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Many companies carry some type of inventory and most find it necessary to count that stock on a regular ongoing basis. Those firms do this either to find out what to buy next, determine what types of goods are not selling, catch the errors in their inventory system or do it to ensure inventory accuracy for internal sales personnel selling these goods on the telephone or internet.
If the company has been diligent throughout the sales cycle, most of the items counted are correctly listed in the computer. Some are not. Cycle counts determine the items that need correction. While you are doing this, enter a date for everything counted regardless of the outcome.
Reasons for carrying a cycle count date in your system:
- If you dump all of the inventory data out of your system in chronological order, you will know by date what needs to be counted or checked.
- Internal sales personnel will be able to feel more confident telling potential buyers on the telephone that your company has it in stock in the warehouse given it was counted a short time ago.
- These helpful dates will tell your inventory people what to count since your inventory department most likely will have annual cycle count goals based upon stock value (i.e. high dollar A items to be counted four times a year, medium dollar B items to be counted twice per year and low dollar C level stock items will be counted at least once per year.
- To more effectively turn inventory, one must know what is selling. High selling items most likely should be counted frequently so the store does not run out of these high margin items.
- Labeling items internally as A, B and C stock and then watching last cycle count dates will allow you to dump all of the A items with a cycle count date more than one quarter old. This will ensure that you are able to get everything counted as necessary.
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