Physical Inventory Vs Cycle counts

Physical inventory is an activity in the DCs/ warehouse locations which is carried out once/ twice in a year. This actually carried for one basic and important reason of inventory control is ‘to keep the count correct and reflect it correctly in the system’. Whenever this physical inventory is going to be carried out in the facility, the facility is supposed to have completed all the putaways/ picks/ replenishment/ moves/ deliveries/ loadings before the last shift of the facility. When the physical inventory process starts, all the access levels of users will be withdrawn from their use of applications which leads to integrity of inventory. During this, the system tries to find what are the pending activities to the locations, finds the Data Base integrity (two items at one location, qtys mismatch), accordingly the systems generates checks for those locations. A user goes to the location verifies the qtys, this leads to another check for the location for the confirmation. But this time the same user may not continue with the check for the location, this time another user has to do. This continues till the qtys match and one round of confirmation of qty match. Accordingly the HOST is notified with UPDATE in qty. This is not a compulsory activity which is being carried out in every RDC/ warehouse, in fact its rare to carry out this in RDCs, this may also change from the organization to organization, size of the warehouse locations and working hours. One warehouse with a smaller capacity may carry this out twice in a year by picking out any random day on which its entire operations are anyhow closed on that day. But this may not possible for all warehouses which run 24x7x365. Organizations may not afford to keep these facilities/ warehouses  shut down for a day or two where every day these facilities run through a huge product/ freight inbound/outbound traffic.

On the other hand, during cycle counts, the application increments/ decrements the HOST quantities while in physical inventory it updates the qty with the new count. This is carried out by the inventory specialists in the RDC locations minimum once in a quarter. The frequency of cycle counts for each of the item may vary depending upon the price of the product and nature of the product. Moves may generate out of these activities to keep the locations replenished.

Both of these activities in the RDCs/ warehouses make sure the availability of product at any point of time for delivery to the store/ customer whenever they are needed without loosing the customer going to next door. This also maintains the integrity in the inventory counts, avoids product shrinkage/ loss.