What does "cycle counting" refer to in inventory management?

Cycle counting refers to a method in inventory management where a portion of the inventory is counted on a specific schedule rather than conducting a complete inventory take all at once, such as at year-end. This approach allows for ongoing verification of inventory accuracy and helps identify discrepancies between recorded and actual inventory levels more frequently and in a less disruptive manner.

By counting smaller, manageable segments of inventory regularly, businesses can maintain more accurate records and address issues as they arise. This method is often integrated into the daily operations, allowing employees to become familiar with the inventory while minimizing the impact on overall operations.

The continuous nature of cycle counting means that businesses can correct inaccuracies and adjust their inventory management practices promptly, ultimately leading to improved efficiency and better decision-making regarding stock levels and ordering. This proactive strategy provides a more effective alternative to one-time, large-scope inventory counts that can be time-consuming and may lead to greater disruptions.