Guide

Continuous Cycle Counting

The annual physical inventory is an archaic process. It requires closing the store, paying overtime, exhausts staff, and usually results in rushed, inaccurate counting. Furthermore, finding a discrepancy in December that occurred in March offers no actionable data to fix the root cause.

The Solution: ABC Cycle Counting

Cycle counting involves counting a small subset of inventory every day or week. Over a set period, the entire store is counted. The 'ABC' method prioritizes counts based on item value or turn velocity.

  • A Items (High Velocity/Value): Count monthly (or bi-weekly).
  • B Items (Medium): Count quarterly.
  • C Items (Low Velocity): Count bi-annually.

Implementation Steps

  1. Ensure your POS supports partial inventory adjustments without freezing the whole database.
  2. Categorize your inventory into A, B, and C groups based on sales volume.
  3. Determine how many units your staff can reasonably count in 30 minutes before opening.
  4. Create a rotating schedule. If you have 5,000 SKUs, counting roughly 50 SKUs a day ensures you touch everything multiple times a year.

The ROI of Cycle Counting

Our research shows operators using cycle counting identify administrative receiving errors within 72 hours, allowing them to contact vendors for credit before invoices are paid. Annual counters absorb these errors as pure loss.

FAQ

Do I count during business hours?

Preferably not. Count 30 minutes before opening to ensure no transactions occur while an item is being counted, which corrupts the data.

What about variance?

Set a variance threshold (e.g., +/- 2 units or $50). If the count variance is within threshold, accept it. If higher, trigger a secondary recount by a manager.