Full count or cycle count: which suits a Chinese-owned factory

Many Chinese-owned plants run their counts like this: stop production for a day or two, send everybody onto the floor, count every item from end to end, then argue about the differences the next day. Over the next year the books drift from the shelves again. Someone suggests cycle counting, a small slice every day, and head office or the auditor asks: if you do not count everything, why trust the figures? The two methods are not rivals. The useful question is what each is good at.

Full count: one complete answer

A full count means counting every item in every storage location at one cut-off time. Its strengths are plain:

• It covers all items, which is easiest to explain to head office and an auditor.
• It finds items that were never booked and goods sitting in the wrong place, and everybody does the same job on the same day.

The costs are just as plain. Production and shipping must stop for half a day to two or three days. Tired counters make more mistakes. And a full count shows only one moment, while differences may have piled up for eleven months, so tracing them is slow and the answers are often uncertain.

Cycle counting: turning one big exam into small daily quizzes

Cycle counting spreads the work across the year. Each day or week a fixed slice of items or locations is counted, every item is reached at least once a year, and important items are counted more often. Rotation can follow locations or item categories, and an item with negative stock, zero stock or a big fresh delivery can be added at any time.

Its main strength is that errors surface early. A mix-up from last week can still be traced to the document and the person involved this week. It needs no shutdown, and it trains storekeepers to keep books and shelves in line all the time.

It also demands more: a steady schedule, someone who keeps to it every day, and books that are reasonably reliable to begin with. Otherwise the team chases differences daily and soon loses patience. And whether head office and the auditor accept cycle-count records in place of a year-end full count should be confirmed with them in writing, in advance.

Choosing: four questions

1. Can you stop production? A plant that cannot halt its lines suits cycle counting. A plant that can close for a holiday may find a full count easier.
2. How accurate are the books now? If differences are routinely large, do one full count first, then move to cycles. If the books are already fairly good, cycle counting keeps them there.
3. How many items are there, and is the value concentrated? With many items and most of the value in a few of them, cycle counting by value class is the most efficient. A small store with few items can simply be counted in full.
4. What do head office and the auditor require? Some insist on a full year-end count; others accept spot checks plus a year of cycle records.

Combining the two: an invented example

Suppose a plant holds 3,000 items. Ranked by value, 200 A items hold most of the stock value, 600 B items sit in the middle and the other 2,200 are C items. (The split is for illustration only.)

A cycle plan could count A items monthly, B items quarterly and C items once a year. That is 200 + 200 + 183, about 580 items a month. Over the year it adds up to roughly 7,000 counts, more than the 3,000 of a single full count, but spread over about 250 working days it is only around 28 items a day, which one or two people can finish in half a day, with no stoppage.

At year-end, run a much smaller confirming count: all A items, a sample of B and C items, and the year's cycle records as supporting evidence for head office. Work that would have stopped the plant for two days may shrink to half a day.

In short

A full count is for reporting and clearing the slate, cycle counting is for staying accurate between reports, and a mix of both is often the best fit. UzWarehouse carries out year-end and quarterly counts and can help you design a counting plan that suits your plant, with results matched line by line to your 1C, Excel or ERP records.