What it produces
Accurate on-hand by location, plus an adjustment trail your auditors can rely on.
Workflows
Cycle Counts
an inventory practice of counting a small set of items on a rotating schedule instead of shutting down for a full physical count
The job in one minute
Who owns it
Inventory control, with warehouse counters, receiving, the cost accountant and the controller.
How often
Daily.
- 01Select
- 02Count
- 03Approve
Why it hurts
A count is quick. The variance is slow. Someone has to work out whether the 40 missing pieces were stolen, scrapped without a transaction, received to the wrong bin, issued to a job twice or counted mid-pick.
Skip that research and the adjustment just moves the error into the P&L. The same part is wrong again next month. And a count program auditors cannot trust means a shutdown weekend for the annual physical. One they can trust may replace it.
Systems it touches
The agent reads scanner uploads, checks carrier portals to see if a "shortage" is actually freight delivered but not yet received, and files count sheets and approval packets by period. Product →
- ERP
- Barcode and mobile scanners
- Carrier portals
- Outlook
- Excel
- SharePoint or OneDrive
12 steps · 5 actions · 6 decisions · 1 human reviews
The workflow, step by step
Action Decision Human review Select a step in the flowchart to jump to it.
Show the flowchart
- 01 Decision · Agent Select items by class frequency, plus triggers
- 02 Decision · Agent Skip or freeze locations with open receipts, picks or transfers
- 03 Action · ERP Generate counts in the ERP and send counters their sequence
- 04 Action · Scanner Read counts from scanner uploads or
- 05 Decision · Agent Compute the variance in units and dollars
- 06 Decision · Agent Outside tolerance, order a recount by a different counter
- 07 Action · Agent Research
- 08 Decision · Agent A variance fully explained by a transaction posted after the snapshot…
- 09 · Human review · The approver The approver for that dollar tier sees counts
- 10 Action · Agent Post the approved adjustment with its reason code and read back…
- 11 Action · Agent Log the root cause
- 12 Decision · Agent Items or locations wrong two counts in a row get counted more often…
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Decision · Agent
Select items by class frequency, plus triggers: negative on-hand, zero on-hand with open demand, a recent adjustment, a short pick.
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Decision · Agent
Skip or freeze locations with open receipts, picks or transfers.
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Action · ERP
Generate counts in the ERP and send counters their sequence. Counters never see the expected quantity.
-
Action · Scanner
Read counts from scanner uploads or, for paper sheets, by reading the handwriting with a confidence check.
-
Decision · Agent
Compute the variance in units and dollars. Inside the class tolerance, accept.
-
Decision · Agent
Outside tolerance, order a recount by a different counter.
-
Action · Agent
Research: receipts, issues, transfers and backflushes since the last good count, unposted receipts on the dock and unit mismatches.
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Decision · Agent
A variance fully explained by a transaction posted after the snapshot is a timing difference, not an adjustment.
-
Human review · The approver
The approver for that dollar tier sees counts, recount, research and a proposed reason code, then approves, rejects or orders another count.
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Action · Agent
Post the approved adjustment with its reason code and read back on-hand to confirm it saved.
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Action · Agent
Log the root cause: transaction error, unit error, location error, unrecorded scrap or unexplained.
-
Decision · Agent
Items or locations wrong two counts in a row get counted more often and go to the materials manager.
✓ Done
Rules vs judgment
The counter can never approve, and the recount must come from a different person. Finance owns the tolerance and tier tables, and every change is versioned.
- Selection, tolerance, recount, approval tier, transaction research, timing test
- Handwritten count sheets (unreadable goes to recount); a suggested root cause from the research
- Every adjustment outside tolerance, at its value tier; unexplained losses and suspected theft; changes to tolerances and count frequencies
When it stops
Recount
- 01
Third count or inventory control goes on site.
- 02
Search sister locations for a misplaced receipt or transfer before booking any gain or loss.
Research
- 03
A location or lot correction, not a quantity change.
- 04
Receiving posts it, then the variance is rechecked.
Approve
- 05
Excluded from the adjustment.
- 06
Flagged as a unit error before any recount.
What you end up with
- Variances already researched and ranked by value each morning.
- Small variances that never wait on the controller, and large ones that always do.
- Per count: why the item was chosen, both counts and counters, the research, the approver and the posted adjustment. Per period: counts done against schedule and accuracy by class.
- A repeat-offender list with causes, not just part numbers.
Questions
Can cycle counts replace the annual physical inventory?
They can, if records are well kept and the program is documented. Management and the auditors decide; the agent produces the evidence they ask for.
How should tolerances be set?
By class and value: tight for expensive items, looser for cheap bulk parts. Start with what finance will write off without investigating.
Our ABC classes are years old. Where do we start?
The agent recomputes classes from twelve months of usage, lists what would move and waits for inventory control to approve.
How does it work across several plants?
Each site gets its own tables. A shortage that matches an open transfer from another plant is treated as in transit before anyone calls it a loss.
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