Since we are coming to that time of year, let’s discuss Inventory Counts. This is usually one of the biggest headaches companies face at the end of a year.
There is down time, when all material stops moving and the business is closed. There are extra staffing needs to make sure the count gets done in a timely manner. And in general, it is nobody’s favorite job. But if you have inventory, it MUST be counted, annually at minimum. There is no getting around it.
However, there is an easier way. It’s called Cycle Counting. It can be done by your regular materials staff on a daily basis. If an effective and efficient system is properly implemented and maintained, you can actually keep your inventory between 97 and 100% accurate at any given time. There will always be some discrepancies as items are still moving but most times they can be traced via open orders and RMAs.
Cycle counts will help you find discrepancies in your inventory on a daily basis. When mistakes are found in a timely manner, not only will you correct your inventory, it will allow you to backtrack through your process to find potential problem areas. Overall, if fewer mistakes are made, costs can be kept down.
Cycle counts are a quick snapshot of your day to day inventory changes. They allow you to see quickly which items move regularly and which ones do not.
There are different types of cycle counts that can be done. Such as the geographic method: Where is it in the warehouse? Break it down into manageable sections and set up your count schedule. Another method is Ranking or ABC method: Differentiate parts by A, B, C and designate which grouping gets counted when by setting up a schedule.
The method you choose will really depend on the amount of items in your inventory and how many material handlers you already have in place. Define your parameters and set up a schedule. It might require your staff to stagger their hours so that 1 -2 people come in earlier or stay later to do their daily counting. You will see the benefits of this process quickly.
Then, when next year ends and you don’t have to close your doors or utilize all available staff to count, you can breathe a sigh of relief.
If you would like some assistance setting up a cycle count process for your business, please contact us.
Happy Holidays!
