Cycle Count
Also known as: Cycle Counting, Perpetual Inventory Audit, Rolling Count
Definition
Cycle counting maintains inventory accuracy by counting a small portion of products each day or week. Unlike annual physical inventories, it’s continuous and doesn’t disrupt operations.
Cycle Count vs. Physical Inventory
| Cycle Count | Physical Inventory |
|---|---|
| Ongoing process | Once per year |
| No shutdown needed | Operations stop |
| Catches errors quickly | Errors found late |
| Lower labor peaks | High labor demand |
| Continuous accuracy | Point-in-time snapshot |
Cycle Counting Methods
ABC Analysis
- A items (high value): Count weekly/monthly
- B items (medium): Count quarterly
- C items (low value): Count annually
Random sampling: Randomly select locations daily Control group: Count same items repeatedly to verify process Location-based: Systematically count by zone
When to Cycle Count
- After receiving shipments
- Before shipping high-value orders
- When discrepancies are detected
- At regular scheduled intervals
- After inventory adjustments
Accuracy Targets
| Industry | Target Accuracy |
|---|---|
| Manufacturing | 95-98% |
| Distribution | 97-99% |
| Retail | 95-97% |
| E-commerce | 98-99%+ |
Best Practices
- Count blind (don’t show expected quantity)
- Investigate all variances
- Document root causes
- Train counters thoroughly
- Use barcode scanning
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