What is warehouse cycle counting?

By Craig Dowley

Maintaining an accurate inventory count is crucial to achieving warehouse productivity and quality. Inaccurate inventory counts lead to delayed orders, lost time looking for items, and customers.  Staffing to support traditional methods of inventory audits has been difficult to sustain due to ongoing industry wide challenges in employees recruiting and retention.   Additionally areas of the warehouse being counted are shut down till the process is complete, and in some extreme scenarios warehouses shut down for days to adequately audit their goods.  Because of this, some 3PLs, warehouses and distribution centers take inventory once or twice a year.   Many don’t cycle count at all and settle for suffering the consequences. 

Enter cycle counting. By definition, warehouse cycle counting is a sampling method that allows you to obtain an accurate picture of your physical stock by counting a subset of your inventory and doing it much more frequently than an annual, complete assessment. 

Types of Cycle Counting

One of the most common cycle counting methods is the ABC technique. Divide your stock into three categories. The “A” products are the 20% of the items that account for 80% of your sales. “B” items account for 30% of the inventory and 15% of the sales. “C” items are everything else. Count the “A” items most often and “B” and “C” less frequently.  

Another approach is to choose a portion of your facility’s floor space and do a physical count of the items in that area.  

“Opportunity-based” cycle counting uses triggers like when an item is ordered to be put- away. Other triggers include when the quantity of an item goes below a certain threshold or when a product is “short-picked,” in which your company ships with fewer items than an order specifies. 

The value of cycle counting, regardless of your method, is that you can gain a more accurate inventory assessment without having to halt operations. Because cycle counting can be done regularly and far more often than a “full” count, you can find discrepancies more quickly, leading to a more accurate picture of items on hand.  

A more truthful inventory count results in  

• Higher order fulfillment rates 

• Better customer service levels 
• Improved picker productivity 
• Fewer errors 
• Less obsolete inventory 
• and a more efficient operation overall.  

Cycle counting improves your ability to identify and fix misplaced, mislabeled, or lost stock. Because it continually focuses on improvement, cycle counting enhances a culture of accuracy in your organization.  Cycle counting pays for itself. In addition to the advantages just mentioned, a robust cycle counting program can eliminate the need to make a complete, annual assessment, saving your organization considerable expense and time.   

Even though cycle counting is less disruptive than a total inventory count, employees must be assigned to do it, and it takes time. Cycle counting still requires lots of man-hours, especially when using manual methods. And many warehouses still count inventory by carrying clipboards, paper, and pencils. People climb up on ladders to peer into bins, count each item, and write down numbers. 

Wireless, handheld barcode readers and portable devices can support cycle counting, but this technology has proven to 

• Be extremely unreliable and slow to respond 
• Require manual verification of code captures 

• Experience latency issues when communication is often lost.  

Wearable technology helps even more – allowing people to work with both hands. Even then, however, a substantial investment of your people’s time is needed.  Other novel solutions include warehouse drones and cycle counting robots, both come with their own sets of challenges.

Time is the biggest single obstacle to doing cycle counting more often. Cycle counting should be done when no other transactional activity is happening, like during downtime or when shipping and receiving are not taking place.  

What Can Be Done to Improve Cycle Counting Results

More and more 3PLs and brands are turning to Vimaan to improve accuracy, time and expenses spent on cycle counting.  Vimaan has been focusing on solutions that improve the cycle counting process from the very beginning.  Vimaan computer vision solutions allow for more accurate tracking and reporting of inventory the moment they enter your receiving doors.  Vimaan computer vision cycle counting solutions: 

• Conduct automated cycle counting without impeding other warehouse processes 
• Use fast inventory capturing solutions with large fields of view, like StorTRACK, to allow for the scanning of high-density and high bay storage areas
• Track, validate and easily pinpoint put-away inventory 
• Conduct open bin audits, supporting more effective space utilization 
• Provide faster, more frequent, highly accurate and less expensive cycle counting of your inventory 

3PLs that are using Vimaan cycle count solutions have reported a more than 75% reduction in related headcount, more frequent counts and best of overall a return on investment in months, not years. To learn more about Vimaan cycle counting solutions contact our inventory tracking team.