Cycle Counting and Inventory Accuracy for a Türkiye Subsidiary

Group controllers tend to ask the same question about a subsidiary's inventory: can we trust this number? In many Türkiye operations the honest answer arrives only once a year, after a full physical count that stops the warehouse for a day or two and produces a list of differences nobody can trace back to a cause. By then the shrinkage, the mis-picks and the unposted receipts are twelve months old.

Cycle counting replaces that single event with a steady routine. This article explains how it is set up, how often each item should be counted, and what the ERP has to record so the result stands up in front of a parent-company audit.

What is cycle counting?

Cycle counting is the practice of counting a small, planned part of the inventory every day or week instead of counting everything once a year. Over a full cycle, every item is counted at least once, and the important ones are counted many times. Differences are investigated while the cause is still fresh.

Short answer: you trade one large, disruptive count for many small ones, and you find errors in days instead of months.

Why does a yearly count fail?

Three reasons recur across operations of every size.

• The error is old. A wrong unit of measure on a receipt in March is discovered in December, when nobody remembers the shipment.
• The count stops business. Shipping pauses, temporary staff are brought in, and the count itself introduces mistakes.
• There is no learning loop. The adjustment is booked, the cause stays unknown, and the same difference appears next year.

Which items should be counted how often?

The usual method is ABC classification by value or movement. Nothing here is a legal threshold; each company sets its own rhythm.

Class	Typical profile	Suggested rhythm
A	High value or critical to production	Counted frequently, for example monthly
B	Medium value, regular movement	Counted a few times a year
C	Low value, bulk items	Counted once or twice a year

Add triggers on top of the schedule: count a location when its balance reaches zero, when a negative balance appears, or after a large receipt is put away. These event-based counts catch errors at the moment they are most likely.

How does the count work inside an ERP?

The ERP generates the count list from the rules above, so no one decides by memory what to count today. A counter receives a task for a location or item, enters the quantity, and the system compares it with the book balance. The counter should not see the book balance before entering the quantity, otherwise the count becomes a confirmation.

If the difference is inside a tolerance set by the company, the adjustment can be approved by the warehouse lead. Larger differences go to a second approver and require a reason code. Every adjustment keeps its count task, counter, approver and timestamp.

What should the group controller see?

A parent company does not need every count line. It needs evidence that the process exists and that it works:

• count coverage: the share of items counted in the period against plan
• inventory record accuracy: the share of counted items where the count matched the book balance
• adjustment value by reason code, so patterns become visible
• aged differences that are still open

These figures turn "trust us" into a report that can be reproduced each month.

How is this solved in Birasyo?

In Birasyo, count tasks are generated per warehouse and shelf location from the item classification, and counters work from a task list without seeing the book quantity. Tolerance levels and approval steps are configurable, each adjustment requires a reason code, and every posting is traceable to the person and time. Coverage and accuracy figures are available in reports, so the group controller can follow them without asking the local team for a spreadsheet. See the inventory module for the full set of screens, or request a demo to walk through your own warehouse layout.

Where should a subsidiary start?

1. Clean the item master first: duplicate item codes and wrong units of measure make any count meaningless.
2. Classify items into A, B and C using the last twelve months of movement.
3. Start with class A items in one warehouse and run the routine for a full cycle.
4. Review the reason codes after the first month and fix the process behind the top two.
5. Extend to the remaining locations and keep the annual count only as a confirmation.

Local accounting and tax treatment of inventory adjustments, including the documents required for write-offs, should be confirmed with your Turkish CPA.

Key points

• Cycle counting replaces one annual count with a planned, continuous routine.
• Count frequency follows item value and movement; event triggers add targeted counts.
• Blind counting, tolerance levels and approval with reason codes keep the result credible.
• Group controllers need coverage, accuracy and adjustment reports, not raw count lines.
• Item master quality is the precondition for all of it.

Sources

The approach described here reflects widely used inventory control practice (ABC classification and cycle counting) rather than a specific regulation. Confirm local accounting and tax treatment of stock adjustments with your financial advisor.