Cycle counting

Completed

Cycle counting is a systematic approach of verifying inventory accuracy by conducting frequent and regular counts of a subset of items within a warehouse. Unlike traditional annual or periodic physical inventory counts, cycle counting involves counting a small portion of inventory on a continuous basis. You can base the selection of items for cycle counts on criteria such as value, demand, or classification.

Diagram of cycle counting.

The cycle counting process involves three steps:

  1. Create cycle counting work. You can create cycle counting work automatically based on threshold parameters for items or by using a cycle counting plan. Alternatively, you can manually create cycle counting work by using the item or warehouse parameters on the Cycle count work by item page or the Cycle count work by location page.

  2. Process the cycle count. After cycle counting work is created, you can complete the cycle counting work by counting items in a warehouse location and using a mobile device to enter the result in Microsoft Dynamics 365 Supply Chain Management. Alternatively, you can count items in a warehouse location without creating cycle counting work. This process is referred to as spot cycle counting.

  3. Resolve differences in the counted value. After a cycle count, items that have differences in the counted value have a work status of Pending review on the All work page. You can resolve these differences on the Cycle count work pending review page.

Digram of a automatic versus manual flowchart.

General setup

Before you can begin cycle counting, you need to set up the following parameters:

  • Workers

  • Work pools

  • Mobile device menu items

  • Location profile settings

  • Warehouse management

  • Priority of counting work

Worker parameters

You need to create work user accounts for your workers and then assign mobile device menus to their respective user IDs. To set up your workers, follow these steps:

  1. Under Modules, go to Warehouse management > Setup > Worker.

  2. In the list pane, select Julia Funderburk.

  3. On the Users FastTab, select the row with the following values, or create a new row if necessary:

    • User ID - 61

    • Username - WH61

    • Default warehouse - 61

    • Menu name - Main

  4. On the Work FastTab, ensure that the following values are set for user 61, adjusting if needed:

    • Is cycle count supervisor - No

    • Maximum percentage limit - 0

    • Maximum quantity limit - 0

Work pool parameters

You need to create work pools to organize and separate the warehouse work based on the type of work. To do so, go to Warehouse management > Setup > Work > Work pools. You can use work pools to segregate warehouse work based on the type of work, which in this case is cycle counting work.

Make sure that a record exists with the following settings:

  • Work pool ID - CycleCount

  • Description - Cycle Count

Mobile device menu item parameters

You can create menu items for user-directed cycle counting, cycle count grouping, and spot cycle counting in the system by using the Mobile device menu items page. Additionally, you can set up menus.

To enable the mobile device, follow these steps:

  1. Go to Warehouse management > Setup > Mobile device > Mobile device menu items.

  2. Select New.

  3. In the Menu item name field, enter a value.

  4. In the Title view, enter a value.

  5. In the Mode field, select Work.

  6. Set the Use existing work option to Yes. As a result, the system searches for existing work when the mobile device menu is used.

  7. In the Directed field, select System directed so that the system directs the warehouse worker to open work that's in defined work classes.

To create work classes, follow these steps:

  1. Expand the Work classes FastTab.

  2. Create two work classes that you can use with this mobile device menu item. When you use the menu item, the system queries these work classes, and then shows the work with the highest priority.

  3. Select New.

  4. In the Work Class ID field, select a value and then select New.

  5. In the Work class ID field, select a value.

  6. In the Action pane, select Save and close the page.

  7. Go to Warehouse management > Setup > Mobile device > Mobile device menu.

  8. In the list, find and select the record that you want.

  9. In the tree, select the menu item that you created.

  10. Select Edit and then select the arrow to add the menu item to the menu.

  11. Select Save.

Location profile setting parameters

You need to update the location profile by selecting the Allow cycle counting option on the Location profiles screen. Usually, you define and manage different physical locations within a facility separately in the inventory or warehouse management systems. A location profile contains information about a particular location, such as its name, description, size, capacity, and other attributes.

Warehouse management parameters

On the Warehouse management screen, you need to set up parameters, including the default adjustment type code, work class ID, and work priority.

Priority of counting work parameters

By setting the priority of counting work, you can help individuals or organizations manage their counting-related tasks more effectively, ensuring that they address the most important or time-sensitive activities first. Prioritization helps streamline workflows, improve efficiency, and ensure accurate and timely results in various fields and contexts.

To set up prioritization, follow these steps:

  1. Go to Warehouse management > Setup > Warehouse management parameters.

  2. Select the Cycle counting tab.

  3. In the Default cycle count work priority field, enter a number. This step changes the priority of cycle counting work compared to other types of work in the warehouse. By entering a number that's lower than the number for other types of work, you raise the priority of the cycle counting work.

  4. Select Save and then close the page.

Cycle counting workers

The Work users page plays a crucial role in setting up workers for cycle counting tasks. You can use this page to set up individuals who are responsible for completing the actual cycle counting work, including those who have the authority to approve or reject the cycle counts that warehouse workers complete.

Users who are assigned to perform cycle count work don't require specific setup. However, you need to consider extra parameters for workers who are involved in the approval or rejection of cycle counting tasks.

These extra parameters are designed to ensure accuracy and accountability in the cycle counting process. They might include factors such as experience level, expertise, or managerial roles. By setting up these parameters appropriately, you can establish a streamlined workflow that ensures accurate cycle counting and effective decision making in the warehouse.

Work pools

You can use work pools to organize work into groups. For example, you can create a work pool to classify work that occurs in a particular warehouse location. For all work types, except counting, you can assign a work pool to a work template.

For cycle counting, you can assign a work pool to cycle count plans. You can assign a work pool to a cycle count threshold and perform a cycle count work by location and some cycle count work by item.

When you use work templates to create work, the system automatically assigns the work pool to the work. You can also manually assign work pools to work by using the Location directives page.

After a warehouse worker defines the menu items to use for performing work on a mobile device, they can scan the work pool ID. Then, the system automatically assigns the work that's related to the work pool ID to the work user on the mobile device until all work is completed.

Guided cycle counting

Guided cycle counting involves directing the workers to count particular items. During the cycle count, if an incorrect quantity is counted, the worker receives a prompt to recount the items. This prompt serves as a reminder for the worker to recount the items in question, ensuring that the final count is accurate. By prompting the worker to double-check and correct errors, guided cycle counting helps maintain the integrity of inventory records and improves overall accuracy in the counting process.

The basic steps in the guided cycle are:

  1. Create cycle counting work.

  2. Verify that work is created.

  3. Perform a cycle count.

  4. Approve cycle counting work.

  5. Review cycle counting work.

Blind cycle counting

In a blind cycle count, a worker is tasked with counting items in a specific location without receiving guidance or indication regarding which specific items they should count. This method allows for independent counting without predetermined instructions.

During the blind cycle counting process, you can determine the type of information that's displayed on the worker's mobile device. Additionally, you can specify the quantity or value that needs to be scanned or entered during the counting process. By controlling these aspects, you can customize the parameters of the cycle count to align with your specific inventory management requirements.

A blind cycle count involves personnel physically counting inventory without having access to the specific details that are displayed in electronic or other inventory systems. You can apply this method to evaluate the accuracy and reliability of automated inventory systems.

A blind cycle count is a way to independently verify the integrity of the inventory system because it eliminates potential biases or preconceived notions about the items being counted. By focusing solely on the physical presence of items and recording accurate counts without any prior knowledge, blind cycle counts help ensure the accuracy of inventory records.

Spot cycle counting

You would use a spot cycle count when you find a variance while doing other work. These variances can include breakage, misplaced items, or physical movements that weren't recorded with an inventory movement. Spot counts don't require you to create work prior to performing the count.

You can use spot counts as a quick way to record and remedy inventory questions as they're discovered on the warehouse floor.

For example, you're directed to put away items into a specific location that's empty, according to the system. However, when you arrive, you find that the location is filled with another item. Then, you can perform a spot count on the location to update the system.

When you use license plate control in the warehouse, a spot count can prevent the cycle count from occurring or allow it. Then, the spot count can automatically create a transfer instead of a movement. To enable the spot counts, set the Allow license plate moves during cycle counting option to Yes.

Thresholds

You can create cycle count work by using thresholds. Cycle counting thresholds automatically create cycle counting work when the threshold limit is reached.

As warehouse workers implement picking work in the warehouse, if a threshold is reached, the system will automatically create cycle count work for that location in the warehouse. You can set up each threshold by using item and queries, which the system evaluates while the warehouse workers are picking.

You can set up a cycle counting plan to create cycle counting work immediately or periodically. When you create counting work, it contains the information about which location to count as part of the counting work line. The on-hand inventory that's associated with this location isn't blocked; therefore, it's available for reservation and outbound processing, even though open counting work exists.

Example

The threshold type of a threshold is set to 10 percent. If the quantity is 3000 when the inventory reaches 300, then the system immediately creates cycle counting work. Alternatively, you could set up a time fence, such as 7 days or 14 days before another cycle is performed.

The threshold types can be a check on a quantity and unit of measure combination or a volumetric percentage check. If the inventory falls below this threshold when you're doing picking work, and the last counted date on the location falls outside of the days between setup on the threshold, then the system creates cycle count work.

You can set up Warehouse Management to ensure that warehouse workers run the cycle count work immediately after the threshold is reached.

To create a counting threshold, follow these steps:

  1. Go to Warehouse management > Setup > Cycle counting > Cycle count thresholds.

  2. Select New.

  3. In the Cycle counting threshold ID field, enter a value.

  4. Set the Process cycle counting immediately option to Yes.

  5. In the Description field, enter a value.

  6. Select Save.

  7. Select the Select locations option.

  8. In the list, select desired row.

  9. In the Criteria field, select a value.

  10. Select OK.

  11. Close the page

Create cycle counting work automatically

The two ways to schedule recurring creation of cycle counting work are:

  • Set up cycle counting thresholds - This method indicates the quantity or percentage limit of inventory items. With this method, the system automatically creates cycle counting work when the threshold limit is reached.

    For example, 60 items are in a location that has a cycle counting threshold of 40. During a sales order transaction, warehouse workers pick 25 items from the location and put them in a staging location. Because the new item count is 35 and less than the threshold quantity, the system will automatically create cycle counting work for the location.

  • Set up a cycle counting plan - This method creates cycle counting work immediately or periodically through a batch job. When cycle counting work is created, the counting work line includes information about the location to count. The on-hand inventory that's associated with this location isn't blocked; therefore, it's available for reservation and outbound processing, even though open counting work exists.

    Consider the following examples for setting up a cycle counting plan:

    • An item is available in three locations in the warehouse, and the maximum number of cycle counts is set to 2. In this case, when you run the cycle counting plan, two cycle counts are created for the two locations where the item is present.

    • You set the number of days between cycle counts to 5. In this case, cycle counting work is created every five days. However, if cycle counting work is processed on day three, the next cycle counting work will be created five days after the last cycle counting was processed, on day eight.