The importance of cycle counts in your business

From my conversation with retailers I think is fair to assume that what you cannot measure, you cannot manage. Some managers however have a head in the sand attitude to their stock and how it should be managed.
With this in mind I have wrote this article to assist managers and owners with how they can have efficient stock control without having to undertake a full stocktake every time.

So firstly, what is a cycle count?

A cycle count is a mini stocktake where you count a certain area of department within your operation. It is then used to either
  • Update your EPOS and generate a variance report
    Or
  • Used to provide a valuation of stock so that a margin can be calculated

What will this do for my operation?

In a nut shell, it provides you with a snap shot of how that department within your business is performing. Any losses are immediately highlighted and action can then be taken accordingly.

My EPOS already tells me what I have on hand, why would I want to waste resources doing this exercise?

Wrong! Your EPOS tells you what you should have on hand, your theoretical stock on hand level. What you want to know is your actual stock on hand level. The difference is what you want to know.
It doesn’t tell you the level of wastage, pilferage (internal or external), breakages etc, is within the business.

What’s best practice for dealing with cycle counts?

We recommend a regular schedule of cycle counts for each department. This of course, does depend on the stock turnover, value of the stock, level of current control measures and loss, your current accounting practices and your particular type of EPOS.
A general rule of thumb is that a stocktake of all stock is conducted four times per year and a cycle count of each department is conducted in-between each full stocktake.
This way you are

  • Taking a proactive approach to you stock control (as it is this which makes you money and contributes most to losses within the business)
  • You know your losses and can make adjustments accordingly and immediately
  • Going back to the first line of this article – if you don’t measure, you cannot manage