QC Software’s Tips for a Strong Cycle Count Program

Cincinnati, OH, January 08, 2012 --(PR.com)-- With a comprehensive cycle count program, warehouse managers can efficiently optimize inventory and improve warehouse performance.

Rich Hite, President of QC Software, a leading provider of warehouse control systems, states, “Cycle counting is an excellent tool for effectively managing inventory. By conducting an ongoing review of inventory, discrepancies and underlying issues can be resolved quickly. Since a physical inventory is usually conducted annually and is more labor intensive, cycle counting is the preferred method.”

Following is an overview for a strong cycle count program.

Determine which method will be used for cycle counting. Commonly used methods include:

1. Price. Choose 20% of the SKUs that make up 80% of the total inventory value. Use this method to assign high-value items a greater count priority to reduce large monetary discrepancies and frequently monitor these items.
2. Velocity. Choose 20% of the SKUs that make up 80% of the total usage. You are assigning fast moving items a higher count priority to minimize stockout conditions.
3. Location. Cycle counting by location means that all inventory is counted the same number of times.
4. Item Number. For specific SKUs that are critical or may have issues, you may want to schedule weekly or bi-weekly cycle counts. On the other hand, slow moving items may only need to be counted a few times each year.
5. Last Cycle Date. This method ensures all inventory is counted on a timely basis.

In general, high volume, high risk or high priced inventory should be on an accelerated cycle count schedule. This will help maximize accuracy and resource efficiency. Regulatory compliance will also determine the frequency. Periodically evaluate each item and change the count schedule as needed.

Preparations:

1. Assign a team leader and make sure all counters are properly trained. If this program is new, choose a pilot site and test the program before implementation.
2. Make sure all items and locations are properly labeled.
3. Assign a location to each inventory item in the computer and store all inventory in the appropriate place.
4. In reserve locations, store like SKUs together instead of multiple locations to simplify the process.
5. Create the cycle counting report. Once you decide on the selection method, you or your programmer can create the report that must include the item number, item description, and on-hand quantity, sorted by location.
6. Implement procedures for completing all inventory transactions. No cycle counting should begin in an area until transactions are finished.

General procedures when conducting the cycle count:

1. Assign counters to specific areas in the warehouse to improve accuracy.
2. Verify that all inventory transactions have been completed and print the report.
3. Count the inventory. Make sure all items listed on the report are in their physical locations and make the necessary corrections. Then verify that all items in their physical locations are listed on the report to find items not recorded in the database.
4. Review and investigate discrepancies, making sure to resolve those items that are critical for order fulfillment first. Look at historical records in the database for trends. Discuss errors with managers and counters to determine the root cause.
5. Revise warehouse procedures to prevent recurring problems.
6. Correct the errors found during the count. Actual counts should match database counts.
7. Perform weekly audits and post the results.

If count discrepancies beyond acceptable limits are found during normal warehouse operation, an inventory control specialist should conduct affected slot and SKU verifications. This will minimize time and labor while maintaining the integrity of the inventory.

There are many benefits of a well-executed cycle counting program. Managers can achieve higher productivity, accuracy and service levels while minimizing operating costs. With an inventory accuracy rate of 97% or more, many industry leaders believe you can eliminate physical inventories.

QC Software is recognized as an industry leader in providing innovative and adaptive software solutions for order fulfillment and distribution centers. Their RFID–enabled warehouse control system provides advanced management capabilities for inventory control, resource scheduling and order management. For over 15 years, these solutions have enabled customers in North America and Europe to streamline their warehouse operations with the lowest total cost of ownership in the industry.

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