Advantages of Process Control Cycle Counting

Experience has shown that process control cycle counting is 100% to 1,000% more efficient than either random sample or ABC cycle counting. That is, many companies have shown that the same people using process control cycle counting count and reconcile 2 to 10 times the number of counts than when they did random sample or ABC cycle counting. It should be noted that on a national average, random sample and ABC cycle counting produce about the same number of counts per person per day, approximately 25. (Note: This number was derived by polling hundreds of companies that sent representatives to classes on Inven­tory Record Accuracy and Manufacturing Resource Plan­ning.) However, a recent survey contradicted this average. The survey revealed the following average number of cycle counts per person per day.

The argument that some parts may never become easy to count or have an obvious error and thus will never be counted simply does not develop in practice. There are so many counts made with process control cycle counting that virtually all parts are counted in the course of a year— provided, of course, that a reasonable number of counters are used. If theory dominates the thought process, consider the part that never has an obvious error nor is ever easy to count. Operationally, it will never be of major concern. In a company where the author was practicing process control cycle counting, a senior member of management insisted that all parts be counted at least once every year. To honor this requirement, all parts that had not been counted within the last twelve months were selected from the inventory records. Out of 30,000 parts, less than 20 'A' and *B' class cost had not been counted at least once. If comfort is found with this "safeguard," it should be employed.

Since cycle counting has the dual purpose of measuring inventory record accuracy and finding and fixing causes of errors, it is only logical to design the cycle counting meth­odology to excel at both of these. No one type of cycle counting is known to accomplish both tasks equally well. Random sample cycle counting is the best measure of inventory record accuracy with ABC a close, but biased second. Neither works as well as process control cycle counting in detecting errors so their causes can be cor­rected. This was inadvertently discovered by the author while practicing both process control cycle counting and random sample cycle counting on the same population simultaneously for an extended period of time—two years.

Process control cycle counting produced a continual stable inventory record accuracy measure of 97.2%, ±V&%, for two years. The population consisted of 30,000 part numbers. During this time period, over 320,000 counts were made via process control cycle counting. To satisfy the company's general manager, the controller conducted a monthly ran­dom sample audit of 300 parts. Her sample results were equally stable. On a total sample size of 7,200, her measure of inventory record accuracy was 98.6%, again ±l/z%. The results of both methods were consistent throughout the twenty-four month period. Because both samples were extremely large with respect to the population and because they were both extremely stable, it was initially thought that two different characteristics of the population were being measured. However, this was not the case. It was eventually realized that both were a measure of inventory record accuracy. Random sample cycle counting was a pure measure of inventory record accuracy. Process control cycle counting, on the other hand, was a biased measure, like ABC cycle counting. However, where ABC has a bias toward those parts that have the greatest annual expendi­ture, process control cycle counting has a bias toward those parts with the greatest exposure to error.

A surprising side benefit of process control cycle counting is its popularity with cycle counters. Typically, they comment on its ease and the outstanding record accuracy that it produces.

Summary

The most important aspect of cycle counting is investigat­ing, reconciling, and eliminating the CAUSES of errors. (Note: Theoretically, if an error cause is eliminated, it should not recur.) Whether a company uses ABC, random, process control or some other method of cycle counting is not nearly as important as eliminating error causes. Time spent debating which method of cycle counting to employ is time wasted. The practitioner must select a method, assign responsibility for cycle counting and reconciliation, and document the entire process with clear and understand­able procedures.