Inventory Cycle Count

Why is Cycle Counting Important?

Every product you carry in your warehouse has value. Keeping an up-to-date picture of your stock through cycle counting carries a significant impact on overall inventory cost in your organization. 

With consistent cycle counting, ongoing counts are set to update and match inventory records at any point of the year they are carried out. With this method, your company can have the most up-to-date, accurate view of the number of items in your warehouse and where they are located at any given time.  

Ultimately, inventory cycle counting can help recognize and correct discrepancies in your stock records. Successful inventory cycle counting leads to fewer human errors and increased accuracy.

Benefits of Cycle Counting

Here are 3 additional benefits you can expect from cycle counting: 

1) Keeping track of inventory movement 

Cycle counting increases inventory accuracy, it can identify inventory issues faster and reduce the need for inventory auditing.  

Many companies start out with paper-based systems, like RF-SMART customer Kateeva. They did not yet have an inventory management system in place, so everything was done manually. Counting could take hours, which often meant they get done quarterly, at best.  

For Kateeva, there was a significant lag between data points for their inventory management and accounting systems, which is common for teams with manual processes. This made it impossible to know the number of items they had, where they were, and when they got there. 

By implementing RF-SMART's Cycle Counting, Kateeva can now run counts on a dependable schedule and count double the inventory in 50% less time. 

2) Minimizing risk for inventory discrepancies

Cycle counting reduces the risk of human error by performing more consistent daily counts that automatically update every time an item is scanned. This eliminates staff having to physically rope off areas that might get tampered with after manually counting.

RF-SMART customer Rhino-Rack used daily cycle counts to catch inventory discrepancies sooner rather than later. Since accurate inventory counts are the basis for all other inventory processes, such as picking, packing, and shipping, those inventory discrepancies were impacting their bottom line.

With RF-SMART, their new daily counting processes ensure their inventory levels are accurate, so less energy is spent looking for items and more orders are picked. These changes have also had upstream impacts in their business, helping keep the finance department satisfied by trusting that the best control measures are in place.

3) Improving customer service and warehouse efficiency 

By focusing your efforts on improving your warehouse operations, you are laying the foundation for optimal customer service. When your customer is expecting a product, efficient order fulfillment and a timely delivery can positively impact your customers’ experience. 

ABC Counting  

Inspired by the Pareto Principle and the 80/20 rule, rank your items based on unique business criteria, including cost, quantity, or historical order value. 

Create your ABC class definitions. Valuate your items, group them, and then assign them to a class.

1. A  items are high in volume or value and are counted quarterly.   
2. B items are counted twice a year and have higher turnover but may cost more.   
3. C items are slower moving and counted annually.

How to Do an ABC Cycle Count

Set up counts and approvals:
Ensure you define the items and classes to be included in each count. A and B class items should be scheduled for more frequent counts, thereby ensuring the accuracy of inventory. C class items are typically only counted once a year. Ensure all items in the ABC group are cycle count enabled.

Determine count frequency:
When attaching classes to a cycle count, ensure that you have entered the number of times you want the items in that class counted. This number is the minimum number of times it will be counted in a calendar year.

Generate count schedules and count sequences:
Schedule your count reviews, make any adjustments, and approve counts once complete. This should be done as soon as possible for accuracy. 

Review your ABC analysis:
You should still review your ABC Analysis once a year to ensure inventory is still in the appropriate class. If items no longer meet class criteria, move them to another inventory classification.

Bin Sequence Counting

If the ABC counting strategy isn't a good fit for the type of inventory you manage, another option is to divide your warehouse into sections, then count them sequentially. A best practice is to randomize the order to avoid creating any predictability and limit the margin for error.  

Random Sample Cycle Counting

Completely randomize the SKUs you will count and assign each one a count date. This method will allow you to count all bins containing the same item in one go.

There are two types of random sample cycle counting:  

• Constant Population Counting  
  Constant population is where a selection of items could be counted multiple times within a small-time frame due to staying in the group of all warehouse items.  
  
  
• Diminished Population Counting
  Diminished population counting, on the other hand, excludes the items from being counted again until all items in the warehouse are counted.  

Check Software Updates

Ensure you are operating with your solution's most recent software updates so you have the latest functions and features.

Start with Clean Data 

Before you begin your first cycle count, it is important to do a wall-to-wall physical inventory count to ensure NetSuite is updated with the correct inventory numbers. Skipping this step will make your cycle counts inaccurate.  

No Bins? No Problem! 

When working with few to no bins in the warehouse, consider physically assembling your inventory as close together as possible. For stores that cross-merchandise items, knowing all item locations is critical. If you utilize shelf tags, a color dot on the tag can indicate a cross-merchandised item, making it easier for any recounts.

Organization is Key  

From tidying up around the warehouse to adopting storage that works for your WMS, organized inventory facilitates an accurate count.  

To assist with the counting process, we recommend you fully label your warehouse with items, locators, sub inventories, etc. Be sure to identify and leave items that have not been received or shipped from your ERP out of the count. Ensure items that you want to include in your counts are properly set up. 

Analyze Warehouse Data  

All inventory transactions should be reviewed to determine what kind of cycle program that best fits your needs (ABC, Bin Sequencing, or Counting Groups.)  Create a stock count plan based on the type of cycle count you want to use. 

Initiate the Counting Process  

1. Create the Count
2. Start the Count
3. Perform the Count
4. Complete the Count
5. Approve the Count
6. Create Recounts or New from Unapproved
7. Close the Count 
   

Ongoing Cycle Counts

Ensure you are completing the cycle counting at regular intervals to maintain accuracy throughout the year.

How Often Should You Cycle Count?

Since counting techniques, frequency, and inventory levels are unique to each business, the cycle count system in place should reflect your company’s needs to keep inventory accuracy high and minimize or eliminate a pause in warehouse operations.  
 
With cycle counting, counts should be spread throughout the year, with each count being small enough to be processed on the same day. This can vary from business to business based on different types of inventory and frequency of orders. 

Built in NetSuite

The most effective way to conduct inventory counts is by utilizing a cloud-based, mobile barcoding solution that is built directly on your ERP platform. RF-SMART leverages our proven Built-in-NetSuite, native warehouse management system for accurate, efficient cycle counting.  

Eliminate Halt to Warehouse Operations 

Halting warehouse operations is inefficient and costly – time is money. With RF-SMART, you do not need to pause operations to conduct a physical inventory count or cycle counting. This is key, so whether you use cycle counting exclusively or in conjunction with physical inventory counting, you never have any downtime.  

Multiple Forms of Counting 

RF-SMART has multiple counting functions available to RF-SMART customers. This includes options to help warehouse staff directly navigate to items/bins or do blind counts as well as scan-only options for each of those functions. These functions can be tailored to items that need to be individually counted or counting overall inventory.  

Real-time Review of Inventory Count Progress

RF-SMART enables managers and supervisors to review in real time how far along the counts are in progress, variances, and errors – and even ask those questions while warehouse staff are counting.  The functionality allows flexibility to sort by variances and approve the inventory adjustment value when someone is assisting you during the approval process. 

Ease of Use

With RF-SMART's intuitive user interface, automated features, and detailed analytics, you know exactly where your inventory is and who puts it there at all times. It’s easy to implement, easy to use, and easy to train warehouse staff to ensure your counting processes are consistent. You can cycle count from the same place you are scanning – no toggling to other systems! 

Advanced Cycle Counting
with RF-SMART

After building a set cycle counting routine, it’s time to take your processes to the next level. The counting groups and planning features within RF-SMART give you unmatched flexibility to meet the specific needs of your business: