CYCLE COUNTING CAN IMPROVE YOUR BOTTOM LINE
An accurate inventory is necessary for maintaining customer satisfaction as well as a company's bottom line. An effective means to attaining inventory accuracy is cycle counting. Many companies that employ this method have had success in maintaining an error-free inventory throughout the year. This year-round success can result in inventory accuracy of 95% or greater! However, some companies have tried cycle counting only to find it has taken more time and energy than they have to spare because it was not implemented properly. The following discussion highlights what can be gained from cycle counting and when it should be applied.
What can be gained? One advantage to cycle counting is error-free records. This can result in greater customer satisfaction and the ability to lower inventory levels. To get to this point, though, one must understand what cycle counting is and what it can achieve. The definition of cycle counting is to count a small percentage of pre-selected inventory on a regular cycle. A regular cycle can be every day or every week depending on the amount of inventory and labor resources. Samples counted can then be compared to inventory records to determine accuracy.
The overall objective of this procedure is to achieve an accurate inventory. The following must be done in order for the desired results to be achieved:
1) Keep the system up to date so the cycle count is accurate.
2) Ensure inventory records have a high level of accuracy.
3) Determine the reasons for errors.
4) Correct the situation that is causing these errors.
