5 Differences between Physical Count and Cycle Count Inventory

If your business is storing items in a warehouse, it is essential to conduct inventory counts on a regular basis. At the time of conducting inventory counts, you have two different options available to consider. The first option out of them is to do a physical count, and the other method is to do a cycle count.

Before you select a method to count the inventory, it is important to have a solid understanding of the differences that exist between a Physical Count and Cycle Count methods. Then you will find it as an easy task to select the best method as per your preferences.

What is Physical Count?

A physical count is the count of all the products and materials owned by your business. It makes sure that the numbers you have entered into the records of the company book match with the number of items you have in your warehouse. This will be an in-depth count, which requires a considerable amount of time and effort. As a result, physical counts take place only for one time a year. It is important for you to do a physical count in order to meet the financial accounting rules and tax regulations.

What Is Cycle Count?

Cycle counting is where a party of the inventory is counted. In here, a small subset of your inventory, which is kept at a specific location will be counted on a given day. It is one of the most popular counting methods because it can provide you with the opportunity to count what you have in your warehouse for multiple times a day.

5 Differences Between Physical Count and Cycle Count Inventory

With the above definition in mind, let’s take a look at 5 key differences that can be found between physical count and cycle count inventory.

1. Labour And Time Insensitivity

A physical count can be considered as a labor and a time-intensive activity to do. That’s because you will have to count the complete inventory found in the warehouse.  More resources will need to be allocated to get the job done as well. However, cycle counting is more time and labor efficient when compared to physical count. That’s because you are focusing only on a subset of the inventory.

2. Inventory Variance

A physical count can offer annual data related to the inventory variances. On the other hand, cycle count can proactively reduce inventory variances.

3. Facility Downtime

When you are conducting a physical count, you will need to keep your warehouse down. Otherwise, the calculations you do will get affected. When it comes to cycle counting, you will not come across the need to face such a situation.

4. Frequency

The physical count will be done in your inventory for one time a year. However, the cycle count is done regularly for specially selected items. It is done on a daily basis, as well.

5. Scheduling

With physical counting, you will not be able to schedule the count. But when it comes to cycle counting, you can schedule the count and get the job done conveniently.

These are the most prominent differences that you can see in between physical count and cycle count. Based on the differences, you can go to the next step and select the best counting method to manage the warehouse. After you select the best counting method here are some other tips for efficient Warehouse Management.