Optimizing Cycle Counting in Dynamics 365 Business Central
Traditionally, counting inventory required closing operations for a week or more so that everything in the warehouse was counted – by hand. Not only was this process disruptive to ongoing business operations, but it was also fraught with errors.
One way to maintain accurate inventory without disruption is to use cycle counts. Cycle counts break your inventory into smaller groups that can be counted by one or two people in a day or two. This means each group can be counted one, two, or more times yearly to maintain accurate numbers.
Cycle counts make it possible for a small team to perform a count of inventory one day a week (or one day a month, whatever is appropriate). Each week the team selects a different group until they cycle through the entire inventory. By keeping each subset of inventory items small, identifying the cause of count discrepancies becomes much easier. Cycle counts help to maintain inventory accuracy and reduce the risk of overstocked or out-of-stock items. In addition, cycle counts have been shown to optimize operations, reduce costs, and improve customer satisfaction.
Cycle count methods
While there are many variations, two popular cycle count methods are ABC Counting and Bin Counting.
ABC Counting is based on the Pareto Principle (the 80/20 rule). Here you would count your high value or high turnover items (A) more frequently, for example, quarterly. Medium volume, moderate cost items (B) would be counted less frequently, perhaps twice a year. Slower moving or low value items are (C) are counted annually.
The Bin Counting method is more straightforward; you divide the warehouse into sections and count a fixed number of bins each time.
The keys to successful cycle counts
While cycle counts produce many benefits for a company’s warehouse, there are several things to keep in mind to ensure the process is working properly:
- Maintain a regular schedule. Whether you decide to perform the counts annually, semi-annually, or more frequently, it is important to maintain regular counts of each item group. Random or infrequent counts cause inventory records to be inaccurate, resulting in stockouts, overstocks, and other problems, particularly for items with high inventory turnover.
- Establish a consistent methodology and stick to it. Consistent methodology produces consistent results. If different employees use inconsistent counting methods or tools, the inventory count will be inaccurate.
- Ensure all employees are properly trained. To ensure consistent methodology and accurate inventory counts, ensure each employee tasked with cycle counting is properly trained on the process.
- Count all inventory. Just because you are only counting a subset of inventory at any given time, you still need to count all the inventory items over the course of the year (or whatever timeframe is required by the company).
- Reconcile any discrepancies. One advantage of cycle counting is that it makes finding discrepancies and locating the root cause much easier. However, failure to correct the problem promptly means the errors will persist and might result in your not finding a more pervasive problem in your warehouse.
Invest in automation. Manual counts may not prove as inexpensive as you might think. Counting by hand requires more time and is error-prone throughout the process. Consider investing in an automated solution that ties into your ERP and WMS for increased speed and accuracy.
How cycle counting in Dynamics 365 Business Central works
Dynamics 365 Business Central supports cycle counts and maintaining accurate inventory management records. Users can define cycle count codes and frequency, identify the subset of inventory items to count, and either perform manual counts or automate the process with handheld scanners and barcodes. Business Central also supports adjustments to inventory quantities based on cycle count results, document adjustment reasons, and monitor cycle count performance.
In addition to Business Central, your organization might benefit from an app that offers more to optimize the cycle count process. Apps like the Cycle Count Scheduler from Insight Works offer additional automation, scheduling, and reporting tools.
Choose a partner that understands inventory management and Business Central
As always, your technology is only as good as how it is implemented. If you’re interested in learning more about how your company can benefit from Business Central’s cycle count functionality and take it a step further, contact ArcherPoint’s inventory management experts. They’ll help you evaluate your current processes and supporting systems and recommend areas for improvement.