How to Setup Cycle Counting vs Full Physical Inventory: Pros & Cons
Efficient inventory management is the backbone of any manufacturing, distribution, or retail operation. Two of the most common approaches to keeping stock accurate are cycle counting and full physical inventory counts. Both aim to ensure records reflect reality, but they differ in execution, costs, and operational impact.
In this article, we’ll cover:
- What cycle counting and full physical inventory involve
- How to set up each method
- Their respective pros and cons
- How modern ERP systems like Kechie make both approaches easier
What is Cycle Counting?
Cycle counting is an ongoing inventory audit method where small subsets of inventory are counted on a rotating basis. Instead of shutting down operations to count everything at once, you count selected SKUs regularly—daily, weekly, or monthly—based on your business needs.
How to Setup Cycle Counting
1. Choose a Counting Method:
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- ABC Analysis: High-value or high-volume items (“A”) are counted more frequently than low-value items (“C”).
- Random Sampling: Randomly select items to spread counts across categories.
- Control Group: Count the same items repeatedly to identify recurring issues.
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2. Schedule Counts: Build a rotation so every item is checked within a defined period (e.g., quarterly or semi-annually).
3. Use ERP/WMS Support: Integrate your counting program with software to flag discrepancies, make adjustments, and analyze trends.
What is Full Physical Inventory?
Full physical inventory is the traditional method where all items are counted at once, often requiring operations to pause. Typically performed annually or semi-annually, it provides a comprehensive snapshot of inventory accuracy.
How to Setup Full Physical Inventory
1. Plan Ahead: Pick a slow season or end-of-year period to minimize disruption.
2. Organize the Warehouse: Label bins, tidy aisles, and group products for easier access.
3. Assign Teams: Use a counter/verifier system to reduce human error.
4. Count, Verify, Reconcile: Match physical counts with system records and investigate discrepancies.
Pros & Cons of Cycle Counting vs Full Physical Inventory
Where Kechie Fits In
The right ERP software makes inventory management smoother and more accurate. Kechie ERP offers a robust cycle counting module with unmatched flexibility, allowing companies to tailor counts to their unique operations.
With Kechie, cycle counts can be configured by:
- ABC Code – prioritize critical items for more frequent checks
- Location – focus on specific warehouses, bins, or zones
- Item or Category – group counts by SKU or product family
- Number of Days in the Week – schedule based on business rhythms and staffing availability
This flexibility allows businesses to design a cycle count program that matches their exact needs—whether that means daily checks on high-value inventory or weekly audits across entire categories.
At the same time, Kechie also supports full physical inventory counts whenever necessary, such as year-end audits, compliance, or financial reporting.
Benefits of Using Kechie for Inventory Counting
- Reduced discrepancies with ongoing, tailored cycle counts
- Compliance-ready reporting with full physical count support
- Lower labor costs through automation and smart scheduling
- Improved supply chain visibility across warehouses and categories
With Kechie, companies don’t have to choose between cycle counting and physical inventory—they can confidently use both within one integrated platform.
Final Thoughts
Both cycle counting and full physical inventory are valuable methods in inventory management. Cycle counting minimizes disruption and keeps records accurate year-round, while full physical inventory provides a clear baseline for compliance and financial reporting.
The best approach for many businesses is a hybrid model: use cycle counts regularly to stay accurate, and run one full physical count annually. With Kechie ERP, you can do exactly that—configure flexible cycle counts by ABC code, location, item, or category, and still run physical inventories when needed.
Contact us today to learn more about how Kechie ERP can transform your inventory management practices!
