Wednesday August 26, 2015 07:59

Inventory Cycle Count

Posted by Steve Drago as Inventory

What is an Inventory Cycle Count?

An Inventory Cycle Count is where a small subset of inventory, in a specific location, is counted on a specified day.  A cycle count can be done on any day usually without affecting operations at a plant.

The advantages of cycle counts are:

  1. They are less disruptive to daily operations.
  2. They provide an ongoing measure of inventory accuracy and procedure execution.
  3. They can be tailored to focus on items with higher value, higher movement volume, or that are critical to business processes.
  4. If you suspect an inventory problem, the cycle count will identify the quantity differences at the time of the cycle count rather than waiting until the next physical inventory count. Then you can take steps to remedy the problem.
  5. With a properly documented and functioning cycle count program you can eliminate the annual physical inventory.

An effective cycle count method to utilize is what is called an “ABC” grouping. It is a risk based approach where items with higher value or higher turnover are counted more frequently.


Comments are closed.