Randall Schaefer is an APICS CPIM (retired) consultant who published an article entitled “Cycle Counting Is Not a Guessing Game” for APICS Magazine. In it, he describes a few scenarios that lead to common errors in cycle counts, such as only counting negative on-hand balances, counting after a production run when quantities are likely to be low, or counting only when the MRP system says to order more inventory.
Schaefer then reminds readers of “the right way to count” which we’ve reprised from his article below.
Since cycle counting is critical to effective inventory management, and hence to reliable MRP (material requirements planning), we thought it would be useful to remind readers of those key principles. As he notes, commitment to the principles ensures accurate counts of inventory.
- First, items must be counted at a predetermined frequency
- Second, cycle counts should be performed more frequently for high-value or fast-moving items than low-value or slow-moving items.
- Third, the primary purpose of cycle counting is to identify items in error in order to trigger research, identification and elimination of the causes.
- Fourth, there are two types of cycle counts:
The first is a parts-based system, which counts every location on record to get a total. This is then compared to the stated inventory. If a part ends up in a location not on record, it is effectively lost forever.
The second type of cycle count is location-based. Here, every storage location is visited when its turn comes up. The parts found are counted and compared with the inventory records. This method eventually finds parts lost to the parts-based system. As Schaefer points out, “the experienced supply chain management professional understands that world-class cycle counting requires both.