DB-5

Colorado Technical University

May 25, 2015

Executing Cycle Counts

Organizations keep inventories and stock in their warehouses to keep back up in several locations and units to improve supply chain processes. It is necessary to keep count of the preserved products in order to transparently audit the stored resources. Mostly this audit counting is repeated on annual basis manually to cross check the numbers showing in the computer screens. It is very hectic and dry procedure of manual counting but organizations cannot entirely depend on automatic machine counts because incoming and outgoing of the inventory products is always dynamic and moving.

The best way to execute cycle counts per year is to categorize the yearly counts on shorter time spans; monthly, quarterly, and half and then these smaller portions are evaluated with the total yearly counts for auditing purposes. The most effective procedure of annual cycle count is “The Ranking method” in which products are categorized on the basis of their sales [Jimsobeck (2015)]. Fastest moving inventories compile up to form almost 80 percent of the total stocks and there are greater tendencies of error or fraud in these fast moving products and the rest of the lesser velocity dead end products that make up 20 percent of the stock have fewer chances of being stolen [Anderson, K. (2012)]. The cycle count on “A” category items that are fastest moving in the stock are audited and counted on a regular basis manually by the most trusted team of individuals. Second category of items is B category which are mid volume products, they are counted quarterly and level “C” stocks are counted after 6 months [Anderson, K. (2012)]. It is necessary to assign the task of cycle counts to the most trusted and morally ethical people because no matter what method an organization choose for inventory count, people might be bribed or corrupted by social factors to hide sensitive errors.

The items can be identified on the basis of their categories or by making classified stacks and portions within the warehouse. Counting people might check on the stacks and read the titles to identify the items. The items being counted monthly should be placed in different places in the warehouse whereas items being counted quarterly or after six month should be placed separately [Anderson, K. (2012)]. An overall count should be documented for cross checking of the counts and to match the accumulated counts with the overall larger number. When a high-loss item is identified prior to year-end inventory, it must be matched with the total number firstly to check for any errors in the total count and then it should be accumulated in the right category.

References

Anderson, K. (2012). Software Solutions Inc. Improving Warehouse Efficiency – Cycle Counting Methods. 13 April 2012. [WEB] Retrieved from: http://www.mas-ss.com/blog/bid/123619/Improving-Warehouse-Efficiency-Cycle-Counting-Methods

Jimsobeck (2015). Tumblr. Inventory Cycle Counts. [WEB] Retrieved from: https://www.tumblr.com/search/inventory%20cycle%20counts