Five Benefits of Cycle Counting Over Annual Inventory Counts


As a small business owner, you barely have time to interact with customer let alone spend an entire day counting inventory and checking for inaccuracies. Although tools like Stitch can help you manage your inventory, in order to fully take advantage of our tools, you must implement systems in-house that account for physical stock counting. Online systems can manage quite a bit, but it's mandatory that you also set aside time for manual counting.

One thing that a lot of product-based businesses will do is ditch the annual inventory count and opt for something a little less taxing - ongoing cycle counts.

What is a cycle counting? It is an inventory auditing process that occurs continuously throughout the year, allowing you to only focusing on a subset of inventory. 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.*

Here are the largest benefits to implementing cycle counts in your business:

1. Limit the amount of disruption within your warehouse.
Keep cycle counts as a part of your weekly routine to prevent major disruptions to your warehouse. Often times, when businesses conduct full-day annual inventory counts, the entire warehouse must be paused in order to finish the job. With cycle counting, you will evaluate inventory accuracy on an ongoing basis, allowing for minimal disruption and continuous communication among your team.

2. Increase confidence in buying decisions.
When you implement ongoing cycle counts, you’re forced to continuously assess your inventory. By having smaller check-ins, focusing on a subset of inventory, your buying decisions are more informed and targeted. You're able to avoid stock-outs ahead of time and create a better report for buyers on your team.

3. Lessen discrepancies.
By shortening the amount of time between counts, you are decreasing the amount of time an error could have been made. If you account for inventory incorrectly, waiting several months may cause a large issue with your customers and your business as a whole. Catch mistakes faster by these smaller, ongoing counts.

4. Maintain focus and keep inventory as a priority.
Inventory can often be the most frustrating part of owning a product-based business. Implementing smaller cycle counts allows your entire operations team to see your stock accuracy as a vital part of your business, allowing them to feel more confident about the business decisions you’re making. It will also decrease the amount of stress it causes, allowing for it to be accomplished with minimal haste.

5. Annual inventory counts are time consuming and drain resources.
Although it feels great ending the year with an annual inventory count, allowing for a clean slate, annual inventory counts drain time and human resources. Maximize your productivity and encourage ongoing communication about inventory by implementing cycle counts.

How about you? Do you prefer annual inventory counts over frequent cycle counts? What do you find to be the most challenging? I'd love to hear your feedback!

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