What are the key metrics to track for cycle counting accuracy?

1 Inventory Accuracy Rate

The inventory accuracy rate is the percentage of items that have the correct quantity recorded in the inventory system, compared to the actual physical count. It is calculated by dividing the number of items that match the physical count by the total number of items counted, and multiplying by 100. For example, if you count 100 items and 95 of them have the correct quantity in the system, your inventory accuracy rate is 95%. The higher the inventory accuracy rate, the better your cycle counting process is.

3 Cycle Count Variance

The cycle count variance is the difference between the quantity recorded in the inventory system and the quantity counted physically for a specific item or location. It is calculated by subtracting the physical count from the system count, and can be positive or negative. For example, if you have 10 units of an item in the system, but you count 12 units physically, your cycle count variance is -2. The lower the cycle count variance, the more accurate your inventory records are.

4 Cycle Count Adjustment Rate

The cycle count adjustment rate is the percentage of items or locations that require an adjustment in the inventory system after a cycle count, compared to the total number of items or locations counted. It is calculated by dividing the number of items or locations that need an adjustment by the total number of items or locations counted, and multiplying by 100. For example, if you count 100 items or locations and 10 of them need an adjustment, your cycle count adjustment rate is 10%. The lower the cycle count adjustment rate, the less errors you have in your inventory records.

5 Cycle Count Error Rate

The cycle count error rate is the percentage of items or locations that have an incorrect quantity recorded in the inventory system, compared to the total number of items or locations in the warehouse. It is calculated by dividing the number of items or locations that have an incorrect quantity by the total number of items or locations in the warehouse, and multiplying by 100. For example, if you have 1000 items or locations in the warehouse and 50 of them have an incorrect quantity, your cycle count error rate is 5%. The lower the cycle count error rate, the more reliable your inventory system is.

6 Cycle Count Cost

The cycle count cost is the amount of money you spend on performing cycle counts, including labor, equipment, and overhead. It is calculated by adding up the costs of all the resources involved in the cycle counting process, such as staff wages, scanners, software, and storage. For example, if you pay $20 per hour for each cycle counter, and you use 10 cycle counters for 8 hours each, your labor cost is $1600. If you also use 10 scanners that cost $100 each, your equipment cost is $1000. If you also pay $500 for software and $200 for storage, your overhead cost is $700. Your total cycle count cost is $3300. The lower the cycle count cost, the more efficient your cycle counting process is.

7 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?