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Inventory Cycle Count: Significance and the Best Practices for Success

June 28, 2022

6 min read

To succeed with your eCommerce business, you need an intelligent and efficient strategy for inventory management. Proper inventory tracking and positioning are essential to take care of the inventory levels, improve order processing efficiency, and enhance delivery. To maintain a thorough inventory strategy, you must have a dedicated system to count inventory to avoid issues like overstocking and stockouts accurately. Inventory cycle count is one technique to track inventory so you can stay updated at all times. They can be a disconnect between the physical numbers and your online stock. Processes like inventory cycle counting can help you reduce these discrepancies.

To make it easier for your business, let’s look at inventory cycle count, it is its importance, and the best practices to help you succeed. 

What is Inventory Cycle Count?

Inventory cycle count refers to the process of accounting for inventory in which certain items are counted at a time at regular intervals, so it forms a cyclical schedule. 

So instead of counting the entire physical inventory at once, you can focus on specific items and conduct a cycle review regularly. 

This way, you can conduct inventory counting without halting warehousing and fulfillment operations. This inventory cycle count is helpful for large businesses with a large variety of SKUs.

Types of Inventory Cycle Counting

ABC Cycle Counting

The first type of inventory cycle counting is the ABC cycle counting. You categorize your inventory into three parts: A must contain high-value items, B the middle-range ones, and C the lowest-value items. You conduct their inventory count cycles based on the priority starting from A. 

Control Group Cycle Counting

In the control room cycle counting, you focus on a small control group of inventory and frequently count over a short period to find out issues in the technique. This way, you can find yourself in your accounting process and understand the process better. 

Opportunity-based counting

Opportunity-based inventory cycle counting is done at particular stages in the logistics pipeline, like when the items are received in your warehouse or when inventory levels get low. 

Geographic counting

In geography type of inventory cycle counting, you focus on specific areas in your warehouse and conduct inventory count accordingly. 

Difference Between Cycle Counting and Physical Counting

Both cycle counting in physical counting or popular audit procedures for inventory. In physical counting, you are supposed to count the entire inventory stock at once, the warehousing and fulfillment operations are halted, and it can be time-consuming and disruptive. 

However, inventory cycle counting involves accounting for specific stock at regular time intervals leading to a cyclical counting. This process is comparatively less disruptive as the entire inventory is not required to conduct this procedure. 

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Steps Involved in Inventory Cycle Count

Gather Information

The first step in inventory cycle count is to decide the number of SKUs you want to work with in each cycle. Decide the number of cycles you want to run, and collect all information regarding the resources you have to do these operations, the frequency, etc.

Assess Current Inventory

Next, you must see how much inventory you have in the database, the current stock levels, existing records, etc. Before you start your inventory cycle count, you must do one physical can’t to help you make sure that you are starting on the right note. 

Start Cycle Counting

Following the assessment, you must start counting the SKUs and maintain records of quantities, locations, and descriptions. These must match the physical inventory records. 

Track and Investigate Problems

Finally, once all information is tracked and recorded, you must register and identify any issues you might find and look for patterns to get to the root cause of any discrepancy

Advantages of Cycle Counting

Efficient Fulfillment

The first advantage of cycle accounting is efficient order fulfillment. It helps you conduct audits without disrupting your existing operations to optimize and deliver simultaneously. This can help you reduce the order to shift time, stay on top of your inventory, and process orders at the same pace or sooner. 

Hands-On Correction

Inventory cycle count is conducted frequently, which helps you take the necessary measures to maintain inventory accuracy. You can minimize errors faster and ensure better order accuracy. 

Greater Sales

The inventory cycle count does not ask you to stop operations, and you can continue to receive orders as usual. With cycle counting in the background, you are always aware of the inventory you have to re-stock and can do it on time. This helps you avoid situations of stockouts and backorders, and you can improve sales considerably. 

Improved Customer Experience

Finally, inventory cycle counting can help you improve the customer’s experience as you can identify inaccuracies in your supply chain and take action to enhance the fulfillment operations. This can help you improve order accuracy, ship on time, and deliver seamlessly without errors. 

Best Practices for Inventory Cycle Counting

Regular Counts

The foremost best practice for conducting a successful inventory cycle count is to do it regularly. You must cover all product categories and stocks regularly to detect issues on time and improve accuracy. 

Choose The Right Products

When you have products with different sales and priorities, you can decide which ones you need to focus on more. For example, if an SKU has more excellent deals, the inventory counting must be done more frequently. 

Utilize Technology

To conduct inventory cycle count regularly and seamlessly, you must utilize technology to avoid human errors and save time whenever possible. RFID and barcode scanning systems can reduce the need to log inventory manually. You must have an inventory management system to update records automatically and crosscheck whenever necessary. 

How Can Shiprocket Fulfillment Help?

Inventory management can be complex if you do it entirely yourself. It requires constant accounting and accuracy for other supply chain operations. It involves a lot of high capital investment in inventory management systems, barcoding, etc. Still, an efficient solution is to outsource it to 3PL fulfillment providers.

3PL fulfillment providers like Shiprocket Fulfillment help you process incoming orders by storing inventory in different warehouses across the country. All these warehouses are equipped with warehouse management and inventory management systems to help reduce the order-to-ship time for your incoming orders, so you do not need to worry about running an in-house inventory and warehouse management system. 

By storing inventory closer to customers, you can reduce the shipping time, decrease costs, and improve your delivery rate, offering express delivery options like same-day and next-day delivery. 

Final Thoughts

Inventory cycle count is an efficient way to conduct inventory audits and track inventory. However, it can be challenging to carry on continuously and might require additional investment and resources. You can outsource your fulfillment operations to 3PL fulfillment providers to ensure that your orders are delivered on time without having to worry about the working of your fulfillment supply chain.

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