Accurate inventory information is crucial to business success as it impacts everything from customer fulfillment to financing and business forecasting. However, maintaining accurate inventory information can be challenging.

Traditionally, many companies have relied on time-consuming periodic physical inventory counts, which can interfere with everyday business operations. Nowadays, many are moving to a more flexible and agile approach: cycle counting.

Check out this article to explore the key differences between the traditional approach (physical counting) and the more flexible and agile approach (cycling counting) and implement the best approach that best fit for your business.  It will also share how you can optimizing your counts with the inventory Management software.

What is Physical Count?

A physical count is an actual count of the goods in stock. This is a carefully coordinated counting process in which counting areas are segregated and count teams examine assigned inventory areas, recording their counts on count sheets. If there are any differences between the amounts counted and the amounts recorded in the inventory records, the records are updated to match the counted amounts.

What is Cycle Counting?

A cycle count is a subset of a physical count, since it involves counting only a small portion of the total inventory each day. In addition, cycle counting is more concerned with discovering the reasons why specific inventory records are inaccurate, and correcting the underlying problems.

Cycle Count vs Physical Count: What’s the Difference?

While both cycle and physical counts aim at the same goal — accurate inventory data — they take different approaches to get there. Those differences have significant implications for day-to-day warehouse operations. The following table compares both methods at a glance:

Cycle Count Physical Count
Schedule Continually (often every day) Occasionally (often annually)
Items counted Select SKUs over a given period of time All SKUs or items at once
Level of disruption Low High
Information offered A count of select items on a regular basis Exact counts of each SKU in inventory. Authoritative and comprehensive information, annually
Staffing May be the responsibility of a dedicated team of employees and incorporated into other employees’ responsibilities May involve the full attention of many employees and some temporary workers
Level of flexibility Substantial (e.g., counts by value, quantity, category, seasonality or other characteristics) Minimal
Types of companies Often, those with large, growing or complex inventories where physical counting is difficult Often, those with limited inventories where physical counting is less disruptive. Public companies, and some auditors or accountants, may require them for financial reporting.

Optimizing Your Counts With Inventory Management Software

Cycle counting becomes much easier with a modern inventory management and warehouse management software. Leading inventory management systems automate the cycle counting process, providing daily instructions for both individual counters and reviewers through intuitive checklists and dashboards.

Smart cycle counting, implemented with an inventory management system, can reduce expenses, improve customer experience, enhance warehouse efficiency and eliminate much of the traditional disruption associated with inventory.

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Source: Oracle NetSuite


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