What is 'Cycle Counting'?

Cycle counting is a method of physical inventory counting that is conducted regularly throughout the year, rather than relying solely on a full inventory count at year-end. This approach allows businesses to maintain updated records of their inventory, helping to identify discrepancies and ensure that stock levels are accurate at any given time.

Unlike a one-time inventory count, cycle counting can be scheduled to occur frequently, often focusing on different subsets of inventory items over specified periods. This ongoing process helps improve inventory accuracy, reduce the need for large-scale inventory disruptions, and enhances overall inventory management efficiency. By identifying inaccuracies quickly, organizations can take corrective actions that can lead to better inventory control and improved operational performance.

The other options pertain to different inventory management concepts that are not related to the physical counting of stock. Monitoring shipment distances, categorizing products by usage, and forecasting demand based on historical data each address different aspects of supply chain and inventory management, but they do not define cycle counting specifically.