Initial
Phase of Cycle Counting
Prior to
initiating a full scale cycle counting program, a small sample of
items should be selected which can be cycle counted repetitively as
part of the daily activities of storekeepers. The objective is to
select a small sample which will detect the causes of errors.
Select
some purchased items, some manufactured items, some similar in
appearance, some small and numerous but difficult to count and some
which experience a changing unit of measure from ordering through
receipt into stock. After counting these items, verify that the
inventory record is correct. Then reconcile and adjust the records.
Count the
same item at some interval short enough to insure that only a few
transactions need to be studied and that only recent history needs
to be investigated to detect the causes of errors.
When the
sample test group can be maintained essentially error free, expand
the program into a regular full scale cycle counting operation.
During the
initial phase of cycle counting problem areas can be identified by
answers to the following questions:
• Is
storage space adequate?
• Are items stored in an orderly manner to facilitate counting?
• Are items properly identified?
• Is access to storage area limited to authorized personnel?
• Is there an effective storage plan?
• Is there a locator system and is it operating effectively?
• Is obsolete, scrap, and inventory pending quality control
disposition segregated from "good" inventory?
• Is the system for reporting daily inventory transactions
effective?
• Is responsibility for reporting inventory transactions clearly
defined?
• Are inventory classifications compatible with the financial
accounting system?