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Cycle Counts

Physical Inventory Counts… Three words that can send shivers down most retailers’ spines. Hated by some, loathed by many, dreaded by most, and, yes, avoided by some (temporarily of course).

Fortunately, there is a simple habit that can make year end physical a whole lot less painful.

Cycle Counts!

Cycle counts are simply the continuous counting and updating of inventory, on a regular basis.

Now there’s a considerable amount of highly technical documents out there that talk about ABC models, product volume, etc., etc.. That’s all well and good but, “oh my goodness”, that could end up being more pain than pleasure!

Since we don’t want to scare you away, let’s put aside all of the technical mumbo jumbo and keep it simple. Start off by setting aside a couple hours or so per week to count a small number of products – that’s all it really takes. These counts are done using the same basic year-end physical count method except on a much smaller scale – start a physical count, take a snap shot of what you’re counting, enter the counts or import from a scanner, print your variance report, fix things, set to Default, and Update.

Once you get into a rhythm the process will go that much faster, and you may even reach a point where you no longer have to run an annual physical count (not recommended, but you never know).

The Benefits

  1. Better customer service – having the right inventory at the right time;
  2. Reduce dramatic annual variances in inventory – aka. save money;
  3. More accurate inventory numbers;
  4. Since you’re only focused on a small cross section of products, it’s easier to track down errors;
  5. Reliable inventory numbers make automated purchasing more reliable;
  6. Your staff will trust the inventory numbers knowing they are being scrutinized;
  7. Having multiple staff members familiar with the inventory process, means they can pass this on to new personnel;
  8. A tough subject to broach, but it reduces pilferage. Studies show that pilferage is considerably higher in operations where the inventory numbers are inaccurate. When they know you are on top of things, those things won’t wander out the door;
  9. The process for year-end physical count is no longer overwhelming since it is the same thing that is being done on a regular basis.

Simple Steps

Now that we know cycle counts are good for your mental, physical, and financial well-being, let’s take a look at the steps to implementing this strategy.

  1. You have to be committed to the process. If appropriate, plan on a calendar the days that the cycle count is going to be done. Might only be a couple of hours a week where you count random products. Just commit to it, and make sure it gets done;
  2. Start off with a few key products, and then move up to the high turnover, and big ticket items. You can also mix things up a bit, so that a broader cross section of products are being counted. The idea is to grow the process so that everything is counted at least once a year, and important products are counted at least 3 times per year;
  3. Use data collectors or the Aralco Mobile system if possible. Accuracy and ease of use can spell the difference between success and a painful process;
  4. Download the instructions for conducting a physical count from our Knowledge Base. If you are nervous about the process, pre-book some training time for the first couple of weeks, and have one of our specialists guide you through things until you are off and running;
  5. Document your processes so that the next person doesn’t have to start from scratch;
  6. Keep your expectations low – Rome wasn’t built in a day! By committing to the process you’ll see the benefits down the road, and especially come year end physical count time.

Good luck, and happy counting!

If you have any questions please feel free to drop us a line at support@aralco.com – we’re here to help.

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