When cycle counts make a parts department's records worse
Why a parts cycle count can leave stock records less accurate than before, and how to count a part kept in the store, the workshop and the van.
By Achekam · · 5 min read · For Automotive businesses in South Africa, Nigeria, Kenya
The parts manager introduced weekly cycle counts to fix the stock records. Six months later the records are worse. The system says there are oil filters for a popular model on the shelf; the shelf is empty; the counter staff have stopped trusting the screen and walk to the bin before every quote. Each count found differences, each difference was adjusted, and yet the errors keep coming back.
This is a well-known trap, and it is not a reason to stop counting. It is a sign that the counts are being done in the wrong order, or that parts kept in more than one place are being counted as if they lived in one. This article explains why it happens and how to count a parts department properly.
How a correct count makes the record wrong
AccountingTools warns that if outstanding inventory transactions are not entered before a cycle count, a counter's adjustment followed by the late transaction can leave the record less accurate than before. It adds that this is particularly common when the same item is stored in multiple locations. AccountingTools' guide to cycle counting explains the problem and the counting practices that prevent it.
Here is how it plays out in a workshop. On Tuesday morning a technician takes two sets of brake pads from the main store for a job, but the issue is not captured until the job card is closed on Wednesday. On Tuesday afternoon the counter counts the bin and finds two fewer sets than the system shows, and adjusts the record down. On Wednesday the job card is closed, the issue is captured, and the system deducts the same two sets again. The record is now short by exactly the amount the count "fixed".
The count was accurate. The sequence was wrong.
The same part in three places
A parts department rarely keeps a fast-moving part in one bin. There is the main store, a few on the workshop floor for quick jobs, a set in the service van for call-outs, and sometimes a returns shelf waiting for a supplier credit. If the count covers only the main store, and the system holds one total for the part, every unit in the workshop or the van looks like a shortage.
The fix is to know where each unit is supposed to be, and to count all locations for a part at the same time, or to record stock by location so that each location can be counted on its own.
Enter everything before you count
AccountingTools advises completing all outstanding inventory data entry before a physical count begins, including issues, returns and transfers between bins. For a parts department, the pre-count checklist looks like this:
- Close or update open job cards so parts issued to jobs are recorded.
- Capture any returns from technicians and any returns to suppliers.
- Record moves between the store, the workshop floor and the vans.
- Process deliveries received but not yet booked in.
- Freeze movements in the bins being counted until the count is finished.
Only then does the count measure what it is supposed to measure.
Shelf to report, as well as report to shelf
Most counters work from a list: they read a part number from the report, walk to the bin and count. AccountingTools explains that counters should also trace items they see on the shelf back to the counting report, in case some items are not recorded in the system at all. In a parts store that is where the surprises live: a box of filters received under the wrong part number, a supersession stocked under the old code, a customer's part left behind after a job.
Count in both directions and the count finds the errors the report cannot show.
Every difference gets a reason
AccountingTools explains that errors found in cycle counts should lead to an adjustment of the inventory records and an investigation into the reason for each error, and describes investigating variances, and discussing them with the warehouse manager, as the most important cycle counting activity. In a dealership, that conversation is with the parts manager.
Typical reasons are worth listing on the count sheet so the counter can tick one: issue not recorded, transfer not recorded, wrong part number on receipt, superseded part, damaged and discarded, or unexplained. A pattern of "unexplained" in one bin is the start of a different conversation.
Counts per location in Achekam
With Achekam's Warehousing add-on, a business keeps stock locations such as warehouses, stores, bins and vans on the server, with the quantity on hand at each. A stock count sets a location's quantity to what was counted and records the difference as an adjustment. That suits the multi-bin problem: the van and the workshop floor can be counted as their own locations instead of being lumped into the main store.
One limit needs care. In Achekam, stock counts, wastage, transfers and opening quantities do not post to the general ledger; only till sales and till returns move the inventory account. A count adjustment therefore corrects the quantity at the location, but not the value of inventory in the books. Once the count's differences have been investigated, total their value at cost and post a manual journal for it yourself, between inventory and a stock adjustment expense account. Achekam refuses a journal that does not balance or that is dated in a closed month, so post it before the month is closed.
A counting routine for the parts department
- Count a few part groups each week, chosen so that every part is counted several times a year and fast movers more often.
- Before each count, clear the pre-count checklist.
- Count every location that holds the part, not just the main store.
- Count both ways: report to shelf and shelf to report.
- Record a reason for every difference, reviewed with the parts manager.
- Post the value of the agreed differences to the ledger at month end.
For setting up part numbers and barcodes so counts are easier to match, see parts stock, SKUs and barcodes; for parts that are scrapped rather than missing, read scrapped parts and redone work.
Cycle counting works when the record and the shelf are compared at the same moment. Get the timing right and the counts start fixing the records instead of chasing them.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
