Cycle Count and Actual Inventory

September 12th, 2013

Cycle counting is an inventory stocktake solution that allows organizations to count a number of items quantity in certain areas within the warehouse without having to count the entire inventory. It is a sampling technique where count of a certain number of items can be selected to be counted. This sampling method is used by surveyors every day where they measure the opinion of a small group of the people and infer that is the opinion of the whole population.

When a cycle count is performed, there are two consumption that are made. The primary one is that the accuracy of the items quantity in the cycle count can be used to determine the accuracy of the items quantity in the warehouse as a whole. The other is that if an incorrect quantity is found in the cycle count then that it could also be expected to occur for other items in the warehouse.

Types Of Cycle Counting

There are a number of types of cycle counting that can be used:

•Certain Category

•Random Sample


Certain Category Cycle Count

When the warehouse management starts cycle count (stock take) they may use a certain category of item to test whether this group of items will provide with the best result. The process usually focuses on a small category of items that are counted many times within a certain period. This repeated process will show if there are any inaccuracy in the count technique which can then be corrected. The process is continued until the technique has been confirmed to be accurate.


Random Sample Cycle Count

When a number of items to be counted are chosen randomly, this process known as random sample cycle count. When a company’s warehouse has a large quantity of items, they can randomly select a certain number of items to be counted in order to save times and resources. The count can be performed weekly or monthly so that a large percentage of the items in the warehouse are counted in a reasonable period.

Two methods can be used in random sample cycle counting; constant  counting and diminished counting.

Constant counting is where the same number of items are counted each time a count is performed. This can mean that certain items are counted frequently and some items are not counted, as the selection of items to be counted is random.

Diminished counting is a technique where a number of warehouse items are counted and then excluded from being counted again until all of the items in the warehouse are counted. Each count selects items from an ever-decreasing number of eligible items to be counted.