Cycle counting is the better alternative to periodic inventory counting. In cycle counting few SKUs are counted everyday by the Cycle Counters, who are trained in cycle counting. The accuracy of the logical inventory is much better compared to periodic inventory auditing as the inventory is counted continuously and more frequently based on the ABC Classification Criteria. Here I would like to recommend few best practices in cycle counting.
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1-The list of SKUs that need to be counted in any given day should not be a time tabled one, but rather it should be a random one. This prevents frauds and embezzlements related to inventory.
2-The number of cycle counting of any given item shall be evenly distributed throughout the year rather than planned closely just to achieve the counting target. This is to ensure that the same item is not counted immediately, which may defeat the purpose of cycle counting.
3-The cycle counting shall be performed on an item when it is at its lowest volume or quantity. This is to improve the productivity and the counting accuracy.
4-Cycle counting may be done just before the replenishment.
5-There shall be a policy to conduct root-cause analysis to find out the source of inventory discrepancies. This is to improve the inventory management practices.
