Inventory cycle counts: a routine for investigating discrepancies
Prioritize products, control the cutoff and document why each adjustment is needed.
Cycle counting examines groups of products over time. Its value comes from explaining why recorded and physical quantities differ, not just correcting balances.
Prioritize operational risk
Start with valuable, fast-moving or repeatedly discrepant items. Include new products and difficult unit conversions. Document why some products need more frequent counts.
Control timing
Set a cutoff and decide how to handle sales, receipts and transfers during counting. Otherwise, you compare quantities from different moments. Pausing movements in a small zone may be practical.
Define units
A case of 12 and one loose piece are different units. Use catalog units and explicit conversions. Label locations and separate damaged or reserved stock.
Recount before adjusting
Request a second check, then inspect pending movements, alternate locations, open transfers and returns. Do not adjust only to eliminate a variance from a report.
Record the cause
- Receiving error.
- Unit conversion.
- Incorrect location.
- Pending movement.
- Documented damage.
- Still under investigation.
Keep unknown causes visible rather than inventing explanations.
Follow up
Check whether the same discrepancy returns after correction. If it does, change the underlying procedure and assign someone to verify improvement.
Connect the routine with branch transfer controls to account for stock still in transit.
