Cycle Counting for Increased Inventory Accuracy

Claire Eastburn
May 16, 2024

Accurate inventory data is crucial to running an efficient fulfillment operation - there’s no way around it. Unfortunately, limiting your inventory counts to annual/fiscal physical counts just isn’t going to cut it. Annual physical inventory counts are often required by certain businesses, but they can often take weeks and involve more than just the warehouse team. Many merchants require the assistance of numerous other teams within the company, including finance and IT, just to complete the counts. That’s where cycle counting comes into play.

What is a cycle count?

As opposed to an annual or quarterly physical inventory count, a cycle count is a smaller, more agile inventory count that focuses on the quantity and status of inventory located in a specific bin. Depending on the warehouse management system (WMS) that you use, cycle counts can occur daily or weekly, after all item fulfillments have been cleared out, or as part of your regular pick process.

There are numerous types of cycle counts that a business may choose to use, including but not limited to:

Directed cycle counting - the WMS will guide the operator from bin to bin in a sequenced manner, according to the rules or filters defined, count plan requirements, and the current count state of each bin. Various filters might include: a specific bin, aisle, or area of the warehouse; a specific item or item family; bin inventory threshold; specific count plan; recount threshold; bins with no activity, or empty or non-empty bins. While each of these filter types will help out your operation, it’s important to consider that not all WMS’s can manage these so determining what will work for your business is crucial in a WMS evaluation.
Interleaved cycle counting - interleaved cycle counts interleave, or combine, different tasks within a trip in the warehouse. For example: cycle counting a specific bin and item/SKU putaway on the same trip instead of creating two separate tasks for each.
Manual cycle counting - manual cycle counts are when a warehouse employee scans or enters a bin ID and performs a count. With manual counts, the WMS is not directing the employee to count a specific bin and instead, the warehouse manager will determine what bin to count.
Exception counting - when inventory discrepancies are detected, a robust WMS will create a cycle count task to have a warehouse employee double-check the inventory status.
End-of-year physical counts - while it’s optimal to avoid reliance on annual/fiscal physical counts, many businesses require them as part of their auditing process or due to contracts. With a modern WMS, this process can be much faster when the methods above are already being leveraged.

Not all cycle counts are created equal:

While any kind of cycle counting is preferred over not performing inventory counts, not all WMS’s offer the ability to include a cycle count in real-time, interleaving it while a picker is picking a batch, wave, or cluster. Many warehouse management softwares will perform cycle counts, but you may need to make sure all item fulfillment records are cleared out of your system and shipments are completed before starting the count.

The other option is a more advanced solution that allows you to cycle count in real time while picking orders.

Benefits of cycle counts

By incorporating regular cycle counts into your fulfillment process, you can take advantage of numerous benefits including:

Increased inventory accuracy that supports warehouse efficiency. By completing regular counts, you can reduce the number of times your pickers find inventory discrepancies and increase order throughput due to increased pick efficiency.
Less disruptive and less costly than annual physical counts.
Reduced stockouts due to better inventory visibility and as a result, increased customer satisfaction due to timely and agreed-upon order delivery.

Maximize inventory accuracy with ShipHawk WMS

ShipHawk WMS offers real-time cycle counting that enables merchants to incorporate cycle counting into daily pick strategies. With advanced cycle counting, you can reduce the number of inventory errors your pickers find each day and ensure that your warehouse is operating efficiently. ShipHawk WMS provides a dashboard that helps warehouse managers detect inventory accuracy issues thanks to real-time visibility into inventory by day, month, year, or against a specific plan. Better yet, ShipHawk WMS’s advanced cycle count comes out of the box, without any add-on fees so once implemented, your business can start employing industry best practices from day one.

Ready to learn more about real-time cycle counting? Schedule time to talk to one of our fulfillment experts today.