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Appliance Parts Depot
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How to Avoid Year-End Physical Inventory
How do I love thee? Let me cycle count the ways...
Let's face it: no one, aside from serious masochists, enjoy performing end-of-year physical inventory. The process is tedious, it takes forever, it's costly, your employees/coworkers resent it. What's worse, you face the dread of not being entirely sure how the count is going to go - are you going to come up drastically short on those expensive bulbs from Taiwan? Inventory time is awful, but it has to be done.
Or does it?
The answer is, "it depends." Some corporations demand a wall-to-wall physical inventory in which entire warehouses are counted during a short, specified period of time, at least once a year (sometimes more frequently). Others are more flexible and will allow shorter, more frequent counts of inventory throughout the business year.
Cycle counting may help you avoid performing physical inventory all in one big go.
According to Wikipedia, "[a] cycle count is an inventory management procedure where a small subset of inventory is counted on any given day." Determining count frequency, and which items to count, is an issue best decided by individual institutions.
Some companies perform random cycle counts. Others prefer to count more valuable items with greater frequency, classed into prioritized levels, based on the Pareto principle. The idea behind this is that the most expensive items can account for the biggest losses in inventory with the smallest discrepancies, although it's important not to overlook smaller, less expensive items that are easily misplaced in large quantities.
A good warehouse management system should include cycle counting capabilities as a basic feature, and can integrate with your ERP system's ABC classes. Most experts recommend daily cycle counts. Like other good habits, performing cycle counts on a daily basis ensures that you have a firm grip on understanding how much inventory you have.
Just like cleaning your warehouse (or even your house), incremental jobs can make the overall process easier to manage. If you're not already cycle counting your products, consider working with a WMS that can accommodate your new plans for tighter inventory management controls.