Why Cycle Counting Should Be In Your Manufacturing Process

The days of doing a yearly physical inventory are a thing of the past.  Shutting your company down for two days and having all hands on deck at year end during busy holiday season is obsolete.  Well, not really…but the time is certainly getting closer.  Cycle counting, an inventory auditing procedure done on a specific day (or days), is becoming a more acceptable solution to the year-end physical inventory process.  The general idea here is: tackling multiple small projects is more efficient, safer, and now more acceptable than attempting one huge project. 

There are many different philosophies behind the idea of cycle counting.  First, it allows production managers to ensure inventory will be more accurate throughout the year, rather than waiting until year end.  The cycle count groups are set up with many different criteria (e.g. Wire, purchased only, certain locations).  Counts can be performed on a small scale so the task at counting all the parts at one time can go away.    Each part can be set up to be counted as many times a year, as needed.  Cycle counting can be done monthly, weekly, or even daily.  This makes the task much less daunting than having to count everything at one time.  A cycle counting system keeps track of the number of counts for each tag.  Parts can be counted more or less time based on the type of part.  Using ABC analysis is a popular way of determining how often a part is counted – ‘A’ items (typically the expensive or mission-critical parts) are often counted more frequently than ‘C’ items (like washers, shims) etc.

In ProfitKey’s Rapid Response Manufacturing ERP, cycle counting is made easy, with many risk eliminators. Rapid Response Manufacturing, or RRM, allows you to configure multiple count groups, each with its’ own count list and count frequency.  RRM Cycle Counting automatically flags any variances on a first count and produces a ‘re-count list’ that must be completed before closing the count (as a verification of the first count), and variance reporting is produced on count close.

Don’t risk the biscuit simply because you have a mindset that you don’t have the resources to perform multiple counts per year. Take the time to re-assess and re-assign these major projects based on a set strategy eliminating the risk of one major year-end push and allocate them in smaller chunks throughout the fiscal year.  We have seen many leading manufacturers changing the way they look at their planning, collaboration, and analytics, providing them with more real-time data and, thus, more successful results.  You and your inventory team will be glad that you looked into yours.

Written by team members of ProfitKey International

3 thoughts on “Why Cycle Counting Should Be In Your Manufacturing Process

  1. Lee Bosch

    ABC codes may work where you don’t have inventory spread across multiple locations or sites but what is A for one site may be a C for another.

    Having just completed a cycle count by location, I cannot recommend it. If you have the same part in multiple locations, the inventory is pretty much hosed before it starts. We have the added complication of having interchangeable parts under different part numbers and at different locations. When we run out of one part number, the other part number(s) start(s) inexplicably disappearing.

    The ideal situation for our operation would be to conduct the inventory by some sort of class where parts and any components or assemblies of those parts would be counted at the same time.

    Classing is not an easy process and trying to conduct business during an inventory often doesn’t fetch the undivided attention that it needs. Some of us have a long way to go before cycle counting will be decidedly better.

  2. Nancy Beckman

    The idea of cycle counting, in theory, should make life easier for enterprises. You don’t want to find out six months down the road that your inventory has been off the whole time. It’s far to late to fix the issue and now you have to deal with the fall out. Being able to keep accurate tabs on your inventory as you go should eliminate a lot of headaches in the future.

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