Inventory accuracy is fundamental to manufacturing and distribution. A 3-tiered cycle counting system can simplify inventory management while improving accuracy
Since I’ve been working with a client on a cycle counting program, and it was one of the topics I taught in a recent APICS CSCP (Certified Supply Chain Professional) course, it reminded me of its significance to success.
The point of cycle counting is to maintain inventory accuracy on a continual basis. Inventory accuracy is a foundational element to manufacturing and distribution success. Cycle counting by ABC means you’ll count your high volume, more critical parts (A) more often than your low volume, less critical parts (B & C). Not only will your inventory be more accurate on what is most critical to your business but you’ll also better understand root causes to maintaining critical part accuracy.
If you need to make rapid improvement in inventory accuracy, focus solely on A’s. You’ll maintain high levels of accuracy for the top 80% of your sales volume. You’ll also have more time to focus on root cause analysis because the top 80% is typically only 20% of your items. Also, by resolving root causes to A item inaccuracy, I’ve found that B and C items improve dramatically as well because the same causes persist across the board. For example, I’ve worked with multiple clients to help them go from 50-60% accuracy (or unknown, low levels of accuracy) to the high 90%’s using these strategies. Suddenly, these clients were able to find what they need when they need it and didn’t have to carry excess inventory to account for their inaccuracy.