An organization with a warehouse will have to count its inventory at least once a year. The physical stock must be matched with the recorded stock in their systems. This process is required primarily for financial and tax reporting purposes. At the end of a fiscal year, an organization should have accurate figures to report the correct assets on the balance sheet and to identify and correct issues such as shrinkage, damage, or misplacements.
Advanced Warehouse Management offers the following options to support this process:
- Cycle counting
- Spot counting
I will be publishing two blogs on the counting processes in Dynamics. The first blog will focus on cycle counting. The second will deal with spot counting.
What is cycle counting?
Cycle counting refers to an inventory auditing process in which a small part of the inventory is counted on a rotating schedule . This allows the entire inventory to be checked repeatedly without requiring an entire company closure for a physical count.
What are the benefits for a company?
- Regular small counts help to keep track of errors continuously, keeping inventory records more accurate.
- There's no need to close operations for an entire physical inventory — businesses can continue running smoothly.
- Issues such as theft, damage, or misplacement are detected sooner, which allows a company to resolve these issues more efficiently .
Configuration
1. A cycle count work class.
2. An inventory adjustment type: This setting determines which journal is used to post the counting differences.
3. A default adjustment type and a default cycle count work class must be configured. Optionally, a priority could be set as well. The journal type is used for posting the counting differences, and the work class is used to create the cycle count work.
4. A work template is required for the creation of cycle count work.
5. The ‘Allow cycle counting’ parameter must be set as ‘Yes’ on the location profile.
6. The ‘Cycle counting supervisor’ parameter has to be validated for the user. This parameter determines whether counting results need to be approved in the event of a discrepancy.
7. A cycle count threshold could be configured if preferred. This threshold allows the system to automatically create cycle count work when the inventory quantity falls below a specified level. For example, the system will start cycle count work if the quantity is 2 pieces.
8. A cycle count plan can be used for the automatic creation of cycle count work based on parameters such as items and locations:
| Number | description |
| 1 | Identification of the cycle count plan |
| 2 | Description of the cycle count plan |
| 3 | The work pool for the cycle count plan (optional) |
| 4 | Controls the number of cycle count works, e.g., if an item is available from three locations in the warehouse while the maximum number of cycle counts is set as 2. In this case, when you run the cycle counting plan, two cycle counts will be created for the two locations where the item is present. |
| 5 | This setting determines how often cycle count work is executed |
| 6 | Include or exclude empty locations during counting |
| 7 | Work template for the creation of work |
| 8 | This setting allows users to set up a query for specific products. For instance, this cycle count plan is only applicable for product X. |
| 9 | Creation of cycle count work for the selected cycle count plan |
| 10 | This setting allows users to manage the applicable locations. |
9. A mobile device menu item has to be configured to execute the cycle count.
10. Through the ‘Cycle counting’ menu item, additional parameters can be configured, such as the number of attempts allowed in case of a counting difference and whether or not the warehouse worker could change the counting reason code.
11. A menu item which shows the cycle count work being open .
12. The mobile device menu items must be linked to a mobile device menu.
Demonstration
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1. An item with a physical inventory of 1000 in warehouse WH LT.
2. The item has been configured in the query of a cycle count plan. For this demonstration, only one item has been configured, but the ABC classification could also be used.
3. We select ‘Cycle count plan’ and click on ‘Process cycle count plan’.
4. The user has to click on ‘OK.’ Through this menu item, the user could also initiate a recurrent batch process which automatically creates cycle counting work on a recurring basis.
5. Cycle count work has now been created.
6. The warehouse worker opens the ‘Inventory’ menu item and then selects the ‘Counting’ menu item.
7. The warehouse worker clicks on the ‘Cycle count overview’ menu item.
8. The warehouse worker clicks on the tile to begin the registration of the count.
9. The warehouse worker enters the counted quantity (e.g., 950) and clicks on the ‘Confirm’ button.
10. In case of a quantity difference, a pop-up window appears asking whether the user wants to repeat the count and to confirm it again.
11. The warehouse app asks whether the worker is ready or if they would like to add additional items for counting. For this demonstration, the worker clicks on the ‘Confirm’ button.
12. Due the counting difference, the cycle count work isn’t completed yet. The cycle count work first needs to be reviewed by a supervisor.
13. The supervisor needs to review the counting result and should accept or reject the count. When the supervisor clicks on ‘Accept count’, the inventory will be updated from 1000 to 950. When the supervisor clicks on ‘Reject count’, the cycle count work remains open and the warehouse worker has to count the inventory again. For this demonstration the supervisor clicks on ‘Accept count’.
14. The status is now updated and a journal has been posted.
15. The physical inventory being updated to 950.
16. The counting history being updated.
