How the cycle count process unlocks WMS potential

“Improved inventory accuracy” is prominent on almost every WMS benefit list.  Inventory control and cycle counting improvements translate into tangible financial gains. Without highly accurate inventories, it's challenging to investigate and eliminate inventory losses.

Inaccurate inventories lead demand planners to add "just in case" buffers, increasing current asset investment. Such inaccuracies result in poor decisions, like promising customer deliveries for non-existent quantities or requesting replenishments for already sufficient stock.

"every other benefit from WMS is predicated on accurate inventory counts"

What is it about WMS that results in better inventory accuracy? At first glance, it might seem like an overstatement. There's no revolutionary change in software that alters how we record received quantities, shipped quantities, and item locations. However, inventory accuracy often improves with a WMS because all other benefits depend on precise inventory counts.

Skilled cycle counting

The key to sustained and significant inventory accuracy improvements is to become skilled at cycle counting. “Skilled cycle counting”

involves more than just adjusting WMS inventories when they don't match physical counts. It requires documenting discrepancies, investigating them, and implementing corrective actions. By applying process improvements from a small sample to the entire operation through standardization, discrepancies decrease, reducing the need for frequent cycle counts.

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Unfortunately, many organizations cycle count without developing this skill. In such cases, the cycle count process becomes an end in itself, rather than a tool for process improvement. When better inventory control is needed, the only response is to increase cycle counting frequency.

This approach doesn't improve inventory control; it merely accelerates inventory correction. Inventory losses aren't reduced; they're recorded in smaller, more frequent increments.

Transactional discipline matters

Practically, maintaining an inventory control system with active process improvement doesn't require significantly more resources than frequent cycle counting. Something as simple as scheduling a weekly meeting to review the three largest cycle count variances can yield substantial benefits. When people understand that transactional discipline matters, no one wants to be the person explaining who didn't do their job.

Inventory control is conceptually simple: report what's received, report what's shipped, and the difference remains. However, real-world complexities arise, such as receiving inaccurate quantities, products changing identities within the warehouse, finished goods returning to work-in-progress, and shipped products being returned.

The central premise remains: to fully benefit from your WMS, good inventory control is essential, and cycle counting is the tool that helps achieve it.