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Physical inventory audits, do those words sound like nails running down a chalkboard to you? Halting operations, training, and mobilizing staff, discovering significant discrepancies, errors, and stock shrinkage… it's enough to make you want to run and hide.

Cycle counting may be the answer because it can dramatically reduce many of the problems encountered during typical physical inventory audits.

Some businesses replace physical audits with cycle counting, while others use both methods in tandem.

This article covers the benefits of cycle counting for eCommerce, types of cycle counting, and implementation strategies you can use to adapt the process to your business.

Read on to discover possible solutions for your eCommerce inventory management system.

Benefits of Cycle Counting

Cycle counting involves physically counting a portion of your inventory rather than the entire amount in one go. The benefits of this are:

• More manageable and efficient - save time

• Identify errors and discrepancies quicker

• Maintain accurate inventory records

• Improve inventory-based decisions

• Reduce required safety stock

• Reduce risk of overstocking or stock shortages

• Reduce operational disruption

• Enhance customer service

• Lower costs using in-house barcode scan technology

• Reduce employee expenses

• Prompt theft detection

Managing Cycle Counts with Inventory Management Software

Inventory management software is allowing eCommerce businesses to master their inventory control by keeping it in-house.

With the support of the right software, companies are saving 25%-50% on their inventory auditing procedures.

With features that allow for:

1. Storing all data in one place

2. Managing, syncing, and optimizing inventory

3. Performing frequent counts to maintain accuracy

4. Tailoring cycle counts to specific business needs

5. Depending on your inventory type, shrink rates, and turnover rates

6. Accessing accurate information quickly from your software dashboard using filters and integrated analytics

7. Doing on-the-spot counts when the need arises.

With Inventory management software, you only need to train staff on one solution. In addition, auditing events can be scheduled to suit you without relying on a third-party provider.

Inventory management software empowers eCommerce businesses to take control of their processes, boost accuracy, and lower costs.

The Main Types of Cycle Counting

Cycle counting can be used in a number of ways to enhance your inventory control procedures. The most commonly used types of cycle counting are:

1. ABC cycle counting

Businesses classify their inventory as A, B, or C depending on its performance. Classing of inventory varies from company to company but usually follows these basic principles:

• Class A inventory has the highest profit or sales volume and is counted quarterly.

• Class B inventory has a medium profit or sales value and is counted biannually

• Class C inventory has a lower turnover and/or profit value and is counted once per year

2. Random sample cycle counting

Involves choosing a random selection of inventory to count. This can be at a selected frequency depending on your business needs, for example, daily, weekly, or monthly.

This method can be less disruptive to fulfillment as entire categories are not affected at one time. There are two types of random sample counting:

• Diminished population counting

Counted inventory is removed from the cycle until all inventory has been counted.

• Constant population counting

The selection process is entirely random. Counted products are not removed from future cycle counts, meaning some products will be counted more than once while others may not be counted at all.

3. Control group cycle counting

Control group cycle counting provides a focused count of specifically chosen inventory items, like high value or fast turnover, over a brief time period.

These items are used as a control group to refine the counting process by finding problems and eliminating errors. Once the process is running smoothly, it can be rolled out on a larger scale.

4. Hybrid

A mix of any of the above methods can be adopted to suit your particular business reporting, accounting, and purchasing needs.