How to Make the Most of Your Inventory Cycle Count
A few best practices are key to keeping inventory cycle counts accurate and timely.
Poor inventory management decimates profitability and works against all cost-effective improvements in efficiency and productivity. If a company is confident in its inventory accuracy, it can decrease safety stock in its networks without creating risk to its customers. According to an example illustrated by Forbes, decreasing inventory safety stock from 4 weeks to 3 weeks can create bottom-line savings of tens of millions of dollars, largely because of the carrying costs of inventory. Since consumers are willing to pay more to have the products in their hands more quickly, businesses need to reconsider the value of inventory cycle count strategies.
How Are Companies Failing With Inventory Cycle Counts?
Inventory management has grown complicated in recent years, and the implementation of new inventory management systems hastens the opportunities for error. By definition, says Skuvault, inventory cycle counts are shorter and designed to increase inventory visibility and accuracy. However, some companies make some avoidable mistakes that can reduce the efficacy of their counts. Common mistakes include: failing to update systems quickly with new count information, failure to research discrepancies thoroughly, and counting during picking or replenishment functions, where inventory levels are in flux. This causes inaccuracies and problems when trying to decrease stock, which is key to many modern inventory management strategies.
Automation and New Technology Are the Solution
Having the right quantity in the right locations can become the difference between products available for same-day pickup or arrival next week. In e-commerce, delayed shipping will drive customers to your competitors. Unlike a traditional, annual physical count, conducting frequent inventory cycle counts reduce overall inventory costs allowing the operation to continue running without a major disruption.
Best Practices to Reduce Risk During Inventory Cycle Counts
All inventory cycle counts carry risk. Poor instruction to employees and lackluster process standardization can leave the most skilled employees running afoul. Fortunately, warehouse managers can reduce this risk by ensuring the inventory cycle count is conducted with the same standards, uses technology appropriately, reflects the fastest-moving products, and increasing inventory visibility, while reducing risk of disruption. As explained by The Balance, warehouse managers should take the following steps to improve cycle counts:
- Base inventory counts on the high-selling items of each season.
- Assign employees to specific tasks during an inventory count.
- Share information about inventory savings and problems, like shrink, with employees.
- Vary your inventory count schedule.
- Organize your inventory, using a warehouse management system to increase inventory routing accuracy, as explained by Manhattan Associates’ Flexible Fulfillment Playbook.
- Automate inventory cycle counts, but conduct at least one annual physical inventory count.
Gain Control Over Your Inventory Cycle Counts Today
Inventory cycle counts represent an opportunity for growth or a risk of increased costs. As the world grows more hyper-focused on customer service, break-neck delivery windows, and unrelenting accuracy in order fulfillment, keeping stock levels just right will become more important. If you are uncertain how to achieve these practices or need assistance in implementing new systems or technology, Veridian can help.
Veridian will assess your organization’s current systems and bring systems together via integration, automated testing, and configuration platforms to reduce delays and maximize per-order profits. Find out how your organization can develop the right inventory cycle count strategies and succeed in logistics performance by scheduling a time to speak with Veridian by clicking the button below.