5 Tips For Integrating an Effective Cycle Count System By Frank Lucer At Isnare.com Ezine Articles

Creating a cycle count system and integrating it into your small retail shop will help you maintain an accurate inventory. Rarely, if ever, do the megastores and mass merchandisers close their doors and record every item on their shelves. They don't need to because they cycle count throughout the year. Doing so helps them reduce their level of shrink and identify discrepancies more quickly than would be possible by doing a full physical inventory.

As a small retailer, you already realize the importance of reducing your shrink. You also realize the value of counting your stock accurately. In this article, I'll provide five tips for integrating a cycle count system that will deliver both benefits.

#1 - Follow A Schedule

A cycle count system can only work properly if you make it a part of your normal routine. If you plan to do it daily, make sure you do it daily. If weekly, then do it weekly. Too often, small retailers perform it sporadically, whenever they - and their employees - have time available. That reduces the level of accuracy you're trying to achieve while opening the door to increasing shrink. Make a commitment and stick to it.

#2 - Categorize Your Stock

Some of the items you carry will turn over far more quickly than others. The faster turnover can increase your exposure to shrink and inventory discrepancies. A cycle count allows you to record segments of your inventory through a rotating program. That is, rather than doing a full physical inventory during which everything is counted at once, you and your staff would only count specific segments. Categorize your inventory according to sell-through; items that turn over more quickly should be counted more often.

#3 - Close Out And Start Fresh

By the time you and your employees begin counting, all pending transactions that affect the categories you're tracking should be closed. All activities that will influence the stock, including restocking and backstocking, should also be finished before you begin counting. If you have pending customer orders that have not yet been filled, those too, should be completed. Otherwise, your cycle count will yield inaccurate numbers.

#4 - Track Stock Changes During Store Hours

Ideally, you'll be able to finish counting your stock before opening your store to customers. If you're unable to do so, you'll need to track changes in the categories you're counting, especially for high-volume items. This is not limited to items that customers purchase; you must also watch the movement of merchandise across the floor as customers pick up items from the shelves and carry them. If you neglect to do this, you'll run the risk of under-counting that category.

#5 - Begin Gradually And Build Momentum

If you have never completed a cycle count rotation, start out slowly by counting items in low-turnover categories. That will give you an opportunity to grow accustomed to the process while learning how to track your stock with your inventory software. Don't feel pressured to complete an entire rotation. Instead, invest the time during the beginning to increase your confidence level with slow-moving items and build momentum as you go. By the time you're ready to complete an entire rotation, you'll have a firm grasp of the process.

Integrating a cycle count system will eliminate the need to conduct a full physical inventory. What's more, it will allow you to track your stock with far more accuracy. Not only does that reduce your shrink, but it also gives your employees more confidence in your inventory program when they help customers. Use the five tips above to incorporate cycle counting into your small retail shop.

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