Cycle Counting in Manufacturing: An Electronics Warehouse Counted in One Shift Instead of Two Days

The company is fictional. Every action in Bimp is a real product feature.

Cycle counting in manufacturing means splitting the warehouse into zones with bin addresses and counting each zone with its own document within one shift. Below is the scenario of fictional Sensorix: how it gave up two days of downtime every quarter, and where to click in Bimp to do the same.

The storekeeper at Sensorix knows where the resistors are because he remembers. Anyone else needs half an hour to find a single reel. So once a quarter the warehouse and the shop floor stop, and the whole company counts components.

Why does a stock count stop the shop floor for two days?

Sensorix is a fictional contract electronics assembler: SMD placement, 35 people, two lines. The warehouse holds about 3,000 component part numbers, and some of them sit on the floor next to the lines. There is no address-based storage, and all the addresses are in the storekeeper’s head.

The count takes two days with no output. Seven people count for eight hours, which is 112 man-hours each time. The shop floor’s notional output is €4,000 per day, so four counts a year mean eight days of stopped lines. That is €32,000 of output pushed to later.

Discrepancies surface a month afterwards. Last time there were 140 items out of 3,000, or 4.7%: €2,600 of shortages and €500 of surpluses, a net difference of €2,100. By then nobody remembers where the reel went.

Can cycle counting in manufacturing run without stopping the shop floor?

You can, if you split the warehouse and count it in parts. Sensorix divided 3,000 items into six zones of 500. Two people count each zone within one shift while the rest of the warehouse and both lines keep working.

The steps in Bimp follow, with a link to the help page next to each one.

How do you split the warehouse into zones and bins?

Start with the structure of warehouses. In the “Warehouses” directory, create a group “Components” and six warehouses under it: “Hub A”, “Hub B”, “Hub C”, “Hub D”, “SMD Line 1”, “SMD Line 2”. The group only combines them and has no movements of its own (Warehouses).

Next come the storage locations. In the “Storage locations” directory, a rack is created as a “Bin group”, and a shelf or a bin inside it as a “Bin”. Names are up to the company, for example “Rack 3”, “Shelf B”, “Bin 14”. In the product card, on the “Storage locations” tab, you specify the warehouse, the bin and a priority if the item is kept in several places (Storage locations).

For 3,000 items this is a separate piece of work before the start. After it, the “Product balances without address” report shows the items left without a bin, and the “Empty storage locations” report gives the storekeeper a list of free addresses for a new delivery (Empty storage locations report).

How do you prevent negative stock?

Turn on the “Product stock control” switch under Settings → Accounting settings. After that a product cannot be sold if it is not in the warehouse (Stock control). The switch applies to sales. Write-off to the shop floor behaves differently: a scanner writes off only the quantity on hand and records the shortage in the document comment (Write-off).

Components move between the hub and the line with a “Stock transfer” document, operation kind “To warehouse”. The balance of the “From warehouse” drops and the balance of the “To warehouse” grows at the same moment, so the line sees its own stock (Stock transfer). Issue to the floor by scanner goes through Warehouse → Operations: scan the employee’s barcode, then the product barcodes, then the employee’s barcode again to close the session. The “Write-off” document is created automatically.

How do you count one zone?

Open Warehouse → Stock counts, click Create and choose “Stock count”. In the header, specify the warehouse of the zone, for example “SMD Line 1”, and the accounts for surpluses and shortages (Stock count).

The Fill in recorded quantity button adds every item of the warehouse with its recorded quantity. Storekeepers enter the actual quantity in the “Actual qty net” column, and barcodes can be scanned in a separate field. The system calculates the deviation in units and in money, and the “Deviations only” switch leaves just the rows with discrepancies. While the zone is being counted, it neither receives nor issues material. That is a few hours of one shift instead of two days.

Sensorix scheduled one cycle over six weeks, one zone a week, counting on Tuesdays when the lines are least loaded.

The items add up to 6 × 500 = 3,000 and the man-hours to 6 × 16 = 96. On the day when its zone is counted, a line takes material from stock issued ahead from the hub.

How do you close the discrepancies?

While the document has the status “New”, two documents are created from it. First Create based on and “Stock posting”: it receives the items with a surplus, and the unit cost should be checked before posting (Stock posting). Then Create based on and “Write-off”: it receives the shortages, which go to the loss item.

The date and time of both documents match the stock count time or follow it immediately. Otherwise the balance chronology breaks.

What does the owner see in the reports?

For the “SMD Line 1” zone (500 items) the count found 17 discrepancies. The four largest are in the table, and the other 13 items are combined in one row. Prices are fictional.

Shortages come to 6 + 28 + 20 + 80 = €134. Surpluses are 2 + 28 = €30. The difference is 30 - 134 = -€104, and this is the amount that passes through the posting and write-off documents.

The resistor discrepancy is traced with the “Stock Movement” report for the “SMD Line 1” warehouse over the six weeks since the last count. The opening balance was 50,000 pcs, transfers from the hub 15,000, scanner write-offs 17,000. The recorded quantity is 50,000 + 15,000 - 17,000 = 48,000 pcs, while the box holds 46,500. The report lists documents by day, and they lead to a 1,500-piece reel that the setup technician took without a write-off (Stock Movement report). After the two documents are posted, the closing balance in the report matches the actual count.

The “Stock with Reserve” report shows physical stock, reserve and free quantity in one table, so the planner does not promise to a customer order what is already reserved (Stock with Reserve report).

What does this give the company?

Downtime disappears from the schedule. Each zone is recounted every six weeks: 3,000 divided by 500 gives six zones, one per week. A quarter has 13 weeks, so every item is counted more than twice.

A discrepancy lives no longer than six weeks. Before, it lived a quarter plus a month of searching. If the other five zones show a similar picture, shortages per cycle come to about €804 (134 times 6) against €2,600 before. The figure is notional, but the direction is clear: the error does not pile up.

Man-hours go up. One zone needs 2 people for 8 hours, or 16 man-hours, and six zones need 96. Counting twice a quarter gives 192 against 112 before. The extra hours buy a shop floor that keeps running and items counted twice as often.

For the basics of warehouse records, see Raw Materials Inventory Management in Manufacturing: Where to Start. The warehouse features are described on the Warehouse management page.

Responsibility changes too. Before, a discrepancy belonged to the whole warehouse and nobody searched for its cause. Now every zone warehouse has a responsible employee, and the stock count has an author and a responsible person. When 1,500 resistors go missing from “SMD Line 1”, the question goes to the technician of that line.

Scenario limits

The scenario shows address-based storage, counting by zone and closing discrepancies. Min/max stock levels and automatic purchase planning are not covered here. Stock control blocks selling without stock but does not block write-off to the shop floor. A “Stock count” is created for one warehouse, so for several warehouses the posting and write-off are created separately. Linking the 3,000 items to bins is done once at the start, in the product cards. Several help articles carry a verification status, so check the button names against your version of Bimp.

Bimp is a cloud ERP for manufacturers, built in Ukraine, and warehouse records in it use the same set of documents described above.

FAQ