then the process starts over again.
Does it seem like this would be disruptive to your daily operations and vice versa? It doesn’t have to be; there are a number of ways to prevent that from happening. One method is to only allow items to be taken from or added to the part of the inventory subsection that hasn’t been counted yet. When the count is completed, you will have an exact snapshot for that part of the inventory. Afterwards, as long as you keep accurate records of what is taken out and placed into that subsection, you will always know its count. Another method is to simply quarantine a subsection until its count has been completed. Normally, a subsection would be a particular part or product. It could also be a category of parts or products.
Cycle counting is less disruptive to your daily operations because you don’t have to shut down the whole of your operations and only requires the labor of a few people. We suggest using the same people to do the counting because the experience will make them experts at the process, reducing the possibility of errors.
The more frequently you cycle through your inventory, the better. The reason for this is that it’s best to catch inventory errors as quickly as possible. The longer an error goes undetected, the more damage it can do to the profit margin of your company.
There are a number of methods of cycle counting. One method is to make more frequent counts of items that have high value and fewer counts of items that have low value. A second method is to count high moving items more frequently than low moving items. This is because inventory items that see a lot of activity have a greater chance of having errors introduced into their count and therefore should be counted more often.
Frequent cycle counting ensures that you know what is in your inventory with a high degree of accuracy. When you are certain of your inventory count, you and the employees of your company have more confidence when conducting business operations.
If improving your inventory management with cycle counting interests you, please contact Acumen Information Solutions today.
