Cycle Counting - Standard Operating Procedure¶

Complete step-by-step guide to performing cycle counts for inventory accuracy.

What is Cycle Counting?¶

Cycle counting is a regular, systematic process of counting a subset of inventory to verify accuracy without shutting down operations for a full physical inventory.

Benefits¶

• Maintain accuracy - Regular verification prevents drift
• No downtime - Count during normal operations
• Identify issues - Catch problems early
• Improve processes - Find root causes of discrepancies
• Financial accuracy - Ensure correct inventory valuation

Cycle Count vs Physical Inventory¶

Before You Start¶

Complete these preparations before cycle counting:

• Review assigned count locations or products
• Ensure counting area is organized and accessible
• Have mobile device or barcode scanner ready
• Understand expected products in count area
• Know how to handle discrepancies
• Clear any active work from count area

Step 1: Receive Count Assignment¶

How Counts Are Assigned¶

ABC Classification (Most Common): - A Items - High value, count monthly - B Items - Medium value, count quarterly - C Items - Low value, count annually

Location-Based: - Count all products in specific location - Rotate through all locations systematically

Random Selection: - System randomly selects products - Unbiased sampling

View Your Assignment¶

On Mobile: 1. Open Zora Tech app 2. Tap Cycle Counts from menu 3. View assigned count tasks 4. Tap task to begin

On Desktop: 1. Navigate to Inventory → Cycle Counts 2. View assigned counts in queue 3. Click to start counting

Step 2: Prepare the Count Area¶

Before Counting¶

1. Clear active work from location
2. Complete any pending picks
3. Finish any putaways

4. Remove empty pallets/containers

5. Organize products for easier counting

6. Face products forward
7. Stack neatly

8. Separate different SKUs

9. Check lighting and accessibility

10. Ensure adequate lighting
11. Clear pathways
12. Safe access to items

Count Area Requirements¶

Step 3: Count Physical Inventory¶

Counting Methods¶

Counting Tips¶

For Accurate Counts:

• ✅ Count systematically - Left to right, top to bottom
• ✅ Count twice if unsure
• ✅ Open boxes to verify contents
• ✅ Check behind items for hidden stock
• ✅ Verify SKU matches physical product
• ✅ Use scale for bulk items (if available)

Common Mistakes:

• ❌ Rushing through counts
• ❌ Estimating instead of counting
• ❌ Missing items behind front stock
• ❌ Counting wrong SKU
• ❌ Counting display samples as inventory

Recording Counts¶

For each product:

1. Scan or enter SKU
2. Count physical quantity
3. Enter count in system
4. Note any issues:
5. Damaged items
6. Wrong location
7. Expired products
8. Questionable items

Serial Number Handling¶

For Serial-Tracked Products:

Cycle counts for serial-tracked items have special requirements:

Count Matches Expected:

If your physical count matches the system quantity: - ✅ Skip serial scanning - System optimization - System assumes serial numbers are correct - Count proceeds quickly - Saves time on routine counts

Count Does NOT Match Expected:

If your physical count differs from system: - ⚠️ Serial scanning REQUIRED - Must verify each item - Scan each serial number present - System compares to expected serials - Identifies which serials are missing or unexpected - Creates detailed discrepancy report

Serial Number Discrepancy Types:

Expected Serials: SN-001, SN-002, SN-003
Found Serials: SN-001, SN-004

Issues:
❌ SN-002 missing (expected but not found)
❌ SN-003 missing (expected but not found)
⚠️ SN-004 unexpected (found but not in system)

Resolving Serial Discrepancies:

1. Missing Serials:
2. Check if items were recently picked
3. Look in adjacent locations
4. Verify not mis-labeled

5. Report to supervisor if truly missing

6. Unexpected Serials:

7. Verify product SKU matches
8. Check if from different location
9. Look up serial in Serial Number Lookup
10. May need location correction

Serial Count Workflow:

graph TD
    A[Start Cycle Count] --> B{Serial Tracked?}
    B -->|No| C[Count Units]
    B -->|Yes| D[Count Physical Units]
    D --> E{Count Matches?}
    E -->|Yes| F[Skip Serial Scan]
    E -->|No| G[Scan All Serials]
    G --> H[System Identifies Discrepancies]
    H --> I[Resolve Issues]
    F --> J[Complete Count]
    I --> J
    C --> J

    style F fill:#e8f5e9
    style G fill:#fff3e0
    style H fill:#ffebee

Step 4: Handle Discrepancies¶

System Comparison¶

After entering your counts, system compares:

Product: Widget A (SKU: PROD-001)
Location: A-01-A

System Quantity: 50
Your Count: 48
Variance: -2 units

Discrepancy Thresholds¶

Within Tolerance (Usually ±2%): - System may auto-accept - Or prompt for confirmation - Proceed to next item

Outside Tolerance: - Recount required - System prompts: "Count again" - Perform second count carefully

Recount Procedure¶

If discrepancy is significant:

1. Stop and recount
2. Verify location is correct
3. Check system record for recent transactions
4. Count more carefully:
5. Open boxes
6. Check behind items
7. Look for partial units

8. Verify SKU matches

9. Enter recount

10. If still different:
11. Note reason for discrepancy
12. Supervisor may need to verify

Step 5: Complete the Count¶

Review Summary¶

Before finalizing:

• All products counted
• Discrepancies recounted
• Notes added for issues
• Damaged items documented
• No products missed

Submit Count¶

1. Review count summary
2. Tap "Complete Count"
3. System processes results:
4. Accepts counts within tolerance
5. Flags large discrepancies for review
6. Updates inventory quantities
7. Creates adjustment transactions

After Submission¶

System automatically: - Updates inventory quantities - Creates adjustment transactions - Records count accuracy metrics - Assigns next count location

Step 6: Follow-Up Actions¶

Investigate Discrepancies¶

For significant variances:

1. Review recent transactions
2. Check if items were recently moved
3. Verify picks/putaways processed

4. Look for timing issues

5. Check for process issues

6. Receiving errors
7. Picking mistakes
8. Location confusion

9. Data entry problems

10. Take corrective action

11. Retrain staff if needed
12. Improve labeling
13. Fix location issues
14. Update procedures

Handle Found Issues¶

Damaged Items: - Set aside damaged products - Create adjustment to remove - Document damage - Follow disposal process

Wrong Location: - Note correct location - Transfer items to proper location - Update system

Expired Products: - Remove from sellable inventory - Create adjustment - Follow company expiration policy

Cycle Count Schedule¶

Frequency Guidelines¶

High-Value Items (A): - Count monthly - Examples: Electronics, high-cost materials - Highest impact on financials

Medium-Value Items (B): - Count quarterly - Examples: Standard products - Moderate financial impact

Low-Value Items (C): - Count annually - Examples: Supplies, low-cost items - Minimal financial impact

Daily Count Goals¶

Typical targets: - 10-20 locations per day (small warehouse) - 20-50 locations per day (medium warehouse) - 50+ locations per day (large warehouse)

Best Practices¶

Counting Accuracy¶

• ✅ Count during slow periods - Fewer interruptions
• ✅ Same person recounts - Consistency
• ✅ Use scale for bulk - Faster, more accurate
• ✅ Organize before counting - Easier to count
• ✅ Good lighting - Prevent mistakes

Process Improvement¶

• ✅ Track accuracy by counter - Training opportunities
• ✅ Analyze variance patterns - Find root causes
• ✅ Review high-variance items - Process issues
• ✅ Document findings - Continuous improvement
• ✅ Share learnings - Team education

Common Issues to Watch¶

Frequent Variances: - May indicate theft or shrinkage - Process problems (receiving, picking) - Location management issues - Training needs

Specific Products: - Always wrong? Check receiving process - Wrong location? Improve labeling - Damaged frequently? Storage issues

Cycle Count Metrics¶

Key Performance Indicators¶

Count Accuracy: - Target: 98%+ first-count accuracy - Measure: (Correct counts ÷ Total counts) × 100

Cycle Count Coverage: - All locations counted per schedule - A items monthly, B quarterly, C annually

Variance Rates: - Track $ value of variances - Monitor trends over time

Time per Count: - Track efficiency - Identify training needs

Reporting¶

1. Navigate to Reports → Inventory
2. Select "Cycle Count Report"
3. View:
4. Count accuracy by user
5. Variance trends
6. Coverage completion
7. Problem products/locations

Troubleshooting¶

Product Not in Location¶

Possible Reasons: - Already picked for order - Moved to different location - Receiving not completed - Data entry error

Solutions: 1. Check if picked recently 2. Look in nearby locations 3. Verify with supervisor 4. Record as zero if not found

Cannot Scan Barcode¶

Solutions: - Clean barcode - Use manual SKU entry - Use camera scan mode - Report damaged barcode

System Shows Different Location¶

Solutions: - Verify you're in correct location - Check if item was moved - Item may be in multiple locations - Report if product in wrong location

Recount Still Shows Variance¶

Solutions: - Have different person count - Supervisor verification - Check for partial units - Review recent transactions - Accept count if accurate

Mobile Cycle Counting¶

Mobile Advantages¶

• On-the-floor counting - No desk needed
• Barcode scanning - Camera-based
• Real-time updates - Immediate system sync
• Touch-friendly - Large number pads
• Offline capable - Count without WiFi

Mobile Workflow¶

1. View count assignment
2. Navigate to location
3. Scan location to confirm
4. Scan each product
5. Enter count on number pad
6. Submit when complete

Related Guides¶

• Inventory Adjustments SOP - How to adjust inventory
• Inventory Management - Complete guide
• Serial Number Lookup - Find and verify serial numbers
• Serial & Lot Tracking - Serial number tracking guide
• Mobile Workflows - Mobile counting tips
• Reports - Count accuracy reports

Need Help?¶

Standard Operating Procedure | Last Updated: January 2025