What is the Difference between the Physical Count and Cycle Counting?

November 13th 2013 15:29:15 PM

As we discussed a few weeks ago, inventory counting is critical to your company’s success. Inaccurate inventory data can result in delayed orders and unhappy customers, not to mention false inventory reports. In order to prevent inventory inaccuracies, you must perform periodic inventory counts. Companies can count inventory in one of two ways: through the yearly physical count or cycle counting.

In order to determine the best inventory counting method for your company, you need to have a basic understand of the differences between the two:

• Physical Counts:
  • Labor and time intensive
  • Provides yearly data on inventory variances
  • Requires business downtime
  • Occurs once a year
• Cycle Counting:
  • More labor and time efficient
  • Reduces inventory variances regularly
  • No business downtime
  • Occurs on a regular basis

Most companies are familiar with physical counts. If you have any form of inventory, you probably perform yearly physical counts. While this method certainly gets the job done, cycle counting is a more proactive approach and allows you to reduce inventory variances on a regular basis as opposed to yearly. Cycle counting requires you to be committed to performing regular inventory audits at least once a week. If you cannot make this commitment, then you should stick to the yearly physical count.

Stay tuned to our blog for more information on the benefits of cycle counting. If you could use some advice in the area of inventory and warehouse management, contact our warehouse experts today. We offer a variety of solutions to assist you with all of your inventory counting and warehouse management needs.