- November 8, 2020
- Posted by: simba001
- Category: Reatil POS Insights
Maintaining inventory accuracy is one of the biggest challenges retailers face these days. Between admin errors, stock movement, shrink, and a whole range of other issues, it’s all too easy to lose track of stock taking, and before you know it, the numbers you have on paper are nowhere near the actual stock count.
That’s why it’s critical that you physically do stock taking your merchandise (aka: perform stock-takes) on a regular basis. There are generally two ways to do this. One is to do a full inventory count once or twice a year, where you physically take count of every single item in the store and update your records. It’s a reliable process, and it can certainly help retailers keep accurate inventory counts. But a big downside of a full inventory count is that it’s so time-consuming and labor intensive, that it will likely require you to temporarily shut down store operations, and turn away customers.
Fortunately, there’s another way. Retailers who are looking to regularly count items without having to temporarily close their stores can implement cycle counting instead.
What is cycle counting?
Cycle counting is the process of partially counting merchandise on a continuous basis so you can stay on top of stock levels without having to interrupt regular store operations. This task entails that you count just certain portions of inventory on a daily or weekly basis so you won’t have to do a full stock taking anymore.
Be arbitrary (but systematic)
You can choose to be more arbitrary with how you cycle count for your stock taking.
For instance, you can portion and count items according to where they’re located on your sales floor or stock room. In this case, you’d probably want to create a map indicating where each section or shelf is located, then create a system where you’ll count items in shelves 1-3 on one day, then move on to 4-6 the next, and so on.
You can also cycle count according to the products’ department, supplier, type, or brand. It’s really up to you and what makes the most sense for your business.
The key to cycle counting success is to make it a habit. The benefits we talked about–inventory accuracy, store efficiency, and theft prevention–all that will only come if you cycle count regularly.
Once you have your physical products and paperwork (or digital records) in order, start physically counting items according to the system you’ve determined in the previous steps. This part is pretty straightforward. When counting items, stay focused on the task, double check your numbers, and stick to your system.
If possible, have two people count the same merchandise independently, then have them compare counts to ensure accuracy.
After counting: Review, adjust, and take action
Once the counting is done, review your records and determine your next course of action. For example, if you notice any huge discrepancies, then you may want to dig deeper to find out why your numbers aren’t matching up. Do you need to be more organized? Should you be worried about theft? The only way to answer these questions is to do your stock-takes regularly, look at the numbers, and investigate accordingly.
Recognize the positive by-products of cycle counting
While the primary purpose of cycle counting is to maintain inventory accuracy, there are a lot of other benefits that can come out of it. For one, it can help you run your store more efficiently. Since your staff is aware that you’re doing regular stock-takes, they’ll be more likely to stay on top of admin work, put items in their proper places, and be more organized overall.
Cycle counting can also help reduce theft. If employees know that the owner or manager does regular cycle counts and audits, they might be less likely to steal.
Final thought: Make cycle counting a habit
If we had to leave you with one more thought, it’s this: the key to cycle counting success is to make it a habit. The benefits we talked about–inventory accuracy, store efficiency, and theft prevention–all that will only come if you cycle count regularly. Yes, the task can be repetitive, but stick to it anyway. Trust us, the time and money that it can save you are well worth it.