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Cycle count
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==Risks== Cycle counts, like traditional physical inventory counts, can introduce inventory errors if the process is poorly executed. Multiple locations per item, work in process, and lag in paperwork processing can each contribute to errors. This problem can be mitigated with correct cycle count procedures that specify not only the part number to be counted but also the location it should be in. Some experts believe that cycle counting is only effective in companies with a well-defined inventory control procedure and a high degree of inventory accuracy but this has proven not to be true in practice. Cycle counts should only be conducted by trained and tested personnel to reduce the risks of inventory loss. Physical counts typically count all inventory in a fixed location and later reconcile with the inventory control system. A cycle count may, but not necessarily, start with the inventory control system and reconciles to locations. Its an important distinction when deciding who carries out the audit and how well trained they are. For example, if inventory exists in location A, B, and C and someone physically moves C to D without transaction, the inventory control system will continue to show inventory in A, B, and C. At the time of cycle count, the control system will direct the counter to A, B, and C where they will find C missing. Unless inventory in D, which could be anywhere, is discovered, C runs the risk of being adjusted to 0 and written off. This is why it's important to only use personnel with a proven ability (through testing) to conduct the audits correctly. If the personnel performing the counts is not taken seriously, D may not be picked up unless a physical count is performed so, an operation that relies only on untrained personnel conducting the cycle counts is likely to experience a net loss of inventory.
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