Cycle count

A cycle count is an inventory auditing procedure, which falls under inventory management, where a small subset of inventory, in a specific location, is counted on a specified day. Cycle counts contrast with traditional physical inventory in that a full physical inventory may stop operation at a facility while all items are counted at one time. Cycle counts are less disruptive to daily operations, provide an ongoing measure of inventory accuracy and procedure execution, and can be tailored to focus on items with higher value, higher movement volume, or that are critical to business processes. Although some say that cycle counting should only be performed in facilities with a high degree of inventory accuracy (greater than 95%), cycle counting is one means of achieving and sustaining high degrees of accuracy. There are specific procedures to use cycle counting to quickly identify root causes of problems in the processes that control inventories and then monitor the effectiveness of the actions to eliminate the root causes. In fact, doing conventional inventory audits without having previously made the control processes reliable is like trying to weigh dry ice - soon after balances are corrected, the bad processes wrong the balances again. The ideal procedure is to bring the control processes to reliability through root cause elimination with cycle counting, then perform a full physical audit to correct all balances, and then continue to use cycle counting to monitor and sustain. The specific procedures to this approach include the use of control groups, frequent repetition of counts of inaccurate items (e.g., weekly or twice a month), and prioritization based on control process vulnerability rather than item values. This approach faces difficulty with the mindset of making inventory data periodically accurate for accounting books' purposes but it is essential with the mindset of perfecting control processes so inventory data are continuously accurate for minute-to-minute support to operations. The purpose of cycle counting is to verify the inventory accuracy and even though it is not an adequate procedure to be used to correct inventory errors, it is an adequate way to identify the root causes of inventory errors. In contrast, identifying root causes, agreeing on actions to eliminate them and implementing them to the point of perfecting control processes is virtually impossible with traditional inventory audit approaches. A cycle count is an inventory auditing procedure, which falls under inventory management, where a small subset of inventory, in a specific location, is counted on a specified day. Cycle counts contrast with traditional physical inventory in that a full physical inventory may stop operation at a facility while all items are counted at one time. Cycle counts are less disruptive to daily operations, provide an ongoing measure of inventory accuracy and procedure execution, and can be tailored to focus on items with higher value, higher movement volume, or that are critical to business processes. Although some say that cycle counting should only be performed in facilities with a high degree of inventory accuracy (greater than 95%), cycle counting is one means of achieving and sustaining high degrees of accuracy. There are specific procedures to use cycle counting to quickly identify root causes of problems in the processes that control inventories and then monitor the effectiveness of the actions to eliminate the root causes. In fact, doing conventional inventory audits without having previously made the control processes reliable is like trying to weigh dry ice - soon after balances are corrected, the bad processes wrong the balances again. The ideal procedure is to bring the control processes to reliability through root cause elimination with cycle counting, then perform a full physical audit to correct all balances, and then continue to use cycle counting to monitor and sustain. The specific procedures to this approach include the use of control groups, frequent repetition of counts of inaccurate items (e.g., weekly or twice a month), and prioritization based on control process vulnerability rather than item values. This approach faces difficulty with the mindset of making inventory data periodically accurate for accounting books' purposes but it is essential with the mindset of perfecting control processes so inventory data are continuously accurate for minute-to-minute support to operations. The purpose of cycle counting is to verify the inventory accuracy and even though it is not an adequate procedure to be used to correct inventory errors, it is an adequate way to identify the root causes of inventory errors. In contrast, identifying root causes, agreeing on actions to eliminate them and implementing them to the point of perfecting control processes is virtually impossible with traditional inventory audit approaches. Most cycle counting applications use ABC analysis, segregating items into various count frequencies.