What is Cycle Counting and How to Implement It in Your Retail Business

Cycle counting is an important business tool and can be especially advantageous for firms in the retail industry. Effective use of cycle counts can save retailers enormous amounts of money in inventory mistakes such as overhead buildup. Here’s a breakdown on what cycle counting is and what it can do for you.

What Cycle Counting Is and Why You Should Implement It

Cycle counting is both a savvy and proactive inventory management practice. Essentially, cycle counting means running a check on your inventory with special attention given to best sellers and seasonal goods. You will glean important information from cycle counting that can lead to better decisions in marketing and purchasing. By keeping a thorough accounting of what you have in stock, it’ll be harder to make mistakes in purchasing like over ordering and winding up with an expensive mass of overhead.

The key is to keep up on inventory more regularly by initiating monthly cycle counts. Retailers cannot overlook the overall importance of conducting these counts monthly. Retailers and other businesses who wait longer and run cycle counts once a year can suffer from much more costly errors. The rule of thumb here is that the longer you let it go without running a cycle count, the more damaging and potentially expensive inventory errors will be.

Strategic Uses and Benefits of Cycle Counts

Cycle counting should be implemented in retail because it is a strategic tool. It is important to remember that when first using your cycle counting software package, it will take time to feed it enough sales information to start using it for more specific results. Using the software to assess best-selling items, for example, will require a substantial accruement of input to do this effectively.

With this in mind, it is best to think of cycle counting strategically. By doing so, you will consider such factors as organization, scheduling, employee assignment, and the dissemination of information throughout the retail work environment.

Organizing Cycle Counts

One way to maximize the efficiency of your cycle counts, it is vital to organize and execute them at least once a week. Keep in mind that you should use the cycle count to check a different segment of the inventory each time. By counting different segments, you’ll cover more ground and keep everything up to date without having to undergo the painfully inefficient tedium of physical inventory checks.

It would be best if you strategically ran your cycle counts based on the season. Seasonal products, for example, should be taken into consideration in the scheduling of monthly cycle counts.

Organization Options

Keep in mind that cycle counts can also be optimized to run daily. The exact frequency of cycle counting depends on the size and needs of the retail organization. It is a universal rule; however, to not conduct cycle counts annually. Being done only once a year leaves too much room for error. In the long run, these consequences will only compound and lead to bigger messes down the road.

Another option is to divide the store into sections determined by floor space and put aisles into groups for a systematic approach. This can also be a great way to organize your cycle counts. You can also use the ABC method which essentially means organizing your inventory into categories based on the value of the products. From there you would give the products with the highest values priority in cycle counts.

How Employee Management Works with Cycle Counts

The use of your employees should also be incorporated into cycle counts. For instance, you should be sure to designate employees to handle different segments of the store when performing cycle counts. This helps keep the gears well-oiled and makes for an efficient retail environment with little left to chance or be wasted.

While it is ideal to assign and organize employees according to segments of the store, they should be given limited information. Retailers should not fully disclose information such as the exact dollar amounts in terms of product sales and other potentially sensitive information to employees of the store. This practice addresses security concerns that retailers face from thieves in their midst. Information theft and corporate espionage are serious concerns in today’s competitive and rather unscrupulous market.

Therefore it is advised that the information given to employees be restricted to pertain mostly to performance and orders to provide feedback. Employees should be informed as to when there are losses and rewarded appropriately in prosperous fiscal seasons.

The only restraint is to withhold information that could be used to damage the company when communicated to competitors. This kind of information would also include cycle count schedules. Be advised, do not disclose these schedules if it is not required.

Why Cycle Counts Are Superior to Physical Counts

Physical inventory counts result in too much time wasted to justify doing them when compared to the higher efficiency and greater convenience of cycle counts. For the most part, only retail stores that are very small in size can stomach physical inventory counts, and you’d still be much better off using cycle counts.

Cycle Counts Are the Weapon of Choice for Smart Inventory Management

Overall, cycle counts are one of the easiest to implement and most effective inventory management practices available to the retailer. This is one tool out of many that retailers should use to stay competitive and skirt costly potential pitfalls that come from poor inventory management practices like over ordering. Companies like Vend provide reliable inventory management services that make effective use of cycle counting.

Knowing what you have when you need to move it, especially when it comes to seasonal products is smart management that will save you money in the long run. Never discount cycle counts from your inventory management protocols. You can and should work cycle counts in as regular practice to enjoy smooth operations.

The Future of Cycle Counting

Cycle counting has a bright and exciting future ahead of it. Surgere has partnered with Fetch Robotics and has been taking innovation to the extreme and working on the development of a cycle counting robot. The purpose of this robot would be to eradicate inventory tracking problems fully.

Innovations like this are making cycle counting more promising as a tool in retail inventory management. Stay competitive as a retailer by keeping up with the times. Cycle counting is only going to continue to grow more effective as a tool. Don’t fall behind competitors by becoming overburdened with overhead and costs from inventory mismanagement.