Master Your Inventory Cycle Count by Practicing These 7 Steps

Every business owner should know that when inventory is under control and well-managed, it means that things are going smoothly. Whether a business is a new start-up, a small or medium organization, or a large conglomerate, inventory is important no matter what, meaning it should be a top priority. No matter how you run your business, you can’t get around the importance of proper inventory management and maintenance. One way to maintain a well-managed inventory is through inventory cycle counts. When performing cycle counts, you’re ensuring that your inventory stays organized at all times because, as the name suggests, this practice comes in cycles as well. Not entirely sure how to execute a successful cycle count? You’re in luck. By practicing the following seven steps, you can learn how to completely master your inventory cycle count.

brown brick business building looking to master their inventory cycle count

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What Is a Cycle Count?

Before we get into how you can master your inventory cycle count, first let’s break down what a cycle count actually is and why it matters for your business. In short, an inventory cycle count is a process that requires you to count a small amount of your inventory at a specific time, usually on a specific day, without handling your entire stock in one go. In other words, its a type of inventory auditing method that helps ensure that your inventory is accurate and up to date at all times.

In essence, an inventory cycle count is pretty similar to the physical inventory counts you’ve done, but it does so with a different approach. Instead of taking your inventory and counting it all at once, you can delegate small portions of your inventory to certain employees depending on a predetermined schedule. This allows you to go over all of your stock in a focused manner, lowering the risk for errors and inaccuracies.

Generally, a cycle count can take anywhere from a day or week to several months depending on the size of your inventory and can be done on an ongoing basis so that your inventory is always well accounted for. Though it can be a lengthy process, performing inventory cycle counts instead of one large physical audit can actually save you a lot of time which will benefit your business positively. So, how can you get started with your inventory cycle count? There are certain practices in place that make this easy method even easier. Check out these seven steps that will help you perform a tight inventory cycle count every time you do one.

7 Steps to Master Your Inventory Cycle Count

1. Do a Cycle Count at Least Once a Year

First things first: you’ve got to have a schedule in place to ensure your inventory is always covered. One great practice for a successful cycle count is to get one done at least once a year. This doesn’t mean that you leave the entire project for a single period each year. Rather, it means that you have a cycle count going at least once a year, which really means more than one is best for optimal results. Most businesses find that the best time for a cycle count is once every 12 or 13 weeks, which means you can conduct an inventory cycle count four times in a year, i.e. quarterly. If you opt to do a continuous inventory cycle count, it simply means that you divide your inventory into four smaller portions and dedicate the time to parsing through just that section before moving onto the next. With this pattern in place, your inventory will be organized all year round, making things easier for you and improving both business and customer relationships.

2. Prepare Your Warehouse Before the Cycle Count

This is best done when your business is new and your warehouse or warehouses are just getting set up. Of course, if you have a more established business with warehouses that are already full (or cluttered), this step is still important and doable. Before you being a cycle count, you should make sure that your warehouse is clean and de-cluttered. This means going through and getting rid of dead inventory, i.e. inventory that is no longer profitable. When you have dead inventory hanging around, it takes up space that could be used for live inventory and can really rack up carrying costs, causing you to spend more money than you need to. A great way to determine what is dead inventory is to check sales for the last few quarters and see which products aren’t selling at all or selling enough. Then locate these products in your warehouse and get rid of them by putting them on clearance or offering a promotion to move them out quickly and efficiently. Locating obscure, dead inventory can be time-consuming, so you may want to invest in some barcode scanning software solutions like those offered by Finale Inventory. With a barcode scanner, you can locate all products so you can grab them and get them out of the way. Scanners will also be useful during the actual cycle count!

You will also want to ensure that your employees are prepared for a coming cycle count. This looks like designating certain products to certain people or teams, explaining what you expect during a cycle count clearly, and providing them with all tools and information necessary to guarantee a successful count.

3. Focus on One Category at a Time

When you begin your cycle count, be sure to focus on just one category of your inventory at a time. For example, if you sell pet products such as foods, toys, clothes, apparatuses, and accessories, you could divide your categories as follows:

  • 1st Quarter: cycle count only food items (i.e. kibble, treats, canned foods)
  • 2nd Quarter: cycle count only toys and apparatuses (i.e. cat towers, scratching posts, hamster homes and habitats, etc.)
  • 3rd Quarter: cycle count only clothing
  • 4th Quarter: cycle count only accessories (i.e. collars, nametags, leashes, harnesses, etc.)

By dividing inventory into categories, you’re able to go over everything without running the risk of missing something, fudging numbers, or other inaccuracies. A barcode system will also be helpful here as you can locate all similar items within the warehouse and group them together for an even easier cycle count.

brown dog with glasses separating inventory cycle count by categories

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4. Set Up a Pattern to Get Through Your Whole Inventory

To get even more organized, consider setting up a pattern to get through your whole inventory. Dividing inventory into categories is an important start, but take things a step further with a pattern. This can be anything from going alphabetically through products, moving through certain parts of the warehouse, or working on certain warehouses for larger businesses with larger inventories.

5. Keep Your Inventory Organized During the Inbetween Times

When not doing a cycle count, you must keep your inventory organized at all times to ensure accuracy and ease. If inventory is messy, it can make cycle counts nearly impossible, which can take up time and effort that could be used in other areas of your business. With the help of software solutions like Finale Inventory’s cloud-based inventory management software, you can make sure that your inventory is always organized even during the offseason.

6. Sync Your Budget with Your Cycle Count

When using inventory cycle counts, be sure to budget for growth. Your financial plan will change as you gain more customers and your business and inventory expand. Cycle counting is even more important the more inventory you have (because there’s much more to keep track of!), so you want to make sure that you make room in your budget for the future.

Calculating inventory cycle count with a calculator, pen, pencil, and money

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7. Always Have a Plan

Finally, no matter how you do your inventory cycle count, just make sure that you always have a plan in place. When it comes to running a business and keeping inventory organized, you have to keep in mind that things can get crazy at the drop of a hat. Instead of floundering around, have a plan in place to take care of your quarterly routine so that cycle counts are done and done well no matter what. To make things even smoother, have a plan B, C, and D just in case!

As you run your business, never forget the importance of an organized inventory. If you ever need help with inventory management or inventory management practices like cycle counts, give Finale Inventory a try. You can begin a free trial today and learn about all Finale has to offer – from barcode scanners and warehouse management software to integrations and inventory tracking.

inventory cycle count going your way with upward green and yellow arrows on the wall

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