Some warehouse teams count every item the same way, even when some products are more valuable or move faster. To solve this, we use a cycle counting process that follows the ABC method, helping us focus on the items that matter most.
Below, we’ll explain how the method works, how to group your items, and how to build a counting plan that supports better inventory control.
What is Cycle Counting?
Cycle counting is when we count small groups of items every day instead of doing one big yearly inventory. This helps us stay accurate all year long without stopping warehouse operations.
When we use the ABC method for cycle counting, we’re not just counting at random. We’re using a plan to decide which items to count and how often. That way, we focus on what really matters.
What is the ABC Method in Inventory?
The ABC method is a way to classify inventory into three groups:
- A items are the most important. These may be high in value, fast-moving, or critical to operations.
- B items are somewhat important, but don’t move or cost as much.
- C items are the least important. These are slow-moving, low-value items.
Each group gets its own counting schedule based on how likely it is to go wrong or cause a problem.
Here’s a sample schedule we often recommend:
- A Items: Count every other week
- B Items: Count once a quarter
- C Items: Count once a year
This setup keeps our focus on the items that are most likely to be wrong and most likely to hurt operations if they’re off.
Need expert help with inventory management? Contact Monarch for a free consultation and see how we can help you set up smarter cycle counts using the ABC method.
How to Classify Items for ABC Cycle Counting
There are many ways to break down your inventory using the ABC method. It all depends on what matters most in your business.
By Value
Look at which items cost the most. If one part costs 10 times more than the others, it’s worth counting more often.
By Space Used
If a part takes up a lot of room in your warehouse, it can impact layout and workflow. These should be reviewed more often.
By Quantity or Volume
If you store thousands of items, there’s a higher chance of counting mistakes. Large volumes can make errors harder to find.
By Velocity (Turn Rate)
The faster an item moves, the more likely it is to be wrong. High-turnover items should be counted more often.
Pro Tip: Don’t use just one method. Use a mix of value, space, and velocity to get a full picture of what matters most.
Why Cycle Counting Using the ABC Method Works
This method helps avoid common inventory problems:
- Wasting time on low-value items
- Stockouts on high-demand parts
- Poor data in your WMS or ERP
- Missed sales or delays in shipping
By focusing on high-impact items, we reduce risk and improve accuracy across the board.
Key Takeaway
Using the ABC method for cycle counting is all about majoring in the majors. Focus on what matters most, whether that’s cost, speed, or space. Don’t spend time counting the wrong things.
- Classify items by what impacts your business most
- Count your A items often, B items sometimes, and C items rarely
- Use data to adjust over time and improve your results
Ready to Improve Your Inventory Accuracy?
We’ve helped clients across retail, healthcare, and industrial sectors clean up their inventory and reduce shrinkage. If you’re ready to make your counts count, schedule a call with Monarch today. Let’s make your inventory work for you.
