Cycle Counting

What is Cycle Counting?

Cycle counting is a perpetual inventory auditing procedure.

Rather than conducting a full inventory annually, warehouse operatives count a subset of inventory locations on a rotating schedule.

Benefits of Warehouse Cycle Counting

Implementing a cycle count process ensures inventory accuracy year-round and allows operatives to quickly identify any discrepancies.

It also allows operations to continue without the costly, time-consuming shutdown required for complete inventory counts.

Cycle Count Methods

There are different cycle count methods depending on the needs of your warehouse. Some of the most popular cycle count methods are:

ABC Cycle Counting

ABC cycle counting prioritizes items based on value and velocity:

• A-items: The highest value items are counted monthly

• B-items: Moderate value items are counted quarterly

• C-items: The lowest value items are counted less frequently, typically annually

Random Cycle Counting

Random cycle counting selects random stock keeping units (SKUs) to be counted daily.

This provides a statistically valid sample of overall accuracy and can deter inventory shrinkage since any location might be counted at any time.

Opportunity-Based Counting

Opportunity-based counting triggers counts when inventory reaches zero, after large transactions or following error reports.

This method addresses high-risk situations without requiring scheduled count programs.

What is the Optimal Cycle Count Frequency?

It depends on how many products you have in your warehouse, as well as the value.

Many warehouses use ABC cycle counting as this allows them to prioritize high-value items and de-prioritize low-value ones.