About Cycle Counting

Cycle counting is a method of counting inventory by grouping products into classes and counting the products in each class at designated intervals over a time period. You count only some of the products at one time, but you count all of the products over a designated time period. For example, you might count products of class A once every 3 months, products of class B once every 6 months, and products of class C once every year.

Because products move in and out of inventory, cycle counting creates a dynamic, statistical view of inventory. To enhance statistical accuracy, cycle counting uses the following methods of product classification (the cycle count basis):

• ABC. The ABC cycle count basis ranks products according to financial value. You count products with a larger dollar value more often than the products with a smaller dollar value.

• XYZ. The XYZ cycle count basis ranks products according to turnover. You count higher-turnover products more often than lower-turnover products. This method results in a more accurate count.

You can configure cycle counting for products, inventory location types, and inventory locations.

Note: If you can set a configuration parameter for cycle counting at different levels, then the parameter for the more specific level takes precedence over the other levels. For example, the cycle count basis (ABC or XYZ) for an inventory location takes precedence over the cycle counting bases for an inventory type. The cycle count class (A, B, or C; X, Y, or Z, the class has a high, medium, or low relative value or turnover rate) for an inventory type takes precedence over cycle count class for a product.