How is Cycle Counting defined in inventory management?

Cycle counting is defined as a periodic physical inventory audit that involves checking a subset of inventory items on a regular basis rather than conducting a complete inventory count all at once. This method allows businesses to maintain accurate inventory records and can help identify discrepancies due to errors or theft throughout the year.

By regularly counting small portions of inventory, organizations can streamline their inventory management processes, reduce downtime, and make corrective actions promptly. This is particularly useful for companies that have a wide range of items and complex inventory management needs. Cycle counting thus enhances inventory accuracy and supports better decision-making without the need for a full inventory shut down, which can be disruptive.

In contrast, a one-time inventory system refers to counting all items only once, which does not provide an ongoing check of inventory accuracy. A thorough review of all inventory implies a complete count at one time rather than periodically; and a method of ordering inventory pertains to procurement processes rather than the counting and auditing of existing stock.