Cycle Counts VS. Physical Inventories
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A cycle count is an inventory management process where small subsets of inventory are counted periodically throughout the year. The periodic counts test the accuracy of the inventory processing system. This process allows the user to make the necessary adjustments to inventory to ensure correctness throughout the material process.
Benefits:
- Provides solutions to inventory discrepancies rather than just adjusting for differences
- Accuracy of inventory levels are validated on an ongoing basis instead of annually or semi annually
- Inventory inspection is performed by experienced inventory specialists
- Eliminates downtime of operations
- Maintaining high levels of customer service by assuring availability of product & guaranteeing deliver by dates.
Cycle counts can be a good alternative to physical inventories because not only do they ensure accurate inventory levels but they supply more information about discrepancies to help solve the problem(s). The process of successfully running cycle counts is not automatic and requires many things to be determined prior to implementing counts like: determining goals, what counting method to use, determining count frequencies, when to do the counts, who will be running the counts, etc. But if executed properly they can be a very important tool that can be used to maintain/gain market share in the competitive economy.
