Improving Inventory Accuracy through Cycle Counting - As easy as ABC

Posted by: Ryan - Head of Logistics Suite at Amici

The latest software for managing your inventory is making it easier than ever to gain control and make business decisions based on real-time data. However, even the most powerful of solutions are at the mercy of human error and non-compliance. Such mistakes can result in financial losses from missing or expired stock, wasted effort and may even result in production grinding to a halt.

So how can you verify your inventory data to get the best out of your software? In addition to putting warehouse access controls in place, most of us are familiar with a big stock take, but few of us relish the prospect of shutting down the warehouse or working out-of-hours to achieve it. Is there a way to reduce human error and nail inventory accuracy without disrupting business operations? For many businesses, the answer is yes – Cycle Counting.

Cycle Counting is a process used to audit inventory, where small portions of inventory are counted at a specific time. Cycle Counting has been shown to have many advantages over traditional stocktaking, not least of which is the improvement of inventory accuracy and early detection of problems.

Get the most from Cycle Counting with these five tips.

1. Count little and often.

Avoid shutdown! Cycle Counting involves dedicating a small amount of time each day or week to counting a small sub-set of your inventory. This can be done at the start of the day and is less prone to error. Don’t be tempted to count too many products. Errors are far more likely to be made on larger counts than on smaller ones. Small regular counts have been shown to lead to greater stock accuracy.

2. Use ABC cycle counting.

Tailor the frequency of counting to your most important products. Sort your inventory into three main categories based on how frequently you wish to count them. The highest value, throughput or highest risk products should be assigned as Category A and counted more frequently. Commonly, Category A is given to the top 70% of inventory value, category B the next 15% and Category C the bottom 15%.

3. Improve accuracy through barcode scanning.

Batch information and expiry are critical for GMP Life Science businesses, but easy to get wrong while counting! Incorporating barcode scanning into your cycle counting process can have an immediate impact on stock accuracy and add speed to your counting process.

4. Monitor count variance.

Set a target for inventory accuracy and track over time. It is important to track both – a single variance with high financial value is just as important as multiple variances on count quantity. Trends should be captured, investigated and used to identify products or locations which could benefit from additional counting.

5. Take action!

One of the major benefits of Cycle Counting is that discrepancies in stock counts should be spotted early-on, and the root-cause investigated in real-time before expenses are incurred later. However, it remains important to monitor targets and trends in count variance over time and act upon any underlying issues. Discrepancies are usually linked back to human error and processes may need to be tightened in high risk areas.


You may also find the following articles useful;

Managing Stock Expiry in your Lab

Barcoding in the Biotech Sector