Cycle Counting in Inventory Management

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Organizations with a large volume of inventory like warehouses can experience a challenge when carrying out regular checks to ensure that the correct stock is available.  Cycle counting can be used enhance the process, putting in a structured system to prove the accuracy of stock information.  Cycle counting is a sampling method where particular parts of the inventory are reviewed and the results used as a representative of the entire catalog. Check it out!
Types of Cycle CountingControl Group Cycle Counting Once a company starts using the cycle counting methods, they may use the control group test the accuracy of their approach.  This technique involves counting small groups of items many times in a short period.  It is done to confirm the accuracy of the counting technique, and if the technique is found too inaccurate, it will be corrected before moving to the other areas of the warehouse.   This cycle count process is continually done until the method is proved to be accurate.
Random Sample Cycle CountingThis involves choosing items at random to have them counted. When a company’s warehouse has a large quantity of identical items, they can randomly select a certain number of items and count them.  The counting can be done each or workday ensuring that a large percentage of the items are counted in a reasonable period.
ABC Cycle CountingThe ABC cycle counting is an alternative to the random sample counting and is the most commonly used counting technique.  The method uses the Pareto Principle as the basis. The principle states that roughly 80% of the effects come from 20% of the causes.  In essence, this means that 20% of the items relate to 80% of the sales. These are designed as  Group A. B items account for 30 percent of the items, and 15 percent of the sales and C items represent 50% of the products in the warehouse but only 5% of sales.  It is essential that all the items in the warehouse be marked as A, B, C which is successfully done with inventory management software.  The reports can provide you with an idea of the category into which each item fits.  Once this has been determined,  counting will be more frequent for those products in group A, then B group and then Group C.
The Benefits of Cycle Counto Operations aren’t disrupted during a cycle counto It is time and resource saving o It is less complicated than annual physical Count.

 

Find out more about this at http://www.huffingtonpost.com/entry/top-5-inventory-management-systems-for-small-businesses_us_59652464e4b0deab7c646c40.

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