What is cycle counting in inventory management?

Cycle counting in inventory management is defined as a periodic audit of a portion of inventory for accuracy. This practice involves regularly scheduled counts of a subset of inventory items rather than conducting a complete inventory count at once. The primary goal of cycle counting is to ensure that the inventory records are accurate and to identify any discrepancies that may exist between the recorded quantities and the actual physical counts.

By performing these counts routinely, businesses can maintain a higher level of inventory accuracy, reduce the potential for stockouts or overstock situations, and ultimately improve inventory management efficiency. This method also facilitates addressing any issues detected more quickly, helping to enhance overall operational productivity.

The other options provided do not accurately describe cycle counting. Tracking employee hours pertains to workforce management rather than inventory accuracy, while continuous review of inventory levels refers to a different approach of managing stock than the periodic nature of cycle counting. Evaluating supplier performance is a distinct function in logistics that focuses on the quality and reliability of suppliers rather than the accuracy of inventory records.