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In any industry, no matter what you work on or how you distribute your products, proper inventory management is key. You don’t need us to tell you how vital inventory management is to preventing revenue loss and maximizing productivity, but the question always remains – how am I supposed to count all this stuff?


There’s generally two accepted methods for inventory counting – cycle and physical counts. Curious to know which one might work best for you, or just want to learn the difference between them? We’ve got the tips and information you need:


Cycle Counting: Cycle counting, at its most basic, involves counting a small number of inventory items every day with the intent of ‘cycling’ through the entire inventory on an ongoing basis. Any errors found during these smaller, incremental counts should be tracked and adjusted in your inventory counts overall, and the end goal is to eventually be able to reduce transaction error rates and increase inventory accuracy during counts.

Benefits: After a long-term period of usage, cycle counts generally result in a higher level of inventory accuracy overall. Higher confidence in inventory counts and valuation may lead to the elimination of physical inventory counts since the inventory records are so accurate no further evaluation is required. This can also speed up inventory closing processes, as the inventory no longer needs to be tracked at the end of every reporting period. (And your employees will certainly appreciate not having to spend the time counting inventory – and you won’t have to worry so much about paying overtime!)

Drawbacks: The biggest issue with cycle counting is the time investment needed to properly implement the system and change over from your previous inventory management system. Employees will need to be trained on the new method, previous counts will have to be re-adjusted for your new system, and new industrial storage may have to be brought in (or at least rearranged) to accommodate for the needs of the new system. Changing methods can also lead to a reduction in inventory accuracy while the transition is being made, which can lead to issues down the line.


Physical Counting: Physical counting is the more common method for most facilities and warehouses due to its simplicity and long history of usage. Befitting its name, this method involves physically tracking down and counting each individual inventory piece still currently in the warehouse to adhere to current inventory records or tax regulations, and fulfill any needed inventory counts available.

Benefits: One of the stronger advantages of physical inventory tracking is that it provides an immediate, accurate count of on-hand items. While the time involved is much longer, physical inventory counts provide a better idea of current inventory levels and allow you to manage shortages and loss more immediately than cycle counts do due to the fact the entire inventory is being counted at once. It also allows for better usage of product labels to track item locations.

Drawbacks: Physical counts are a huge time investment, which is one of the leading factors in warehouses switching over to cycle counting. While the accuracy is always welcome, the amount of time it takes will require that employees either work overtime or be taken away from their normal tasks, which could have a big effect on your productivity. It also requires more careful usage and planning of storage and wire shelving to help speed the process along wherever possible – and in physical counts, every second helps.

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