Every warehouse manager knows that maintaining an accurate inventory is a foundational requirement. If Sales, Operations, and Accounting can’t rely on the numbers in the system, then the business will never achieve its full potential. Sound processes when it comes to Shipping and Receiving are critical, but the best way to follow up on those processes and check your accuracy is still cycle counting.

Most everyone understands this, but what are the best practices for conducting cycle counts? It would be great if we could count every item every day, but most companies don’t’ have that kind of manpower. Operations textbooks and the internet will provide different options for managing an efficient count program, but the key is understanding which is most appropriate for your specific environment. This can be the difference in ensuring that you’re maximizing your accuracy in a way that fits within the scope of your capabilities.

Types of Cycle Count Processes

Wall-to-Wall – This is the most basic type of process. Simply start counting at one end of the warehouse, count what you can each day, and when you finish start back over.

PROS	CONS
Find lost/misplaced parts Minimize movement by the employee	Time consuming Lacks focus on important SKUs Requires communication across the team

Zone – Similar to wall-to-wall, but instead of having your team go smoothly from one end of the warehouse to the other, this process divides the warehouse into zones assigns one to each counter.

PROS	CONS
Simple Focus provides an expertise on their individual area Minimize movement by the employee	Low performers areas will be severely affected Lacks focus on important SKUs

Single metric– This process ranks the SKU’s by a single aspect, such as velocity, criticality, or price.  A report is generated and the employees work their way down the list, ensuring that the most valued items are counted first.

PROS	CONS
Can focus on what management values most Easy to follow	Inefficient physical movement Ignores other metrics Requires communication across the team

Stratified – This process combines multiple criteria into a single ranking, allowing you to set the importance of each individual element and then at a glance see where individual products fall on that scale. Typically a stratified count will set a schedule that focuses on the high priority items, so a cycle may go A-B-A-C-A-B-A. This way the A’s are counted 4 times, B’s twice, and C’s once.

PROS	CONS
Count the most important items most often Maximizes the impact of individual counts on the business Aligns with managements priorities	Time consuming initial setup Inefficient physical movement Requires communication across the team

Recommendations

There is a time and place for each of these methods. Think through what your challenges are and utilize the best process accordingly:

• Use Wall-to-Wall for a simple way to ensure that every item gets a count, and you count those items as quickly as possible. Since they aren’t moving around or looking at a report the counters will be able to get more counts done in a shorter amount of time.
• Use Zone counting to keep most of the benefits of Wall-to-Wall but adding in the benefit of knowing at a glance who’s responsibility an area is. It’s common practice to clean as you go, so an unclean area can show an employee who is not focusing on the task at hand. Zone is simple yet flexible and allows for clear communication to employees.
• Use a Single Metric count as a major push before major events, such as a Physical Inventory or an Audit. Focusing in on only the high dollar items or the high users takes advantage of the 80/20 rule and can make the most impact in the shortest amount of time.
• Use Stratified counts as a way of excelling once a consistent baseline is reached. For warehouses that experience high volatility or employee turnover, using a Stratified method may not uncover some simple mistakes (like misplaced items), and new employees may struggle to navigate a report quickly. But for companies that are looking to take their processes to the next level should adopt this approach.

At Martin, we combine two approaches to take full advantage of our employee’s time and effort. We being each year with a wall-to-wall count. This ensures that we count everything in the warehouse and allows us to focus on individual sections at a time. Once that is completed the rest of the year is spent doing Stratified counts so that we can ensure that critical and highly valued SKU’s get the attention that they need.

We specialize in implementing these types of storeroom solutions that help companies operate better. To learn more about our Integrated Supply line of business click here, or contact us directly to speak to someone about learning more.