Setting up a Cycle Count Program in Exact MAX – Repost

Introduction

Cycle counting is a crucial business discipline. It not only enables high-performance store operations, but also has a significant impact on supply-chain operations:

• Accurate data is foundational to retailer-supplier cooperation and collaboration
  • On promotion, merchandising, & replenishment
  • For inventory optimization (core-inventory initiatives and vendor-managed, and –assisted inventory programs)
  • For better product development, improved order cycle times, reduced freight cost, less returns

What’s Cycle Counting?

Definitions:

• A systematic method of taking inventory continually through out the year
• A dynamic audit that allows for real-time inventory accuracy of merchandise.
• A method for auditing inventory accuracy and reconciling errors on a cyclical schedule rather than once a year.

Why Is It Important?

Improves data accuracy

• Cycle counting drives ordering, replenishment cycle times, category management
• Affects your store and the entire supply chain
• Is the basis for all decisions related to POS data analysis

Reduces human error

• Helps identify and correct receiving, shelving, selling, ordering errors
• Staff training is vital to ensure correct counts

Replaces annual inventory

Can Increase Sales with Reduced Inventory

• Real-time inventory accuracy means less out of stocks
• It also aids finding misplaced and lost stock

Can Increase Performance

• Improved inventory turns and GMROII because you can measure what’s in stock and moving
• Better customer service through higher in-stock rates
• Cycle counts and resulting accurate data increase productivity and efficiency, and lead to reduced operational and inventory-carry costs

A Continuous-Improvement Practice

• Cycle counting helps ensure accuracy is part of your store culture
• It optimizes business opportunities through data-driven knowledge

1. Count all inventory quarterly in a methodical, disciplined manner.

• Recommended to count entire inventory four times annually:
  • An example of how to determine what needs to be counted how often:
    • 8,000 items in inventory / 250 (number of days in operation per year) = 32 counts
    • 32 counts x 4 times per year = 128 products counted per day.

2. Assign a Cycle-Count Team Leader

• Give one person responsibility and accountability for inventory-accuracy program

• Train staff on procedures, value of inventory accuracy, etc.

o Include cycle counting and inventory accuracy priorities in new-employee orientation

3. Determine in advance the counting strategy:

• Count by Physical Area or by Category
  • Use a systematic planned approach for either method.
    • Divide your store into physical areas, such as aisles, fixtures, shelf, bin, etc., and organize a consistent counting pattern that ensures all stock is counted within the specified time parameter.
    • By category means counting by product type, classification, genre, etc.
  • Identify areas that can be counted within specified time constraints and ensure staff is appropriately assigned so count is conducted on schedule.
• Count your stock
  • Some retailers prefer to count after hours to expedite the process and avoid diluting customer service capabilities
  • Check your POS system for supporting reports and other capabilities that contribute to counting speed and accuracy, such as lists by category or location.

4. Track & Investigate Discrepancies – Evaluate for Continuous Improvement

• Identify problems, operational errors, sales/forecast errors, etc.
• Take corrective action based on findings
  • You may want to change store procedures, processes, etc. to ensure proper inventory control.
  • Use updated data for performance and sales analysis.

This best practice basics courtesy of an article by Bob Steele.