The Benefits of Cycle Counting

Modern retailers face a lot of challenges, but managing inventory accuracy remains one of the biggest. There are so many ways to lose track of inventory, and the numbers in the system can quickly become far different from what is actually in stock.

Physical merchandise counting has to be performed regularly to maintain an accurate picture of what is really available. Most businesses follow one of two general approaches.

Full Physical Inventory Count

The first is planning a full physical inventory count around every six months, wherein employees count every single item in a store and then update records. Although it can be reliable, it’s quite labor intensive and can take a lot of time. In some cases, it also requires the store to be closed, which is hardly a good way to boost business!

Cycle Counting

That’s why retailers are increasingly turning to cycle counting to tackle the problem. By partially counting merchandise continuously, it’s easier to stay on top of the levels of stock without bringing regular shop operations to a halt. Under this method, only certain portions of inventory are counted on a weekly or even daily basis to avoid those big, disruptive inventory counts.

The ABC’s of Cycle Counting

If you choose to go the cycle counting route, there are a few ways you can tackle it. The ABC method has proven to be quite useful for many businesses. In this method, products are divided into categories based on their cost or turnover so that the most valuable ones will be counted more frequently.

Most businesses use three groups—A, B, and C—and place their top 20 percent in group A, the next 60 percent in group B, and the bottom 20 percent in Group C. Those in Group A will be counted the most frequently, and each category will be counted several times per year.

It’s also important to keep seasonality in mind. If a product or category is in season, it needs to be counted more often. Clothing retailers, for example, should be counting swimsuits in July, not December.

Whatever approach you decide on, the most important thing is to stay organized and be systematic about it. Inventory management software can help boost productivity and make it easier to spot problems.

This blog post was based off of an article from Vend. View the original here.