Stock reliability is essential for a well-functioning supply chain. For that reason, most companies apply a standard of at least 98%.
Annual counting is a method of checking the stock. You then run a risk with your delivery reliability during the year. Your productivity of your logistics employees will also deteriorate rapidly as a result. Processes must be shut down to fix the errors.
More and more companies are seeing the benefits of cycle counting. According to a routine schedule, all products are eventually served. Which gives the possibility of a statistical stock reliability. The problem with cycle counting is of course that the goods are in motion. if you start with cycle count, there are a number of conditions for the process to be successful.
Time of cycle count
The best time of day is usually at the beginning or end of the day when there are the fewest movements of goods and people available for counting.
Who’s going to count.
If you are going to apply cycle count, reliability of the counts is extremely important. They should be experienced and reliable warehouse employees who work accurately. Before you start with the cycle count, there must first have been a 100% or a good starting point. An end-of-year statement is the best solution before switching to cycle counting.
Type of cycle counting
There are two methods of cycle counting. Geographical method and according to a ranking method.
A fixed pattern of counting locations and products in the warehouse is followed. Until one has had all locations. This allows you to count all items in the warehouse. An additional advantage is that you can also quickly track misplaced articles.
You start at 1 side of the warehouse and count a certain number of items every day. This is continued until all statements have been made. This results in counting all articles according to a fixed number per year. The advantage of this method is that misplaced or “lost” material can be traced. When using this method, all articles will be counted at least 4 times a year for the best reliability.
Example geographic method
A warehouse is open 250 days and has 1000 articles in stock and they want to have all articles checked 4 times for good stock reliability:
Counting 1000 articles 4 times a year = 4000 counts
4000 counts / 250 days = counting 16 items per day.
How much can be counted partly depends on the experience of the counter, the type of article and the storage method.
On day number 63 the first series is completed and the count is continued by starting again at the beginning and performing the remaining number of counts. After 250 days, 4000 counts have been carried out and all items have therefore been counted 4 times. When counting a product, it is important to include all stock locations where the product is stored. All counts must be registered per location. This is to trace any incorrect placements with respect to the administrative stock.
The ranking method uses the Pareto analysis as a starting point. This stipulates that 80% of the value is represented by 20% of the products. We therefore want to count these products with the highest frequency.
This selection method can also look at:
loose parts or bulk product
high volume or low volume outlet
Warehouse or work stock
Manual or bar counting
Trade or Returns
Example of Ranking
We follow a regular ABC analysis. So there are only 3 groups.
A articles. Every two weeks. 100 articles
B articles. Monthly. 200 articles
C Articles. Quarter. 400 articles
When counting 4 days a week and the fifth day for tidying up, the following schedule can be drawn up:
A article. Every two weeks. Every 8 days. 100 articles = 100/8 = 13 per day
B article. Monthly. Every 16 days. 200 articles = 200/16 = 13 per day
C article. Quarter. Every 52 days. 400 articles = 400/52 = 8 per day
All 400 articles can be classified into 34 articles per day. After 1 quarter:
A articles counted 6 times
B articles counted 3 times
C articles counted once
Although this method is less good at detecting “lost” material, it is often preferred because it focuses on the available stock of the important products and takes less time.
Once the physical count has been carried out, it must be compared with the administrative statement. This step should not be performed by the counters. An independent person, usually administration, enters the data and prints the results. If there is a discrepancy, the first step is to perform a recount on the item. If the reason for the deviation has been determined, the computer data can be adjusted after authorization.