Cycle counting by ABC class: how often to count which items

A full count once a year follows a familiar pattern: a weekend of hard work, a long list of differences, and the discovery that many of the errors are eleven months old. By then nobody remembers which delivery, which shift or which document lay behind them. Cycle counting spreads the work over the year. Instead of counting everything at once, the team counts a few locations or items every day, and the items that matter most are counted most often. The warehouse carries on working while this happens.

Sort the items into A, B and C

ABC classification ranks items by their annual issued value (quantity issued multiplied by unit cost), using an export from your book. In 1C or Excel, sort the last twelve months of issues by value.

• Class A: the top items that together make up the first 70 to 80 per cent of the value. Usually a small share of the item count.
• Class B: the next 15 to 20 per cent.
• Class C: the rest. Many items, little value.

The percentages are a convention, so adjust them to your range. Two corrections are worth making. Move into class A any cheap part whose absence stops a production line, and any item that showed errors in the last count. Items with no movement for a year go on a separate list and are checked once a year.

Frequency and daily workload

For illustration, suppose there are 3,000 active items. The 300 class A items are counted every month, the 600 class B items every quarter and the 2,100 class C items every half year. With about 20 working days in a month, 60 in a quarter and 125 in half a year, the daily load is 300 ÷ 20 = 15 items for A, 600 ÷ 60 = 10 for B and 2,100 ÷ 125 = about 17 for C. That is roughly 42 items a day, which two people with scanners can finish in a couple of hours. Compare this with a full count of 3,000 items in a day or two with the warehouse stopped.

Work is organised by location, not by item. If the day's items are scattered across the building, most of the time goes on walking, so sort the list by zone and walking route.

The daily routine

1. Pull from the book the items whose turn has come this week, group them by zone and sort them along the walking route.
2. Count in the quietest window, for example before the first shift or after the last receipt.
3. Scan the location label and the item label, then enter the quantity. Where possible, count without seeing the book quantity.
4. Compare with the book the same day. A difference above the agreed threshold is recounted by another person, and the cause is checked before movements in that location continue.
5. Record the result: date, location, item, book quantity, counted quantity, cause and owner.

Count on events as well as on the calendar

Some situations deserve an immediate count whatever the schedule says: the shelf holds goods but the book shows zero or a negative figure; a large receipt or issue has just been posted; stock has been moved between locations; a picker reports that an item is not where it should be; a customer complains about a wrong quantity. Errors caught at the moment they arise are the cheapest to explain.

Use the results

Record, per class, how many locations were counted, how many had a difference and what share matched. If class A matches month after month, you can afford to stretch the cycle for class C. If one zone keeps failing, look for the cause (labels, mixed bins, the way receiving is done) instead of simply counting again. As the records build up, they show which items and zones fail most often, which makes it easier to decide where to improve. Whether cycle counts can replace the year-end full count is a question for head office finance and the auditors, so ask early and keep the answer in writing.

Summary

Cycle counting turns one painful event into a steady, light routine and finds errors while they can still be explained. Smart Inventory's cycle counting checks key and fast-moving items on an agreed schedule, so differences surface early without stopping the warehouse.