How can you use inventory cycle counting to improve demand planning?

1 What is inventory cycle counting?

Inventory cycle counting is a process of counting a small subset of your inventory items on a frequent basis, such as daily, weekly, or monthly. The items to be counted are usually selected based on criteria such as value, demand, or location. The goal is to cover all the items in your inventory over a certain period of time, such as a quarter or a year. Inventory cycle counting allows you to monitor and correct any discrepancies or errors in your inventory records, such as missing, damaged, or misplaced items. It also helps you maintain a high level of inventory accuracy and avoid costly physical inventory counts that can disrupt your warehouse operations.

3 How to implement inventory cycle counting in your warehouse?

To implement inventory cycle counting in your warehouse, you need to consider several factors. Firstly, you should define your objectives and policies, such as the target inventory accuracy level, how often to count the inventory, and criteria for selecting items to be counted. Secondly, you must choose an inventory cycle counting method that best fits your warehouse size and complexity. Thirdly, assign roles and responsibilities for the inventory cycle counting process, as well as train and equip your staff with the necessary skills and tools. Fourthly, create a calendar or a schedule for your inventory cycle counts that takes into account your warehouse layout, workload, and peak seasons. Finally, monitor and measure the results of your inventory cycle counts and identify any problems or errors. Implement corrective and preventive actions to improve your inventory cycle counting process.

4 How to use inventory cycle counting to improve demand planning?

Inventory cycle counting can help you improve your demand planning by providing you with valuable insights and feedback on your inventory performance and customer demand. For example, you can use inventory cycle counting data to validate and update your demand forecasting models and assumptions, optimize your inventory replenishment and ordering strategies, enhance your inventory segmentation and classification, and improve your inventory communication and collaboration. You can compare the actual inventory levels and turnover rates with the projected ones to adjust demand forecasting parameters. You can also use inventory cycle counting data to test different demand forecasting methods, calculate and monitor inventory metrics, determine the optimal order quantity and frequency, segment and classify items based on their value or profitability, share inventory status with stakeholders, and collaborate with supply chain partners.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?