At DCL, we have a system for classifying our daily cycle counts using letters A, B, C, and D. Each letter corresponds to a specific counting frequency for each part number. The number of customers and units to count, as well as the classification, are considered by the system to ensure that we don't count all parts of the same classification on the same day. For example, if all parts are classified as "A", each part will be counted once a month, but not all on the same day. The system will divide the monthly count equally throughout the month to ensure that each part is counted once a month. This applies to all other classifications as well.

The Letter Codes tell our system how frequently the cycle count should be done.

Cycle Counts are set up in our system based on the Cost of Goods (COGS) we received from our customers. The Standard setup is based on a pre-defined classification based on the value of the product.

Cycle Count Classification adjustments will be made monthly and automatically based on data in the DCL ERP system. Based upon an individual SKUs monthly inventory turns, DCL may automatically reclassify specific individual SKUs to a higher or lower Cycle Count Class.