Inventory & Warehousing
Cycle counting is a method of regularly counting a small portion of your inventory on a rotating basis, rather than performing a single annual physical inventory count.
Full Definition
Instead of shutting down operations for a complete physical inventory once a year, cycle counting involves counting specific items or locations daily, weekly, or monthly. This continuous process helps identify and correct inventory discrepancies proactively. For CPG brands, it ensures that recorded inventory levels match physical stock, which is crucial for production planning and order fulfillment. It's more efficient and less disruptive than traditional annual counts.
Why It Matters for CPG Brands
Accurate inventory from cycle counting prevents costly stockouts of raw materials or finished goods, ensuring your production lines keep running and customer orders are fulfilled on time. It also helps identify shrinkage, spoilage, or mispicks quickly, minimizing waste and improving overall operational efficiency for CPG brands.
In CPG Operations
In a CPG manufacturing facility, cycle counting might involve checking the exact quantity of a specific ingredient like organic oats or a packaging material like stand-up pouches every Tuesday. This regular check ensures that the ERP system's records for these critical components are accurate, preventing delays in your granola bar production schedule due to unexpected shortages.
Example
A gourmet snack brand with 15 unique SKUs of artisanal chips implements cycle counting by dividing its warehouse into zones. Each day, a team member counts all items in one designated zone, rotating through all zones every two weeks. This helps them quickly spot discrepancies in their potato chip inventory or seasoning ingredients, preventing production halts and ensuring accurate fulfillment.
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Frequently Asked Questions
How often should we perform cycle counts?
The frequency depends on your inventory value, volume, and discrepancy rates. High-value or fast-moving items might be counted daily or weekly, while slower-moving items could be monthly or quarterly.
What's the main benefit of cycle counting over a full physical inventory?
Cycle counting is less disruptive, as it doesn't require shutting down operations. It provides continuous accuracy, identifies issues faster, and helps maintain a more reliable inventory record year-round, which is crucial for CPG production schedules.
Can cycle counting help with spoilage or expiry dates in CPG?
Yes, by regularly verifying inventory, cycle counting can help identify products nearing expiry or those that might be at risk of spoilage if not moved. This allows CPG brands to implement first-in, first-out (FIFO) practices more effectively and reduce waste.