Cycle Count Plan & Schedule

Purpose

This cycle count plan helps you keep inventory accurate through simple, repeatable routines that run alongside normal operations. It focuses on counting by category and velocity so you catch problems early, reduce shrink, and keep ordering decisions based on reliable data.

Goals

• Increase inventory accuracy toward a target (example: >98% for A items).
• Detect shrink, receiving errors, and recipe/portion issues quickly.
• Enable continuous improvement with a low-disruption schedule.

Scope

Applies to all active food and high-value non-food items. Exclude deep-storage seasonal items unless they exceed your loss threshold or reorder frequency.

Roles & Responsibilities

• Inventory Owner (Manager/Kitchen Lead): maintain par lists, approve adjustments, run reconciliation.
• Counters: perform counts, record results, flag variances.
• Receiving: confirm deliveries and enter receiving notes that counters can reference.
• Investigator/Coach: lead variance investigations and corrective actions.

Step 1 — ABC Categorization

Rank items by annual consumption value (unit cost × annual usage). Typical breakpoints (adjust by business):

• A: top ~10–20% of SKUs that account for ~70–80% of inventory value.
• B: next ~20–30% of SKUs representing ~10–20% of value.
• C: remaining ~50–70% of SKUs with low value per SKU.

Example: Calculate annual usage value for each SKU, sort descending, and assign A/B/C until cumulative thresholds are reached.

Step 2 — Cadence & Sampling Rules (recommended starting point)

Use cadence based on category and item velocity (fast-moving = counted more often). Adjust cadence to match your risk tolerance and operational capacity.

Simple sample-size rule (practical, non-statistical): choose a fixed percent by category or use n = round(sqrt(total SKUs in category)) for a rotating sample of SKUs each cycle.

Step 3 — Count Procedures (standardized)

1. Prepare: notify receiving and kitchen staff of count windows; freeze movement for the small area being counted when practical (or hold back POS adjustments for short windows).
2. Use a standardized count sheet or electronic form: fields—Date, Counter name, Location, SKU, Description, Unit, Expected qty, Counted qty, Variance, Notes.
3. Blind vs. open counts: prefer blind counts (no expected qty shown) to reduce bias when possible.
4. Two-person verification: for high-value A items or when variance exceeds threshold, have a second counter verify counts.
5. Record immediate observations: damaged packaging, temperature issues, misplaced stock, or expired items.

Variance Thresholds & Immediate Actions

Set simple rules for investigation:

• Value or quantity variance >$25 or >10% → automatic investigation.
• A item variance of any material amount → immediate stop-and-investigate.
• Small C item variances <$5 → log and monitor for trends rather than immediate full investigation.

Variance Investigation Template

Use the following fields when investigating a variance (keep concise):

• Item (SKU/Name)
• Expected qty
• Counted qty
• Variance (qty and $)
• Likely cause (receiving error, theft, spoilage, prep/recipe waste, scale/measure error, data entry)
• Evidence (receiving ticket #, PO, photos)
• Corrective action (adjust par, retrain, update recipe yield, change storage, disciplinary steps)
• Owner & due date

Month-End Reconciliation Checklist

1. Run a complete reconciliation of counted balances to general ledger and POS-derived usage for the month.
2. Investigate high-dollar variances and unresolved open adjustments.
3. Verify receiving logs and match recent deliveries to counts.
4. Adjust par levels and reorder points where recurring variances appear.
5. Summarize shrink by category and identify top 10 items causing variance.
6. Schedule corrective actions and training; log completion.

KPIs to Track

• Inventory accuracy % by category (A/B/C)
• Dollar variance ($) and variance % per month
• Shrink rate (variance $ ÷ total food cost)
• Count completion % (scheduled vs. completed)
• Average days to close variance investigations

Implementation Steps (30/60/90 day starter)

1. Pilot: pick one shift/location, run the cadence for 30 days, refine count sheets and thresholds.
2. Train: standardize count procedure, blind counting, and how to use the variance template.
3. Scale: roll out to all locations, assign owners, put cadence on shared calendar, and begin monthly reconciliation.

Common Pitfalls & Tips

• Don’t try to count everything at once—rotate and focus on value and risk.
• Make counts short and frequent for fast movers; long, infrequent counts hide problems.
• Use blind counts to reduce optimistic adjustments.
• Keep count sheets simple so counters don’t skip fields.

How to Tailor This Template

Adjust cadence, sample size, and investigation thresholds to match your store size, transaction volume, and tolerance for risk. Multi-location groups should standardize ABC breakpoints and variance thresholds while allowing local par tailoring.

Next Steps / Resources

Consider converting the count sheet and variance template into an interactive form to save responses and build history. Track KPIs on a simple dashboard and review trends during weekly ops huddles.