The 6 Biggest Benefits of Cycle Counting Your Inventory

The 6 Biggest Benefits of Cycle Counting Your Inventory

Have you ever found your company in a position where you have too much of one inventory item and not enough of another? Or found your company in a position where you could not fill a parts or sale request? Or had to halt your company’s production due to a lack of inventory? If you have, a cycle count of inventory might be a process to consider.

Cycle counting inventory is a management technique where a small amount of inventory is counted periodically over a fiscal year. This technique eliminates the need to physically count every inventory item at year end. For a manufacturing company, some of the benefits of cycle counting include:

  • Eliminates the need to count all inventory items at year end, resulting in less down-time for staff and operations.
  • Enables a company to maintain a more accurate inventory balance in the general ledger year round.
  • Provides valuable data which allows management more opportunities to review inventory levels to minimize scrap and eliminate over/under stocking.
  • Enables a company to have better internal controls over inventory.
  • Supplies data so the company can review their cost to purchase inventory to achieve better rates.
  • Allows a company to catch inventory related errors sooner.

These are just a few examples of how a cycle count inventory management process could benefit your company. As such, a full inventory count at year end might not be the best process for your company and cycle counting could be something to consider transitioning to.

Contact a MKS&H professional to get valuable help on how to implement and start this process at your company.


Megan BakerArticle contributed by Megan Baker, CPA, MKS&H Manager

About MKS&H: McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by advising them regarding their financial, technology and human capital management needs.

 

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MKS&H

McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by putting complex financial data into truly meaningful context. But deeper than dollars and data, our focus is on developing an understanding of you, your culture and your business goals. This approach enables our clients to achieve their greatest potential.

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