Cycle Counting, Part 2
Some people think that you must cycle count before or after normal business hours, when there is little or no material movement. Though ideal, this is impractical for many distributors. We’ve found a simple method that allows cycle counting to be performed during the business day:
1. The counter obtains a list of the products to be counted that day.
2. He or she places a label reading “Cycle Count Today” on the bins that are being counted and a card in or on the bin. This card lists the item and bin number along with four columns with the following headings:
• Transaction Type
• Order Number
3. The counter prints a listing of items to be cycle counted, including the current on-hand or shelf quantity. He notes the time that the report is printed.
4. If a quantity of a product is removed from or added to a bin marked “Cycle Count Today,” the warehouse person will note the time, transaction type (that is, sales order or stock receipt), order number, and quantity on the card that was previously distributed.
5. When the counter counts a specific bin he will examine the transactions listed on the card. If an order was filled after the count sheet was printed he will add the quantity on that order to the quantity found in the bin. The resulting total amount should agree with the on-hand quantity on the count sheet (that is, the computer’s perpetual inventory quantity when the report was printed). He will make similar adjustments for the other transactions listed on the card.
Cycle counting is a very important element in a program to maintain accurate stock balances. Most highly profitable, successful distributors have established cycle counting programs. One of the advantages of implementing a radio frequency bar coding system is to simplify the cycle counting process. Because the computer’s on-hand stock quantities are updated as soon as material is scanned, the quantity in the bin should always agree with the stock level in the computer. These systems can be programmed to occasionally prompt a picker to verify the remaining balance in a bin after an order has been filled. As a result, cycle counting becomes a byproduct of the order-filling process!
If you don’t know what is actually in your warehouse or storeroom, you cannot provide customers with reliable stock availability information and you won’t reorder products at the proper time. Maintaining accurate stock balances is a vital component of an effective inventory management program. Without correct on-hand quantities it is difficult if not impossible to meet your customer service and profitability goals. You will also not be able to take advantage of the inventory management tools available in today’s advanced computer software packages.
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