Free course · Continuous counting + Pareto
Cycle Count & ABC Analysis
ABC classification by value and movement, cycle count frequency by class, count calendars, accuracy KPIs and SAP cycle counting indicators.
What you must take away
- ABC sorts items by annual consumption value: A ≈ 80% of value, B ≈ 15%, C ≈ 5%.
- Count A items often (monthly), B quarterly, C once or twice a year.
- Cycle counting runs all year without stopping the warehouse.
- Fix the root cause of each error, not just the number.
In the SAP process
- Run ABC analysis (MC40) on consumption value.
- Set the cycle counting indicator in the material master (plant data).
- Create cycle count documents (MICN).
- Count, enter (MI04) and post differences (MI07).
Case study
From yearly surprises to 98% accuracy
Setting. An auto-parts plant with 3,200 active materials.
Problem. The year-end count always revealed large losses on a few expensive items.
How it was investigated
- Ran ABC: 310 items made up about 80% of stock value.
- Those items had never been counted between year-ends.
- Most errors came from wrong unit of measure at goods issue.
What was changed
- Started monthly counts for A items, quarterly for B, half-yearly for C.
- Corrected unit-of-measure settings and retrained issuers.
- Tracked accuracy weekly on a simple dashboard.
Outcome. Inventory record accuracy rose to about 98% and the year-end count was replaced by cycle counts with auditor approval.
Lesson: Count the money first — most of it sits in a few items.
Illustrative composite of common shop-floor situations — no client names or confidential figures.
Practical template
ABC analysis and count plan
Classify items and set how often each one is counted.
| Material | Annual qty | Unit cost | Annual value | Cumulative % | ABC class | Counts / year |
|---|---|---|---|---|---|---|
| PMP-220 | 1,200 | 450 | 540,000 | 34% | A | 12 |
How to use it
- Multiply annual quantity by unit cost.
- Sort high to low and add a running cumulative %.
- Up to 80% = A, 80–95% = B, rest = C; set counts per year.
Quick quiz — check your understanding
The quiz questions stay hidden until you have spent at least one minute reading this lesson — answer from what you learned, not from clues in the options.