Effective inventory management is a crucial pillar of the supply chain, directly influencing the profitability and efficiency of operations. At the core of this management is the obligation to conduct an annual stock inventory to substantiate, from a tax perspective, the accuracy of the evaluation of the assets and liabilities of the company’s heritage.
Beyond this regulatory necessity, stock inventory serves primarily to generate various performance indicators to optimize the supply chain effectively.
To meet this legal requirement, businesses have the option to choose from several inventory methods, each presenting its own advantages and disadvantages: annual inventory, cycle counting inventory, periodic inventory, or perpetual inventory.
But, what is cycle counting? What is its role, its advantages? How can it be implemented to optimize your operations?
The annual inventory is an inventory conducted 1 to 2 times a year, often close to the end of the financial statement period. It involves taking stock of all inventory in a warehouse and is considered the traditional inventory method.
Conducting an annual inventory can be a good choice for businesses with limited stock or whose operations can be temporarily halted without significant disruption. During an annual inventory, the entire stock must be scanned in a short period, often requiring a complete interruption of all logistical activities and the allocation of significant financial resources (such as renting lifts, mobilizing personnel, etc.).
To audit the entirety of an inventory in a medium-sized warehouse (18,500m²), with an average of 120 locations scanned per hour, it would require:
On the contrary, cycle counting, by segmenting inventory activities, allows for partial inventories of the warehouse throughout the year, ensuring the continuity of logistical activities. Requiring annual planning, it particularly enhances the performance of the logistics warehouse by:
These two approaches can complement or substitute each other: many companies implement cycle counting in addition to an annual physical inventory to have complete control over their inventory process. It’s also possible to replace the legal annual inventory with cycle counting. In this case, the inventory procedure must be validated by an auditor who ensures the reliability of the implemented inventory process.
You’ve made the decision to implement cycle counting as a complement or replacement for your traditional inventory processes! What are the different methods and steps to ensure the effectiveness of your cycle counting?
The implementation of a cycle counting requires thorough planning. To establish a reliable and effective procedure, it is essential to consider:
Number of References: Determine in advance how many references are stored in the logistics warehouse. Among these references, you can identify, for example, the number of high-value products, products that require more frequent verification, or products based on their location (references stored at height or in picking areas).
Available Resources for Inventory: Estimate the number of employees and the time they can allocate to stock counting.
Time Windows for Cycle Counting: Depending on the industry, certain time frames may be more suitable for cycle counting, such as late afternoon when the bulk of the day’s logistic flow has passed.
Counting Frequency: Evaluate how often you want to check your stock references.
To enhance stock control, you can employ different cycle counting methods, such as:
ABC Counting: Based on the Pareto principle (20% of references represent 80% of sales), this is one of the most commonly used techniques. Products are classified into different categories: Category A items represent references that generate a significant portion of revenue, Category B items account for 25% of references and 10% of revenue, etc. Categories can be defined based on sales volume or the market value of products. Subsequently, the counting frequency for different categories needs to be determined (counting high-volume or high-value products may be beneficial as these references have the most impact on business).
Counting by Physical Area: Independently of references, the warehouse is divided into several zones (e.g., aisles). The counter is responsible for checking all references in their assigned zone.
Control Group: Involves counting a small group of references multiple times over a very short period to reveal errors in counting techniques.
Random Sampling: Random selection of several references to be counted. This counting can be done daily to ensure the reliability of the stock.
Most companies combine these methods in a hybrid approach to achieve the most accurate results possible.
Implementing a cycle counting process can be tedious: automating all or part of your process can significantly improve inventory accuracy and enable you to generate reliable indicators.
Moreover, in addition to its precision, automation can also help reduce labor costs (fewer workplace accidents, increased productivity) and ensure better visibility into the state of your stocks.
Various solutions are available to automate your inventory, including:
We have designed the EYESEE inventory drone solution to streamline and enhance inventory processes, particularly cycle counting.
Its primary operation is based on physical area counting (although reconnaissance missions are possible) of full SKUs (wrapped and complete pallets).
Due to its lightweight design and infrastructure-free operation, it can be moved from aisle to aisle and can scan an average of 500 locations per hour. Therefore, its use is suitable for both annual fiscal inventory and cycle counting.
Its capability to operate up to 20 meters in height also facilitates internal organization: there is no need to reserve or rent lifts to scan high locations, making it particularly easy to use in concurrent activities and, thus, in cycle counting.
Several users of the EYESEE solution have transitioned their internal processes to cycle counting. If you would like to discover all the benefits of implementing an EYESEE drone, feel free to contact our teams or fill out the form below to assess the eligibility of your logistics site.
Grenoble, September 28, 2023 – DARWIN DRONES, an inventory company dedicated to the marketing, support and software development of the EYESEE solution for the logistics market, has just completed its first study in collaboration with ADEME.
Already committed internally to a proactive CSR approach, the company has decided to continue its efforts and has initiated an initial diagnosis to analyze the environmental performance of its solution in order to define development priorities.
« Premiers pas éco-conception » project conducted during this life cycle assesment focuses on two phases : first, the transportation phase of the equipment to the inventory location, and then the usage phase (primarily the energy consumed during the inventory).
The initial results are encouraging : the study confirms that the EYESEE solution has a lower environmental impact compared to traditional inventory methods (up to 4 times more efficient).
Eric Pierrel, president of the inventory company Darwin Drones, is pleased with these initial results, convinced that the future of logistics lies in reducing its environmental impact through automation and intelligent inventory management :
« The logistics sector currently represents 10% of the national GDP, with a turnover of 200 billion euros and employing 1.8 million people in France. It is a vital organ for the functioning of our society. Unfortunately, it is also a sector with a significant environmental impact. Being able to contribute, on ours cale, to a reduction in our carbon footprint is already a victory, and we are committed to continuing our efforts in this direction ».
There is no doubt that this initial approach will directly interest the end customers of Darwin Drones as the results provide decision-making keys to choose the most suitable solution to address the environmental challenges of their logistics chains.
Logistics in motion
This action is part of the broader transformation of the logistics industry. In recent years, the sector has been increasing its efforts towards greater energy efficiency.
France Logistique has developed an CSR framework for the transport and logistics sector to assist them in implementing an CSR policy. Additionally, they have created a charter of mutual commitments comprising about thirty commitments to accelerate the contribution of logistics real estate to ecological transition and economic recovery.
In 2024, Darwin Drones plans to further develop its CSR initiatives by conducting new comprehensive impact assessments to continue its growth while ensuring the environmental cohérence of its activities.
Press contact : Darwin Drones – Justine LUCAS – +33 7 70 02 95 25 – justine.lucas@eyesee-drone.com
Founded in 2021 and headquartered in Grenoble, Darwin Drones specializes in the development and marketing of industrial logistics automation solutions, particularly using drones. The inventory company also provides associated service offerings. The company is dedicated to marketing, supporting, and software development of the EYESEE solution for the logistics market.
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